In yesterday’s Fortune & Freedom, reader J.B. reported on some difficulties he was having with buying more cryptocurrencies. His bank was making life difficult. Today, the tale turns epic.

I have a passion for these stories of institutions going rogue. But it’s not much use talking about J.B.’s woes without providing solutions. And so I’ve asked our cryptocurrency expert Sam Volkering to provide some relief and outline how to try to buy cryptocurrency in tomorrow’s Fortune & Freedom.

Before we get to J.B.’s latest update on his saga, here’s the first episode again to remind you. The second gets surreal though.

***

From:  J.B.
Sent: Tuesday, 3 August 2021 8:04 AM
To: [email protected]
Subject: I Am Feeling Financially Repressed!

Dear Nick,

I hope this finds you well.

I appreciate you’re pushed for time, so will do my best to keep this brief.

Firstly, I wanted to thank you and your colleagues for producing well-written and interesting articles. I am enjoying my subscription with Southbank!

The reason I make contact is to share a recent experience with my bank, which I have found rather frustrating and baffling. It resonates well with your articles “Are you feeling financially repressed?”, “When money became meaningless” and “Why dump your gold in Tokyo Bay?”, amongst others.

A quick introduction – I am very much a “little fish” in trading and wish to diversify my portfolio into crypto. Again, articles from Southbank have given me confidence to ‘dip a toe’.

I have used the exchange […] to make some very small initial investments (£[…] or so) and wished to increase the amount of risk-capital I invest. However, what I have found is that my Bank appears to be holding my money hostage and not permitting me to transfer funds to crypto exchanges!

It starts with the transaction being declined by the bank… Apparently for “safety reasons”:

To keep your money safe and secure, we have rejected your payment of £XXXX to your selected cryptocurrency provider. Funds have not left your account and future payments may also face the same restrictions. You can find out more information on why we have rejected your payment here:

I find this odd, given I have already consented by ticking countless checkboxes whilst arranging the payment. And in particular that relating to the risk of crypto. [The bank] kindly provided a support link, so I thought I’d have a look to see how to circumvent the payment issue.

The first article reads:

Why won’t [the bank] allow me to purchase cryptocurrecy?

We know that customers investing their money in cryptocurrency has become extremely popular. However, we are also aware of the increasing risks posed by fraudsters exploiting this trend to dupe customers out of millions of pounds per month. In addition, there have been recent regulatory warnings and announcements regarding the risks associated with cryptocurrency, particularly the lack of consumer protection.

As such, we have decided to take proportionate action to keep our customers safe and secure. This doesn’t mean that we block cryptocurrency payments altogether but we will restrict payments to cryptocurrency exchanges that present the highest risk of financial harm.

Although you may have made payments to cryptocurrency exchanges previously, we continuously monitor fraud patterns and trends, adjusting our restrictions to keep you, and your money, safe and secure.

Ok, fair enough – the bank is very kindly “keeping one safe”… What about another FAQ?

Why has my Payment for a cryptocurrency purchase been stopped?

In the past few months, there has been a large increase in the number of UK Banking customers becoming the victims of cryptocurrency scams.

If you’re making a payment to a cryptocurrency exchange where a high volume of scams has been reported to us, your payment may be declined. We are doing this as a preventative measure. The bank wants to keep you, and your money, safe and secure. If you choose to make a payment that we didn’t stop, and it turns out to be a scam, we will not be able to refund any money you chose to send.

Yet again, crypto is inherently Evil and I shouldn’t be doing it, … and I understand the risks involved. But, again, the bank is surely looking out for my best interests. That’s very kind of them!

Well, maybe it’s the case of the £[…] I tried to transfer being too large?!

If I make a lesser payment amount will my payment still be stopped?

Due to the increasing risks posed by fraudsters exploiting cryptocurrency we will continue to block any value of payment to merchants/exchanges where we see a disproportionate amount of fraud being committed in order to protect you.

Oh right… That’s interesting. So it’s not the size of the transaction, it’s where the transaction is going?! Urm…

I think I’d like to contact someone to try and sort this out. I’ve done my research and want to use my money for an investment after all!

I would like to make a complaint

If you are unhappy that your payment to a cryptocurrency merchant has been declined and wish to make a complaint, details of how to do this are available on our complaints page(opens in a new window).

However, it is important to note that this will not change the outcome of the declined payment as this has been done in accordance with bank policy.

You have to be joking?! I can make a complaint but it’s “bank policy” to refuse me access to my own money?! 😊

Despite being infuriating that the bank has a policy to stop customers withdrawing funds, I’m a little concerned where this leaves me from a legal standpoint. I have raised an invoice with the exchange and if I cannot pay the invoice as the bank is “protecting” me (clearly from my own stupidity!) who is responsible for that contract not being fulfilled? I suspect that falls on my shoulders for being an idiot watching fiat-savings devalue! Oh dear! Silly me!

Anyway Nick, sorry for taking your time, but I wanted to share this experience as I cannot believe that a (UK) bank would behave this way! Usually I’m an optimist, but recent events have left me rather cynical – clearly I’ve been reading too many of your articles 😉. I’d be very curious to know if any of your other readers have identified similar patterns with their own banks. Or, at the very least if there’s any way of understanding the policies they refer to… As someone who is trusting the bank to hold their money, I’d be grateful for some more transparency!

Thank you for your time.

Kind regards,

J.B.

PS: I enjoy your “history lesson” e-mails, please keep them going. We have a lot to learn from the past (although it’s not a prediction of future performance! 😊).

***

From: J.B.
Sent: Wednesday, 4 August 2021 9:32 AM
To: [email protected]
Subject: FW: I Am Feeling Financially Repressed!

Hello again Nick,

I’m sorry for making myself into a burdensome pen-pal. However, I wanted to write again with an update – the saga gets even stranger!!!

Since the last time we spoke, I took it upon myself to try and get the situation resolved.

For my own interest, I wondered whether this was an issue pertaining to one specific account. I tried making payments from both of my current accounts, ISA and credit-card. After the payment goes through, about 1 – 4 hours later, I’m informed that the payment was declined and returned. Therefore, it appears the “policy” is applied in a blanket approach across all the accounts I hold with the Bank.

I spoke with someone via online chat, who, in fairness was polite and helpful. He confirms that I am indeed having payments declined (just in case I didn’t know that!) and the declined payments were a direct result of fraud-prevention. He gives me the number to call the anti-fraud-team.

This is where the wheels start to fall off….

I call the fraud-team, give them evidence of my identity and discuss I’m having issues with declined payments from my accounts.

The representative confirms this is the case and he sees on the system that payments have been declined by the anti-fraud system.

Great!

I’m then asked “What are the payments for?!”

I explain that they are payments to a trading-exchange…. I’m then interrupted:

“Ahhh…. This isn’t bitcoin is it? Yeah, we get loads of scams with that.”

Now, I don’t know how this happened, but I started to feel an overwhelming sense of guilt and embarrassment at this point. Perhaps it was a combination of me being over-sensitive and fatigued with the situation, but the language made me feel rather silly for even getting involved with Crypto.

To try and plicate the situation, I explained that I was a casual, small-scale trader with an interest in “trading crypto currencies” (I was actually going to buy Ethereum but couldn’t be bothered to tell him that!). I confirmed the payment was intentional and believed it has been incorrectly caught by the system.

I asked how do we resolve the situation and allow the payment to be approved please?

“We can’t approve the payments once they’ve been declined, you’ll have to make them again”

I said, ok, I understand. Thank you. I then queried how’s best to prevent these payments from being declined in the future? The reply I got is extremely worrying:

“Whenever you try to make payments like this again, it’ll be flagged as fraud”

I tried to understand with the representative that if the payment keeps getting flagged, then how do I approve it?

“You just have to try it again”.

We went round this perpetual loop a couple of times, by the second time around I was left feeling particularly silly. Afterall if I didn’t understand the bank’s policy, then it must be my fault!

During our conversation, I noticed there was frantic smashing of keyboard keys in the background. I thought he was ‘correcting’ the system as per my request so that the next time “I tried it again”, the payment would be approved. We exchanged pleasantries and ended the call.

Later that evening, as instructed, I logged into online banking and “tried again” raising a bank-transfer to the exchange.

You can imagine my delight when I get a text at 2 AM!

Hi, it’s [your bank]. To keep your money safe and secure, we have rejected your payment of £[…] to your selected cryptocurrency provider. Funds have not left your account and future payments may also face the same restrictions. You can find out more information on why we have rejected your payments here. 

Apologies for my language Nick, but this is absolutely [word redacted] ridiculous! 

I wasn’t being silly after all and the perpetual loop of “payments like these being flagged as fraud” cannot seemingly be broken! So, in a nutshell, the bank is not allowing me to spend my money! And specifically, not on crypto.

Having had 18 hours to ponder this and think through things with a level-head, these are some (rhetorical) questions and observations I’d like to propose for thought: 

  • Am I being unfair in my frustration? Like all walks of life, scams happen to everything. Is the bank right to protect me as a customer, despite me conducting due diligence and research?
  • Is it overly cynical to think the bank is hiding behind a veil of “protection”, but is simply prohibiting customers to use their own money (again, fiat escaping to crypto)? – It’s easy to do something when it’s dressed up as a good intention.
  • This does not seem to me to be handled as a traditional fraud case – usually, when I buy a bag of crisps from a motorway services I’ve never been to, I get a text message. It explains that unusual activity has been spotted on your account, did you make these purchases, please reply yes or no and the card is unfrozen. What I’ve experienced here seems to be a specific trap where customers can’t get out of and are presented with a completely opaque policy. – the perpetual loop of “try it again till you give up”!
  • Do we think the bank policy makers have done this on purpose or is this just a case of incompetence with something they don’t understand?
  • Clearly the representatives in the fraud team see crypto as dirty and “scam only” – is this a direct result of bank policy makers or just a lack of education?
  • If (all) payments to exchanges are seen as “fraud” who is specifically being accused of fraud?
    • Is it the customer? – If so, what are the long-term repercussions to this? Do I get a black-spot against my name? Is my credit rating damaged?
    • Is the bank accusing the exchange of fraud?
  • This is a worrying slippery-slope of arbitrary policy… Where does it end? Will I be able to buy a second-hand diesel vehicle in 10 years time or will that be against the bank’s ‘climate responsibility strategy’. The unintended consequences of this allow a foothold of more pernicious policies to gain traction!
  • I wonder if there are any [name of the bank] funds which have a percentage in crypto?  Surely the bank wouldn’t be hypocritical in denying customers access, whilst they’re doing it all along!

Sorry for my ramblings again Nick…  I’ve found this whole experience just flabbergasting. My fight hasn’t ended yet, but I’m slowly running out of energy! But that’s what they want I suppose!

Alike my last message, you have carte blanche to do whatever you wish with this information. – I’m not expecting you to use it for anything specific, but just wanted to share just on the off chance this is a unique case! 

Thank you for listening. – I’ll stop filling your inbox!

Take care,

J.B.

***

What a bunch of luddites!

Although I suppose you can’t expect banks to support the financial system that could replace them altogether…

But I agree that it’s a violation of your rights as a customer.

When you first subscribed to Fortune & Freedom, I wrote to you about counterparty risk. This is a textbook demonstration of my claims in that article. That money in the bank isn’t yours in the way you think.

Let’s see what Sam Volkering has to say about all this. And what the solutions are.

As I see it, the attempt to shut out cryptocurrencies only hastens what will happen next by making it even more important to own cryptocurrencies that banks can’t control.


Nick Hubble
Editor, Fortune & Freedom