The roller coaster price fluctuations of bitcoin has kept the cryptocurrency prevalent in the headlines for months. To start, major banks have reportedly said they will decline transactions that involve customers using bitcoin credit card fraud cards to buy bitcoin. The concern here is that borrows will avoid paying for those bitcoins, particularly if they buy high and bitcoin’s price plunges.
Among the top reasons for this is the belief that the anonymity of cryptocurrency could lead to a fraudsters opening a credit card account with either a stolen identity, or even an entirely new synthetic identity. As we’ve covered in previous posts, synthetic fraud allows hackers to set up accounts in a person’s name that appear to be authentic, but are actually fictitious. Not being able to track and trace fraud is already a concern for banks, so it’s only natural bitcoin would flag this fear. IDs is based on combining truthful and false information to build a credit file and then open new accounts, which is perpetrated at scale by opening hundreds of new accounts. This causes delays in spotting the fraud, if caught at all, which can send banks down a spiral of chasing credit card and identity fraud. Still, that doesn’t mean the bank wants to allow customers to use their cards to buy bitcoin. The LA Times report cited sources indicating that JPMorgan, along with Bank of America and Citibank have declined bitcoin purchases.
7 million in its Series A funding round in February 2016. Goals Buying bitcoins with a credit card has always been a challenge for Bitcoin businesses. Like any merchant accepting credit cards, Bitcoin companies are at risk of fraud and chargebacks. While these problems are common, they are especially problematic with Bitcoin companies because Bitcoin transactions are irreversible.