Coinbase Review: Fees, Comparisons, Complaints & Lawsuits

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Cryptocurrency Acceptance for Merchants

Founded in 2012, Coinbase (coinbase.com) is a virtual currency processor that helps users make transactions with digital currencies like bitcoin, litecoin, and ethereum. Coinbase’s platform is available to developers, consumers, and business owners, but this review will primarily focus on how Coinbase helps merchants accept cryptocurrency payments from customers.

No More Fiat Payouts

Like its competitor Bitpay, Coinbase previously enabled businesses to accept an online bitcoin payment from a customer and then receive that payment as a deposit to the business’s bank account in fiat currency. However, it appears to no longer offer this feature, which means that merchants must accept payments in their chosen cryptocurrency and then exchange that currency themselves. This leaves merchants vulnerable to fluctuations in market pricing for their given cryptocurrency.

Favored by High Risk Merchant Types

Bitcoin (like other virtual currencies) is an appealing payment method for many high risk merchants because of its reputation as “digital cash,” meaning that it is not regulated by bank policies and that all sales are final. However, Coinbase monitors accounts for illegal and high risk activity, and the company will deactivate accounts that violate its terms of service. For this reason, Coinbase should not be relied upon as a payment processor for fringe products such as e-cigarettes, CBD oil, medical marijuana, gambling, firearms, adult products, or nutraceuticals.

Coinbase Location and Ownership

Coinbase is not partnered with an acquiring bank and is headquartered at 548 Market St, San Francisco, California 94104. Brian Armstrong is the CEO of Coinbase.

Coinbase Review Table of Contents

  • Costs & Contract: Coinbase offers month-to-month service and does not charge any early termination fees.
  • Complaints & Service: Coinbase has received more than 30 public complaints.
  • BBB Rating: Coinbase has an “F” rating with the Better Business Bureau and has received 1,269 complaints in the past three years.
  • Sales & Marketing: Coinbase does not appear to hire independent sales representatives and has not received any complaints about its sales practices.
  • Rates & Fees: How Merchants Got The Best Rates With Coinbase

Should You Trust Coinbase?

Lawsuits, Reviews & Complaints

Here's Who We Trust.

Complaint Summary

Total Online Complaints
30+
Live Customer Support
No
Most Common Complaint
Account Termination

Low-to-Moderate Complaint Total

We are currently able to locate more than 30 Coinbase complaints on other review websites and forums, although the total could be much higher when considering the overall number of general comments about the company’s service. Common complaints include account closures, software bugs, poor exchange rates, and a lack of customer support, and some of these complaints describe the company as a ripoff or a scam.

Philosophical Disagreements

One general sentiment that is often voiced about the company is that its willingness to work with mainstream banks and accept large amounts of venture capital runs counter to the decentralized, stateless vision of cryptocurrency held by many bitcoin enthusiasts. This philosophical approach by Coinbase limits the service’s appeal for high risk merchants. High risk merchants who are hoping to capitalize on the anonymity and freedom of cryptocurrency by selling their products through Coinbase will be especially susceptible to having their accounts monitored and terminated, and they are advised to not use the platform for their products.

Coinbase Lawsuits

Coinbase is currently the defendant in class-action lawsuit alleging that the company manipulated the prices of currencies on its exchange in violation of its own terms. There is no current information available about the status of this lawsuit, but it is unrelated to the company’s payment processing services and will not have a major impact on its score in this review.

Coinbase Support Options

Coinbase offers phone and email support to all users, but widespread complaints about account termination and a lack of live customer support have lowered the company’s grade in this category. The service appears to be best suited for cryptocurrency newcomers hoping to exchange, manage, and experiment with digital currencies. It is not ideal for high risk or high-volume merchants who need a robust payment platform for bitcoin and its equivalents.

Is the BBB Rating for Coinbase Accurate?

Better Business Bureau Profile

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BBB Summary

Product & Service Complaints
948
Billing & Collection Complaints
191
Advertising & Sales Complaints
32
Guarantee & Warranty Complaints
6
Delivery Complaints
92

Over 1,200 Complaints

Coinbase currently has an “F” rating with the Better Business Bureau and is not BBB-accredited. The company has received 1,269 complaints in the past three years, with 948 related to product or service problems, 191 having to do with billing and collection, 32 due to advertising or sales issues, six related to guarantee and warranty problems, and 92 categorized as delivery issues. Coinbase has resolved 232 of these complaints to the satisfaction of the user, while 437 complaints either were resolved to the dissatisfaction of the user or did not receive a final response from the user. A whopping 600 either did not receive a response from Coinbase or were not resolved by Coinbase. This low response rate is a major factor lowering the company’s BBB rating.

What Users Say

Coinbase has received 15 positive informal reviews and 225 negative informal reviews to its BBB profile. This profile receives feedback from merchants and non-merchants alike. The most recent review that is applicable to the merchant experience describes fund holds:

Scam. After purchasing $25 worth of btc they froze my account with no notice and wouldn’t refund me or let me withdraw my money, and I couldn’t close the account because the funds were still in the account. Stay away!!!

Merchants should understand why credit card processors hold funds and apply those same rules to their use of Coinbase.

An “F” Performance

The BBB is unable to locate an accurate address for Coinbase and does not appear to have received a response from the company since January 2018. We therefore agree with the BBB’s rating for the purposes of this review.

How Expensive is Coinbase Service?

Rates, Fees, and Contract Terms

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Cost Summary

Per-Transaction Rate
Free
Early Termination Fee
$0
PCI Compliance Fee
$0
Equipment Cost
$0

Free Cryptocurrency Processing

Coinbase enables all users to convert their money between fiat currency and multiple virtual currencies through a bitcoin exchange at variable conversion rates, but its merchant processing solution is for accepting virtual currencies only. Merchants can receive their payments from customers in bitcoin, bitcoin cash, ethereum, or litecoin. All payments are free to receive and are deposited in a secure online wallet. All deposits are subject to Coinbase’s terms of service and do not come with any monthly or annual contract obligations.

Virtual Currency Price Fluctuation

Merchants should be aware that although accepting payments in bitcoin will spare them a processing fee, they will then be subject to market fluctuations in bitcoin’s pricing. The same is true for other virtual currencies. This could result in a loss on the transaction if exchange rates go down, but it could also be attractive to merchants who are optimistic about a specific currency’s eventual value.

Prohibited Business Types

It is absolutely critical that merchants in high risk industries understand Coinbase’s terms of use before signing up for service. Because Coinbase operates within the boundaries of existing regulation, the company monitors its merchants for unlawful or prohibited use of its platform. If a merchant is found to be in violation of the law or Coinbase’s terms of use, the company will terminate that merchant’s account and may hold or seize any bitcoin held in that merchant’s wallet. Two broad clauses in Coinbase’s terms of use outline the company’s stance on prohibited business types:

By opening a Coinbase Account, you confirm that you will not use your Account to do any of the following:

Unlawful Activity: Activity which would violate, or assist in violation of, any law, statute, ordinance, or regulation, sanctions programs administered in the countries where Coinbase conducts business, including but not limited to the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”), or which would involve proceeds of any unlawful activity; publish, distribute or disseminate any unlawful material or information

[…]

By opening a Coinbase Account, you confirm that you will not use Coinbase Services in connection with any of following businesses, activities, practices, or items:

[…]

High risk businesses: any businesses that we believe poses elevated financial risk, legal liability, or violates card network or bank policies

Coinbase outlines other specific instances of prohibited use, such as e-cigarettes, medical marijuana, weaponry, nutraceuticals, adult content, multi-level marketing, and other high risk industries. Coinbase does note that certain money services, charities, games of skill, and religious organizations can use the platform with express written consent from the company following extensive disclosure.

An Easy Solution for Crypto Payments

Overall, Coinbase is a cheap and simple method for accepting virtual currency payments. However, its terms of use specifically limit the types of business that it can serve.

Does Coinbase Use Deceptive Marketing?

Advertising & Sales Strategy

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Key Points

Employs Independent Resellers
No
Advertises Deceptive Rates
No
Discloses All Important Terms
Yes

Transparent Price Quotes

Coinbase appears to primarily market its services through traditional advertising and corporate partnerships. There is no indication at this time that the company uses industry-standard independent sale agents or telemarketing to sell its services. Coinbase discloses its pricing and contract terms on its website, but some of this information is not prominently listed. Merchants are encouraged to thoroughly read through the company’s “Help” section if they have any questions about pricing or contract terms.

No Red Flags

Coinbase’s commitment to disclosure, as well as the absence of “teaser” quotes on its website, has earned it an “A” rating in this section. If you suspect that the company is charging you hidden fees, you may be able to find and eliminate those costs with a third-party statement audit.

Does Coinbase Deserve Your Business?

Review Summary & Our Thoughts

An Average Option for Casual Cryptocurrency Acceptance

Coinbase appears to be a simple and cheap platform for first-time cryptocurrency users who wish to accept bitcoin and other digital currencies from customers. The service does not impose any onerous fees or contract terms on its users, but it also has much stricter fraud prevention policies than merchants might expect. Coinbase is recommended for standard-risk e-commerce businesses who wish to offer an upcoming, alternative payment method, but it is not currently recommended for any businesses that operate in regulatory gray areas.

Customer & Employee Reviews

What Others Are Saying About Coinbase

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Phillip Parker
Credit Card Processors, Virtual Currency
2 min read
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