Major Dutch bank blocks bitcoin purchases

[Jouke]

Let me first introduce myself. I am Jouke Hofman, co founder and co owner of bitonic.nl . We provide an easy and fast solution to buy bitcoins in the Netherlands. We have been operating our business for just over a half year. We have done over a thousand bitcoin transactions, and that number is increasing at ever faster rates every month.

We always thought that government regulations would be the first thing that would bring us headaches. It turned out to be the banks. The software the banks use for internet banking is not as safe as one thinks. Hackers are apparently quite easy able to gain control over a banking account. They have used this control to buy bitcoins at our company.

Although this is not directly our problem, we didn’t want to make money over the backs of innocent bystanders (not all banks refund the stolen money). We spend a lot of time and money on creating a fraud detection system. We had a lot of constructive talks with a couple of the largest banks. One of them, Rabobank, seemed to be most interested in our fraud detection system and even opted to help us develop it even further. After a little while we started to hear less and less from them.

In our talks they revealed that they are expanding their own fraud detection system as well and we soon noticed its effects. Some of our regular customers reported they got “a strange error” trying to send us funds at the Rabobank. When we asked the bank about it we received a standard message that they are looking in to it.

We used other Payment service providers and bank accounts as a test. When we used those, our customers never experienced those “strange” errors. Confronted with this, the bank gave evasive answers. Apparently the Rabobank finds it easier to just block transactions to our company, than to help us make a workaround to their broken software.

They don’t just block every transaction. Transactions less than 50 euro’s make it through. So the workaround to this blockade is to tell our customers to make multiple transactions as that somehow doesn’t trigger the fraud detection. This however adds extra costs for our customers.

We are still working on somehow resolving this issue, but we wanted to tell the community about this, just to get it off our chest. As I said, we spend a lot of time and money (still are) in trying to fix the broken system of the banks and this is how they treat us.

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[Yankee (BitInstant)]

Wow!

Good luck, and let me know if there is anything I can do to help

-Charlie, BitInstant

[Isokivi]

If my bank did this to me, Id be a very loud EX-customer. I hope your clients react the same way.

[paraipan]

If my bank did this to me, Id be a very loud EX-customer. I hope your clients react the same way.

^this, don't think twice

[Mike Hearn]

I've been on the other side of this (writing risk analysis software). It's a really sucky situation to be the victim of false positives, but seen from their perspective, you're not a valuable customer and failing to block fraud has big consequences for them. I actually am glad to hear they are or were willing to talk to you, but don't expect answers if you ask questions like "What exactly is triggering the blocks" as obviously that's confidential information.

[Piper67]

I hear there's a bank in France... 

[Jouke]

I've been on the other side of this (writing risk analysis software). It's a really sucky situation to be the victim of false positives, but seen from their perspective, you're not a valuable customer and failing to block fraud has big consequences for them. I actually am glad to hear they are or were willing to talk to you, but don't expect answers if you ask questions like "What exactly is triggering the blocks" as obviously that's confidential information.

As are our own methods.

But there is clearly something wrong with their profiling when regular customers are suddenly subject to this blockade. We told them that we are willing to work with them in order to fine tune their software, but they said they couldn't accept this proposal because of privacy concerns.

I get why they don't have an incentive to fix it, it is not costing them money. They are however also not honest to their customers by giving vague errors. How are they supposed to know it is something they have to complain about. Also, some of our customers are not very keen to let anyone know they are buying bitcoins.

[davout]

Let me first introduce myself. I am Jouke Hofman, co founder and co owner of bitonic.nl . We provide an easy and fast solution to buy bitcoins in the Netherlands. We have been operating our business for just over a half year. We have done over a thousand bitcoin transactions, and that number is increasing at ever faster rates every month.

[...]

We are still working on somehow resolving this issue, but we wanted to tell the community about this, just to get it off our chest. As I said, we spend a lot of time and money (still are) in trying to fix the broken system of the banks and this is how they treat us.

We had the exact same problem a few months ago. What happened is that the bank account we used at the time got blacklisted by the Crédit Agricole bank. As a consequence, our customers could simply not wire money anymore to us, this thread followed the issue.

That was a retarded situation. But we won and got it unlocked unconditionnally (as I said in thursday's announcement lots of the work we do is unseen).

My advice is the following : Leverage all the contacts you have there, we reported some phished bank accounts to the Crédit Agricole before getting blocked, so we had a couple phone numbers. Call these contacts, every day, I repeat every fucking day, don't let go of them, escalate the issue and talk to the boss, talk to the boss's boss. Be polite, explain politely that it's not acceptable, explain politely that you are losing business because of them, insist heavily on this fact. Insist that this absolutely not acceptable, that the issue is on their side, not yours. Remind them of how you helped them improve their security (in our case we reminded them of the money that didn't get stolen thanks to our phished accounts reports). A bank gives no shit whatsoever, but individual contacts will be embarassed, use this, insist, call again, and again, and again. Don't threaten them directly, but make it clear that it is not going to be tolerated, that a solution has to be found. That a bank can not simply shut a legitimate business down by cutting its funding. Use the embarassment of the individuals you'll have on the phone.

Call again and again. If they say they're going to get back to you ask them when, and if they don't call back you call them.

Be patient, you'll win. It took us a full month, but we won.

I hear there's a bank in France... 

Yeah, and trust me, we know our shit.

[evoorhees]

I think it's important to understand what this stuff looks like from the bank's perspective and act accordingly...

From a bank's view, there is this weird thing called bitcoin, which is a very tiny little micro-community of enthusiasts. For whatever reason, people try to get bitcoins and sometimes try to do it fraudulently. As a bank, if they can just cut off payments/support to anything bitcoin-related, then they save themselves some headache and won't lose any significant business, because bitcoin is small.

^^^ that's how a bank sees this.

Of course, the truth is that the fraud is related to the old rail systems! It is the poor design of banking itself which enables the fraud, and fraud seeks out the bitcoins because Bitcoin is irreversible and far more solid, like gold. The irony then of Bitcoin is that it's so well designed that it encourages fraud everywhere on its periphery.

The banks, not realizing their own faults, then blame Bitcoin for the fraud, and they'll simply chose to shut off bitcoin services. It's not some dark conspiracy, it's just a rational response by the banks since they see bitcoin as high-risk, low-importance.

[Jouke]

(as I said in thursday's announcement lots of the work we do is unseen).

People don't even know the half of it.

All the talks we have had with banks, central bank, financial watchdogs, the companies we are customer of, journalists, etc. etc.

Call these contacts, every day, I repeat every fucking day, don't let go of them, escalate the issue and talk to the boss, talk to the boss's boss. Be polite, explain politely that it's not acceptable, explain politely that you are losing business because of them, insist heavily on this fact. Insist that this absolutely not acceptable, that the issue is on their side, not yours. Remind them of how you helped them improve their security (in our case we reminded them of the money that didn't get stolen thanks to our phished accounts reports).

Thanks. We used that exact tactic when an account with serveral thoudands of euros got blocked by the PSP. They released the money and we got an excuse in the end, but it took its time .. :/

The irony then of Bitcoin is that it's so well designed that it encourages fraud everywhere on its periphery.

Exactly! We have got such a good product, even hackers use it.

[fimp]

We had a bank account with Commerzbank in Germany. They froze about €1000 and closed the account. When I called them and asked questions they would say they were not required to tell me anything and just hang up the phone. I still can't believe I would be treated that way as a customer.

Then I went to the bank branch in person. All I could get was an account statement to see the latest incoming transfers, but they insisted that the €1000 would be returned to the originating phished bank account, and that it was part of our contract with them that we should suffer the loss.

[davout]

We had a bank account with Commerzbank in Germany. They froze about €1000 and closed the account. When I called them and asked questions they would say they were not required to tell me anything and just hang up the phone. I still can't believe I would be treated that way as a customer.

Then I went to the bank branch in person. All I could get was an account statement to see the latest incoming transfers, but they insisted that the €1000 would be returned to the originating phished bank account, and that it was part of our contract with them that we should suffer the loss.

You should have fought harder, they have no right to return a bank transfer without your explicit agreement.

[Herodes]

We had a bank account with Commerzbank in Germany. They froze about €1000 and closed the account. When I called them and asked questions they would say they were not required to tell me anything and just hang up the phone. I still can't believe I would be treated that way as a customer.

Then I went to the bank branch in person. All I could get was an account statement to see the latest incoming transfers, but they insisted that the €1000 would be returned to the originating phished bank account, and that it was part of our contract with them that we should suffer the loss.

I had a similar issue with a German bank, I wasn't even allowed to open a bank account with them. The application was rejected for 'undisclosed reasons and the decision cannot be discussed further'. That's pretty rude.

[fimp]

We had a bank account with Commerzbank in Germany. They froze about €1000 and closed the account. When I called them and asked questions they would say they were not required to tell me anything and just hang up the phone. I still can't believe I would be treated that way as a customer.

Then I went to the bank branch in person. All I could get was an account statement to see the latest incoming transfers, but they insisted that the €1000 would be returned to the originating phished bank account, and that it was part of our contract with them that we should suffer the loss.

You should have fought harder, they have no right to return a bank transfer without your explicit agreement.

Is that a SEPA-wide principle, and you're sure local laws cannot be different?

[Herodes]

My advice is the following : Leverage all the contacts you have there, we reported some phished bank accounts to the Crédit Agricole before getting blocked, so we had a couple phone numbers. Call these contacts, every day, I repeat every fucking day, don't let go of them, escalate the issue and talk to the boss, talk to the boss's boss. Be polite, explain politely that it's not acceptable, explain politely that you are losing business because of them, insist heavily on this fact.

While i absolutely love this attitude and this method of operating, I've done it quite a few times myself, what I find is that doing it this way creates enemies, and sometimes just plain out add to me having a weaker case overall. But then again, doing nothing makes nothing happen, so perhaps some middle ground is the best way to go about it ?

Surely, if a business is not on a case, it can't expect anyone else to do the job.

[davout]

While i absolutely love this attitude and this method of operating, I've done it quite a few times myself, what I find is that doing it this way creates enemies, and sometimes just plain out add to me having a weaker case overall. But then again, doing nothing makes nothing happen, so perhaps some middle ground is the best way to go about it ?

Surely, if a business is not on a case, it can't expect anyone else to do the job.

Thing is, you can use this attitude and be nice at the same time, just be consistent.
"Okay, you'll look into it ? No worries at all, take your time, you understand my problem. You call me back in a week ? No problem". And a week later you call back because they won't. You don't have to be belligerant at all. When people feel you won't let it go they'll get up their asses, just to be left alone

[Rob E]

We had a bank account with Commerzbank in Germany. They froze about €1000 and closed the account. When I called them and asked questions they would say they were not required to tell me anything and just hang up the phone. I still can't believe I would be treated that way as a customer.

Then I went to the bank branch in person. All I could get was an account statement to see the latest incoming transfers, but they insisted that the €1000 would be returned to the originating phished bank account, and that it was part of our contract with them that we should suffer the loss.

You should have fought harder, they have no right to return a bank transfer without your explicit agreement.

Yeh? How do you know. . Bank transfers can be reversed all the time. And what is the difference a bank doing it or an account holder who requests the bank do it for what ever reason.

[Herodes]

When people feel you won't let it go they'll get up their asses, just to be left alone

A very good point. I've experienced people promising me things, and then not delivering on those promises, and I call back, get a new promise, and same thing. In the end, you wonder - is this a company that you want to work with ? Perhaps sometimes it's the only choice you have.

[marcus_of_augustus]

Sounds to me like you should be using a more secure system for transacting with Rabobank .... like bitcoin network for example.  

Just get them to hold a bitcoin account with you and vice versa and settle up like that.

[Rob E]

I think it's important to understand what this stuff looks like from the bank's perspective and act accordingly...

From a bank's view, there is this weird thing called bitcoin, which is a very tiny little micro-community of enthusiasts. For whatever reason, people try to get bitcoins and sometimes try to do it fraudulently. As a bank, if they can just cut off payments/support to anything bitcoin-related, then they save themselves some headache and won't lose any significant business, because bitcoin is small.

^^^ that's how a bank sees this.