Wells Fargo Bans Cryptocurrency Purchases On Its Credit Cards (bloomberg.com) 129
An anonymous reader quotes a report from Bloomberg: Wells Fargo customers hoping to use their credit cards to buy Bitcoin will have to look elsewhere. While putting a prohibition on such cryptocurrency purchases for now, Wells Fargo "will continue to evaluate the issue as the market evolves," Shelley Miller, a spokeswoman, said in an emailed statement. Wells Fargo joins Citigroup, JPMorgan Chase and Bank of America, which limited cryptocurrency purchases on their credit cards in February, citing market volatility and credit risks. Lenders have said they're worried they'd be left on the hook if a borrower lost money on a digital currency bet and couldn't repay. A study conducted by LendEDU last year found that roughly 18 percent of Bitcoin investors used a credit card to fund the purchases. Of those, 22 percent couldn't pay off their balance after buying the digital coin.
Those items don't have 22% default rate (Score:5, Insightful)
If 22% of TV purchasers defaulted, leaving Wells Fargo to pay the bill, you bet your ass Wells Fargo would stop paying for TVs.
The problem is people think they can later resell the Bitcoins in order to pay back Wells Fargo, so they buy more than they can afford to pay back from the paycheck. When Bitcoin prices drop to half of what they were a few months earlier, people can't pay the bill. People don't buy TVs with the thought they can resell it later and thereby pay off the debt.
Re:Those items don't have 22% default rate (Score:5, Insightful)
...and crypto is really easy to hide when you declare bankruptcy or get sued for bad debts.
Re: (Score:2)
If that were what the article said, it'd imply that Wells Fargo should stop issuing lines of credit in excess of what people can repay. Whether the money was spent on Dogecoin or Home Shopping Network kitch, it's spent. The limit is there precisely so that the consumer doesn't spend more than he can repay (even if it is a long way down the road to paying it off).
Instead, what the
Really think their 10,000 accountants can't add? (Score:3)
Do you really think Wells Fargo's 10,000 accountants can't do basic arithmetic? Well Fargo makes money when people use their cards, then pay off the purchases, with interest. Wells Fargo WANTS people to use their cards, as much as possible. That's why they spend millions on marketing, to get people to use their cards.
If Wells Fargo doesn't want their cards uses for X, it's because they are losing money on X. This isn't a company that takes the moral high ground, ever.
Re: (Score:2)
Sure, but how is buying Bitcoin worse than buying commemorative crap on the Home Shopping Channel?
Home Shopping Channel makes even Bitcoin look like a good investment.
HSN users don't plan to resell within 30day to pay (Score:2)
HSN purchasers don't plan to resell the stuff within 30 days at a profit and use the proceeds to pay the credit card bill?*
If HSN had people spending thousands of dollars on commemorative Obama coins and 22% didn't pay the bill, I wouldn't be surprised if Wells Fargo noticed that and either put the screws to HSN via their merchant account, or banned payments to HSN.
* We are talking about Obama fans, so who knows.
Re: (Score:2)
Sure, but how is buying Bitcoin worse than buying commemorative crap on the Home Shopping Channel?
It's pure statistics. WF's numbers show that people who buy bitcoin on their cards are more likely to go into default. Buying crap on HSN is not "better" or "worse", it's just statistically less likely to correlate with WF losing money on the purchase.
I didn't say it's immoral (Score:2)
I didn't say it's immoral for them to not lose money on cryptocurrency.
I said the REASON they don't want to buy cryptocurrency is because they lose money that way, not because they have some moralistic reason.
In other words, they aren't trying to save the env (Score:2)
To put it another way, yes you're right Bitcoin wastes a TON of energy and it's really, really bad for the environment. Wells Fargo doesn't care about that. Of course Bitcoin is used by criminals. Wells Fargo doesn't care, Wells Fargo is criminals. Wells isn't doing this for any reason but one - because they lose money on it.
Jeez (Score:1)
How much did those 22% buy?
Are the banks trying to not allow new currencies?
Why don't they just explain how currency works in education systems?
Didn't anyone read about the tulips?
Re: (Score:3)
Re:Jeez (Score:5, Insightful)
Didn't anyone read about the tulips?
The tulips were zero sum. For every buyer, there was a seller. For every loser there was a winner.
Cryptocurrencies are different because much of the money is drained out of the system to pay for power. It is negative sum, with more (or bigger) losers than winners.
Re: (Score:3)
good (Score:1)
cryptards shouldn't be using credit anyway
Good (Score:5, Interesting)
As someone who's interested in the crypto market and believes it does gave future, I applaud this decision.
Generating debt by buying cryptocurrencies is stupid.
Re: (Score:1)
Re: (Score:2)
Maybe you can. I can't. I can't pay utilities, which is weird, and I can't transfer money from my credit card account to my debit card account. All that if my balance is negative, of course.
I can, however, buy crypto :) which I have tried once, spent the equivalent of 5 EUR just to check.
Still, buying cryptocurrency is very risky and "thou shalt not spend money you can't afford to lose".
Re: (Score:1)
Yes. Commodities and entertainment products have intrinsic value. Different people might have different opinions about how much a game (for example) is worth, but people who buy them definitely feel like they get value from them.
Cryptocurrency doesn't have value even as a currency, it's so volatile the value has changed before the transaction has even completed and the buyer/seller can never be sure which one of them (and by how much) they get screwed.
It's purely speculative, and not in the "stock market al
Gambling? (Score:2)
Generating debt by buying cryptocurrencies is stupid.
More stupid than using your credit card for gambling? Why ban just cryptocurrencies and not all other forms of gambling?
Re: (Score:1)
Re:Gambling? (Score:4, Informative)
Generating debt by buying cryptocurrencies is stupid.
More stupid than using your credit card for gambling? Why ban just cryptocurrencies and not all other forms of gambling?
Wells fargo is not alone [fool.com] in banning cryptocurrency purchases. BofA, Chase, Citi, Discover, CapitalOne, Lloyds, and TD already have bans on cryptocurrencies...
FWIW, I seem to remember visa and mastercard already banned charges from known gambling sites after the UIGEA passed... Also several states have laws against buying securities/stocks using credit cards.
Re: (Score:2)
I wonder if it's because of fraud. Rather than risk trying to buy stuff with a stolen credit card, buy crypto currency.
Re: (Score:2)
Equally stupid, but I would guess that not that many people are stupid enough to do that, whereas too many people bought bitcoin at 20K, sure it would 40K by the end of the week because John McAfee said so.
Re: (Score:2)
Gambling is regulated. Cryptomarket isn't.
In other words, cambling is covered by law, cryptomarket isn't.
Banks would happily ban people from gambling with their credit cards, but my guess is it's illegal for banks to do so.
It's not about debt (Score:2)
Re: What else is prohibited? (Score:1)
Actually, there is a set of clauses in their agreements. One such notable clause is their âoemoralityâ clause (yeah...talking Wells Fargo here). They can decide not to pay for something they deem against that clause.
In the case of Backpage, the credit card companies decided not to allow Backpage to accept credit cards. So, Backpage responded by taking cash, checks, and bitcoin. They one bitcoin portal charged 2x what Backpage wanted for credits if you paid cash.
Yeah, backpage and itâ(TM)s
Re: (Score:2)
So which law(s), specifically, allow/disallow this?
In other news, Banks don't allow you to purchase a number! Guess they don't like you trading one fiat currency for another -- who knew!
Re:What else is prohibited? (Score:5, Insightful)
Re:What else is prohibited? (Score:4, Interesting)
Re: (Score:2)
Any kind of loan is a service a bank offers that comes with terms attached. Nobody is obligated to loan you money, dummy. Does it piss you off that your bank insists you use the money from a mortgage to purchase a house?
Re: (Score:2)
Re: (Score:3)
You realize Wells Fargo is paying for the stuff? (Score:2)
You do understand it's Wells Fargo that's paying for the Bitcoins, right? Also 22% of the time, they never get paid back.
> Image Wells Fargo prohibiting purchases of Girl Scout Cookies, or changes to grocery stores that Wells Fargo doesn't own.
Yes, imagine if I could only use my Lowe's credit card at Lowe's, and not at Home Depot. Or if my Sears card could only be used at Sears, not at Dillard's.
Re: (Score:1)
Re: (Score:2)
I hope that you invested in some guns and ammo as well. If society ever truly falls apart to the point where cash is no longer accepted, nobody it going to want your gold or your bitcoin because they can't hunt for food with it.
for now not good (Score:2)
Re: (Score:3, Insightful)
I don't want a private company telling me what I can or cannot buy with my money.
If you're using a credit card, it's not your money.
Re: (Score:2)
This is true, and a key thing for people to remember.
A credit card is borrowing money from someone else, and paying them at a later time with a touch extra as interest.
It's nothing more, and it's a privilege.
Re: (Score:3)
No, you're not paying for that money. You're promising to pay for that money at a future date. And if the bank fails to collect at the future date, the "money" wasn't exactly "paid for" was it?
Explain to me how the weird fucking language of even putting that into words doesn't give this whole ridiculous pretense away?
He who has the gold, makes the rules. This could have been one of the original commandments, but stone is expensive and carving is hard on the
Re: (Score:2)
Good luck with that one, since the rule is more common and spreadying more rapidly that the article suggests. It's not exactly a competive and profitable selling point -- "you can use our credit card to purchase virtual currencies that have lost more than half of their value since the beginning of the year."
Re: (Score:2)
A debit card is your money. A credit card is the bank's money, with your pinky promise to pay off the balance at the end of the cycle or pay down their loan with interest. Hence, "credit."
Each time this issue comes up, the fact that the rules apply to credit cards manages to slip by a startling number of people who believe that they are f
well that helps (Score:3)
To hell with them (Score:1)
My main credit card's bank treats it like a cash advance. It is a pretty sensible way to handle high risk buying without acting like dirtbag thugs. No one in their right mind would ever knowingly use a credit card for cash advances, but the option is there if desired. I despise payment processors who tell people what they can do with their money and act like de facto law enforcement for things that aren't even illegal.
Re: (Score:1)
I think you mean they tell you what you can do with THEIR money.
Re: (Score:1)
My credit rating is 800 and all my accounts are on full monthly autopay. They are nothing more than intermediaries that take a cut from every transaction. Even aside from that, only a complete idiot thinks that blanket credit denials for an entire category of spending involves any risk assessment.
Re: (Score:3)
Well then I'm an idiot, because I think it's a smart decision to deny all "cryptocurency" purchases. The risk is that you're loaning money to somebody really dumb, to buy something else, really dumb, that is illegal in some places, and will probably become illegal in more places as time continues..
Re: (Score:1)
I may have been unfair in one regard. I mean, yes I was in a bad mood and trolling. But more than that I and a lot of of others simply don't see credit card balance as a loan. Yes, it's right there in the name. That's a very fair point. But...I was raised to never ever carry a balance ever. I do mean I was raised that way. My dad taught me that when I was ten years old. It's outside of my worldview to see it as a loan. And maybe that's unfair of me. I know that I've been fortunate in life, at least economic
Re: (Score:2)
That is good for you. Unfortunately, the bank in question has experienced 22% of people defaulting on their payments because they did not get the anticipated profits and don't actually have any money.
Re:To hell with them (Score:4, Informative)
My credit rating is 800 and all my accounts are on full monthly autopay. They are nothing more than intermediaries that take a cut from every transaction. Even aside from that, only a complete idiot thinks that blanket credit denials for an entire category of spending involves any risk assessment.
FWIW, right now the big banks are also considering a restriction and/or ban on using credit cards to purchase guns as well. Citigroup has already required all of their corporate customers that sell guns limit sales of bump-stocks and high-capacity magazines.
Also, the New York Comptroller is pushing for BofA, Chase and other banks to reclassify merchants that sell guns as high-risk merchants on par with those that sell drugs like opiods. Merchants considered high-risk have to pay significantly more to payment processors and are generally subject to tight limits on chargeback ratios leaving many to abandon accepting credit cards for purchases because of the risk that the "intermediaries" won't pay the charges that their customers will rack up...
Re: (Score:1)
Do you know what kind of specific percentages high risk merchants have to pay payment processors? I didn't even know it was a formal category before just now. Is there a legal reason buyer credit rating isn't used to determine eligibility when purchasing from a high risk merchant, or is it a cultural thing?
Re: (Score:3)
Do you know what kind of specific percentages high risk merchants have to pay payment processors? I didn't even know it was a formal category before just now. Is there a legal reason buyer credit rating isn't used to determine eligibility when purchasing from a high risk merchant, or is it a cultural thing?
A merchant is not allowed by visa/mc to know the credit rating of the card holder. Basically a merchant is required by the visa/mc rules to take payment or deny payment on a non-discriminatory basis (in fact they aren't even supposed to ask for your id).
A payment processor is contracted by the merchant to accepts charge request from the merchant and clears them (usually by contacting the issuing bank through the visa/mc network). The bank who does know the credit rating and charge history of the card hold
Re: (Score:1)
Are you sure about them not knowing my credit rating? Almost all of mine offer FICO rating at a click. Am I misunderstanding what that implies?
I do NOT trust the 22% argument. Firstly, think about how aggressively credit card companies push balance transfer offers. Credit card companies aggressively court customers who literally can't pay off their credit card bills. Does the 22% thing sound plausible in that light?
Secondly, where is this 22% coming from? Are these people established customers who lost all
Re: (Score:3)
If you want to take a cash advance on your card and use that to buy crypto, you could, but cash advances are not only subj
Re: (Score:1)
Your first point is something which all of us should very much keep in mind when dealing with almost any business. All too often I myself forget it. It is wise to do business solely by selfish numbers. If one wants to do good, find a reputable charity. That said, I think the person you're replying to might have been talking about credit unions.
Wells Fargo stories (Score:1)
Wells Fargo bank teller stole nearly $200,000 from a customer [businessinsider.com] (Sept. 29, 2017)
Should you sign up for the class action lawsuit against Wells Fargo? [newsobserver.com] (Sept. 29, 2017)
Senators have harsh words for Wells Fargo head [mpamag.com] (Oct. 4, 2017) Quote:
Wells Fargo (Score:1)
A bunch of feckless cunts. Fuck DeNiro.
Re: (Score:2)
it is your money and you should be allowed to spend it how you like.
completely WRONG. a credit card is you spending their money through a line of credit. You are asking them for a loan. If you want to buy crypto currencies you can, you just can't use their money.
Re: (Score:2)
Re: (Score:1)
Re: (Score:2)
In case you didn't notice credit card companies pre-approve the loan amount to you - that's what's called a credit limit. It shouldn't matter what you spend that credit on.
If credit card companies are worried about what you're spending your pre-approved credit limit on perhaps they approved you for too much credit in the first place. Shame on them for being greedy fuckers.
Re: (Score:2)
Re: (Score:2)
It shouldn't matter what you spend that credit on.
Yet it does, contrary to your opinion of how the lending industry should be run. Loans always have conditions. If you don't believe me, go take out a mortgage loan and try to buy a new car with the money.
Makes sense (Score:4, Interesting)
I can already smell the scam: Get a credit card, buy cryptocurrency, tear up credit card and refuse to pay. Technically, all you have is 'tokens' that're not legal tender in any government. They are technically worthless, so they can't be seized by a court.
And even if by some twist of logic, some court did decide to rule Cryptocurrency isn't a token, but it is in fact a legal tender, or commodity, or whatever.. still, you're going to have a real tough time trying to extract cryptocurrency from any individual.
The normal collections methods are not going to affect cryptocurrencies in any way, shape or form. In REALITY, cryptocurrency coins are literally NOTHING.
But I imagine a clever criminal will find a way to mask the purchase to make this work out, anyway. So .. no solutions here, nothing more than a: Good luck with that!
Re: (Score:2)
Re: (Score:2)
Re: (Score:2)
Re: (Score:2)
Bitcoins have been seized by the cops already, though. Cryptocurrencies are not a magical end-run around the law like you seem to be implying.
But they are. In the correct hands, with the correct security precautions, your cryptocurrencies can be rendered inaccessable to all but the person who possesses a pass phrase or other 'in mind' key that will unlock whatever storage contains the cryptocurrency wallet.
These cases of seizures of cryptcurrency we've read about.. fools and their money parted cuz fools can't properly secure their wallets. You never hear about the ones that successfully stash ill-gotten gains into cryptocurrency.
Ultimately, wha
There needs to be a law... (Score:2)
With various companies over the past ten or so years seeing fit to pick and choose what legal products people will spend their own money on, there needs to be a law telling credit card operators, banks, and companies that pretend to be banks (I'm looking at you Paypal) that they may not disallow users from buying otherwise legal goods and services with their cards or accounts. This always seemed like the way things always should be, but now we have control-freak busybodies taking it upon themselves to deci
Re: (Score:2)
This always seemed like the way things always should be
There of course lenders that ask few questions. They are called loan sharks. You are free to make use of them if you think they offer a better, safe transaction than your credit card.
Re: (Score:1)
Re: (Score:1)
That's fine (Score:1)
Cash Advances in Las Vegas (Score:2)
Have they stopped those too due to the risk of default?