[shtylman]

Coinbase uses a method called "ACH" to electronically request the money from your bank account. The problem with this method is that it is relatively easy for a fraudster to get the information needed to do this (routing and account number) and submit that as their account on coinbase. Consumer protection banking laws in the US are very consumer favorable and thus if someone goes to their bank and claims they did not authorize the transaction (of coinbase taking the money from your account) the funds will be returned to you and coinbase will take the hit. Now, typically this is less of an issue, but with bitcoin, coinbase is not able to take back any bitcoins they have let you withdraw. Thus you can see where this leaves them in a very delicate situation about having to monitor how and who they withdraw money from as well as the amounts.

[damian2000]

Here in Australia all the exchanges I know about require you to physically deposit cash at a bank branch to fund your account. This type of deposit can't be reversed.

[aryanet]

Good details. US laws suck. But they have all this account/identity verifications which is trackable. As a new user, I followed all steps to become a good user, but all my transactions are being cancelled. I even tried new accounts, and no luck. So, if they were to follow this trust pattern, no new user would be able to become a good user. I have seen posts where people who are veterans on coinbase have their transactions cancelled. I am to the point that I want to drop by their office with a physical check in hand and tell them to buy me BTC.

[shtylman]

Ironically enough, due to check fraud that check might not help you as much as you think ;)

I don't know what algos they use to detect fraud but being a veteran does not always mean there won't be fraud on your bank account. Remember, this is not about those five 10 dollar transactions you authorized, this is about that one 5 thousand dollar one that was the result of fraud. From their point of view, a false positive is much better than a false negative.

[aryanet]

OK. Then with the current bitcoin price, their risk level goes significantly higher. They should really open the option to people walking into their office and drop off physical checks. I am willing to do that and that does not have the problem is ACH because it is in physical form and has your signature on it.

[dangrossman]

Sure it does, especially since many times checks aren't actually sent to a clearinghouse, but scanned and turned into ACH transactions. They're just as easy to counterfeit (you can order checks with any account and routing number you want from Vistaprint online, or print your own at home) and sometimes just as easy to reverse. A cleared paper check that was never converted requires a bank's intervention to reverse, but it's still possible.

You want to show up with cash, not a check.

[aryanet]

OK. Cash in the suitcase. ;) I feel like a gangster.