Not upheld: unreasonable verification requirements and unfair treatment complaint against CD Payments Ltd trading as Coinbase

Decision detail

Summary

Mr W complained to the FOS about Coinbase requiring him to complete additional identity verification, including facial recognition, after he had already opened and verified his account. Mr W did not have the necessary equipment and purchased a webcam to complete the verification process, then requested reimbursement from Coinbase. The ombudsman found that Coinbase was entitled to update its verification procedures as part of its regulatory obligations under Know Your Customer requirements and that the facial recognition requirement was a fair and proportionate security measure. The ombudsman concluded that Coinbase was not responsible for Mr W's choice to purchase a webcam and that firms are entitled to update their procedures over time. The complaint was not upheld, and no remedy was ordered.

The Ombudsman's reasoning

The ombudsman concluded that Coinbase was entitled to update its verification procedures as part of its regulatory obligations under KYC requirements. The facial recognition requirement was a fair and proportionate security measure to protect against fraud and account takeover. While the requirement was new, firms are entitled to update their procedures over time, and the fact that the process changed does not make it unfair. The ombudsman did not consider the requirement to create an unreasonable barrier, as Mr W was able to access his account once he completed the verification. Coinbase was not responsible for Mr W's choice to purchase a webcam; the business required facial recognition but did not mandate specific equipment. The ombudsman noted that Coinbase could have responded to the complaint sooner but did not consider this a mistake regarding the verification requirements themselves.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website