After having an experience and a half with my bank this week, I thought I would reach out to Reddit with a throwaway account to vent in hopes that this will help someone in a similar position.
So, a little background: I am a Canadian studying at university in Toronto, ON. I bank with Bank of Montreal and have for a couple of years. I do freelance development work in the crypto/fin-tech industry and as a result, I’m mostly paid in BTC. This has never been a problem since whenever I need local currency, I just sell off some BTC through desks like Coinsquare and Coinberry, or if I’m in a pinch, through a verified buyer on LocalBitcoins and the CAD is sent via Interac e-transfer.
I’ve been doing this for a while and never run into any issues. I have a Mastercard with BMO that I use for regular, reoccurring purchases and occasionally flights/Airbnbs if I travel. Whenever I need to pay off my credit card, I’ll sell off some BTC for CAD and pay off my card with those funds. However, I typically don’t keep a lot of CAD in my bank account just in case BTC spikes - usually less than $500 at a time.
Since heading back to school, I decided to sell off some BTC while the market was stable (at ~$10,300 US) so I had some CAD to pay for textbooks and any other expenses. This was last weekend, Saturday, and since I wanted the funds quickly, I opted to sell to a buyer on Localbitcoins.
I found a buyer who was looking to buy slightly above market price and had a good series of verifications and reviews. Seemed legit. I opened a trade for $1550 CAD with a user called bittor (https://localbitcoins.com/accounts/profile/bittor/) with my Interac email address to receive the funds. I promptly received an email notification from Interac letting me know that I had received an e-transfer for the right amount and that it was automatically deposited to my bank account. I logged into the BMO app and checked, and it had been deposited successfully to my account. Cool.
I logged back into LocalBitcoins and released the BTC escrow to the user since I had received the CAD funds, and the trade was now completed. I even left some positive feedback. Now that I had some cash in my account, I took the opportunity to pay a couple bills. Monday rolls around, 48 hours later, and I go to buy a coffee on the way to class; my Mastercard declines at Starbucks. I try my debit card, and that also declines. I tried logging into the BMO app, and see this: https://i.imgur.com/RwpLFMK.png
I brush it off and decide I’ll give them a call later and sort out whatever is going on.
Later I give BMO a call. After going through some basic account verification questions, they told me that my account had been flagged for fraud and that I would have to come into the branch to deal with it. I remember thinking “Great... I’m sure this will be entertaining”, dug out my passport for extra ID, threw it in my backpack, and headed over to my BMO branch to sort this out.
Before we jump into this, I want to note that I have a pretty good credit score and always pay my Mastercard bill in full. I have a solid financial history and a relationship with BMO and even maintain a TFSA investment there.
When I got to the branch, the rep notified me the e-transfer I’d received from the Localbitcoins buyer was flagged as fraud by TD (the buyer’s bank) and was clawed back from my account. As a result, once the e-transfers were reversed my bank account fell into overdraft to the tune of ~$1280. I was told I “owed” the bank this amount before they could reinstate my accounts and debit card. Additionally, since I had used funds from that transaction to pay off my Mastercard, they also froze my Mastercard and flagged it for fraud.
The bank rep proceeded to ask me a series of questions for a form which she told me would be sent to the fraud department to help sort this out. Most of the questions were straight forward - what was the transaction for, who was the sender, what were the terms of the transaction, etc. However, even after explaining how LocalBitcoins works, in which you don’t fully know the other party participating in the trade, she kept asking me over and over if I knew the sender, almost as though she was convinced I wasn’t telling her something. It was as soon as I mentioned that the transfer crypto-related that her overall approach changed. I suddenly felt as though it was more of an interrogation than her trying to help my situation. I assured her that I do not know the sender personally and that I was the victim of an Interac e-transfer scam.
I asked her what measures the bank has in place to prevent against e-transfer fraud, and she told me something along the lines of “Realistically, none. Only accept money from people you know”. Just that. What do I pay bank fees for?
I then asked her how I can restore access to my bank cards and credit card, since I need money to survive, like anyone else. mShe responded by telling me that until the ~$1280 was “paid back” to BMO, that I would have no access to any of my money or credit cards. She offered encouragement and advised me to contact the Police and file a report (another user on here pointed out that they usually don’t investigate thefts under $2,500 so I won’t even bother) or to get in touch with the buyers to sort it out with them, but that there was nothing she could do. She also told me that due to this, I would be banned from the Interac system for at least 6 months.
Annoyed, I went home and did a little bit of digging. Pretty quickly, I found this thread (https://www.reddit.com/r/BitcoinCA/comments/d1bc2q/got_scammed_for_460_is_there_anything_i_can_do/) in which someone else was also scammed by the same person in almost the same way.
The tl;dr there is that some guy gained access to the user bittor’s LocalBitcoins account, as well as another individual’s TD bank account. He conducted the trade through the stolen LocalBitcoins account and sent the Interac e-transfer from another individual’s bank account at TD. I’m assuming that when the owner of the bank account noticed the e-transfer to me, they reported it to the Fraud department at their bank. This is what led to my bank reversing the transaction and putting me in the situation that I’m in.
I opened a support ticket with LocalBitcoins to report the user. After a little while, a support agent gets back to me and told me they’ve suspended the user’s trading account and frozen their wallet. Okay, cool. They told me they’ll need proof of “payment misconduct” to proceed. So, okay. No problem. Makes sense.
The next day (today), I contact the same bank rep and come up to update her on the latest: that I’ve contacted the site that managed the trade, and that they need proof of “payment misconduct” to proceed with getting the user banned (and maybe getting back my BTC? I’m not hopeful but you never know). I asked her if she would be able to give me a printout showing where the payment was received, and then where it was reversed. She told me that this was “privileged information” that she couldn’t give me. I asked her how that can be since it pertains directly to a $1550 loss from a scammer that’s left me without access to any of my money or credit cards. She tells me all I need to send is the Interac e-transfer number and that’s enough.
On hearing this, I’m reluctant, since a screenshot of the e-transfer confirmation email isn’t going to prove much of anything, apart from the fact that I did initially receive the transfer. I asked her again if there was some sort of document or even just a screenshot of a statement showing what happened so I can try and recover some of my losses, and she bluntly told me that if anyone needs any more information than the e-transfer email, then to call her. I reluctantly left with that information and passed it on to the Localbitcoins support agent. I’m now waiting to hear back from them.
So where am I left? With a $1500-sized hole in my pocket. Until I hear back from the LocalBitcoins support agent, I’m not sure if I can recover the BTC either. They did mention that they had frozen the user’s wallet but did not mention whether there were any funds there.
I understand that a lot of this could have been avoided if I had kept a higher CAD balance in my account. I would have gotten back access to my account, just minus the $1500 and would at least be able to use my credit card, go out for food and pay for my school expenses. I’d still be in the same boat, losing both the BTC and the CAD. Either way, I get it. Mistakes were made, and you’ve gotta learn from them, right?
What annoys me about the situation is I feel as though BMO’s bank reps could have done a better job of helping out a customer who’d been ripped off. Especially since it happened through Interac, which even is dubbed as a “secure transaction” in the footer of the email you receive when someone sends you money. I find it strange that BMO doesn’t have any protectionary measures in place for blocking “fraudulent” e-transfers, or any sort of policy for protecting customers in the event of something like that getting by. If indeed the scammer had gotten access to someone’s account at TD to send me the e-transfer, they shouldn’t have been allowed to get far enough to send me a transfer and have the funds show up in my account, and then let me spend those funds for two days before clawing it back.
So here’s what I’ve learned from this experience:
- If you’re going to sell BTC on LocalBitcoins (casually), make sure to check the user’s profile for more than just reviews and verifications. Check when those verifications happened and compare that to the dates from some of their positive reviews. Are the reviews from three years ago, and verification says 4 days ago? That will tip you off that something’s up with that buyer, and that they should be avoided.
- Another tip is to make sure the name on the e-transfer matches the verified name of the buyer on LocalBitcoins. I didn’t notice that on the e-transfer, the sender’s name was different than the name on the LocalBitcoins account. To be honest, it wasn’t something I was looking for. As I said, I’ve had a history of pretty good experiences with OTC deals online. My new belief is that if they aren’t name verified on LocalBitcoins, don’t buy from them. And even at that, still, be skeptical.
- If you want a CAD e-transfer from crypto and can wait a day or two, use Coinberry. Their e-transfer withdrawal processing time is usually 24 hours or less, and it comes in just like any other e-transfer. If you can wait a day for them to send it, I’m pretty sure they do it at a 0% fee.
- If you’re looking for a larger amount or don’t use Interac, Coinsquare is a great choice as well. They’ll deposit the CAD straight to your account via direct deposit, and usually process within 3-5 days. I often use Coinsquare, and their support was top-notch when I reached out to them about this situation and asked if they could rush my withdrawal. They were more than happy to help. As a result, I should have some money coming in Monday to bail me out of this mess while I wait on LocalBitcoins.
I’ve come to terms with the fact there’s a good chance my $1500 is gone. It happens. It’s an expensive mistake, but it happens. I’m hoping there may be some luck recovering the Bitcoin from LocalBitcoins, but I’m not holding out. If I do get anywhere, I’ll come back and update this post!
How do you think should I proceed? Did my bank handle the situation properly? Did I? Do I have any grounds to get the CAD back from BMO/Interac/TD? Is it worth pursuing with the police for $1500 bitcoin trade? I’ve gotten recommendations to open an account at another bank, and slowly move my money over there. Apparently, BMO is not great with handling anything to do with crypto, and my experience this week proves it.
As digital currency becomes more and more prevalent over the next few years, I’m sure further circumstances like this will pop up. I hope this might be able to help someone who finds themselves in a similar situation or will help you avoid ending up where I am.
