Coinbase and Dell: a match made in hell


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tldr;

  • If you buy something from Dell with Bitcoin and they don’t deliver, they will only refund you in fiat weeks or months after you cancel the order.
  • You assume all opportunity costs for their lack of performance.
  • Dell’s support is clueless about bitcoin and incredibly slow.
  • Coinbase is helpless and ineffective in the face of a badly behaving merchant partner.

Unlike other some payment processors, Coinbase apparently does not wait for an order to be fulfilled before transferring payment to the merchant.

Don’t buy from Dell unless you’re prepared to have your Bitcoin force exchanged to fiat due entirely to their incompetence.

Details

My son had a string of bad luck at college where his fiat wallet was stolen and his 3DS handheld gaming console broke. He wanted to continue to play a new Pokemon game, so he went looking for a new 3DS.

Luckily he found one for a great deal at Dell on Cyber Monday (November 28, 2016). Since his credit card was canceled due to the wallet theft, he used Bitcoin to make the purchase.

I was very proud of him for being so resourceful! How cool it was that he used Bitcoin to buy something in the real world that he really wanted.

The original delivery date from Dell was December 2nd. But apparently they didn’t have the item in stock because they kept delaying the shipment. It got to the point where they wouldn’t deliver the item until January, which would be well after my son had come home for the holidays. Basically the unit would sit in the dorm’s mail room until my son got back to school in mid-January.

My son bought the 3DS in good faith with the assumption that it would be delivered in a reasonable amount of time. Waiting almost two months really was unacceptable.

So my son cancelled his order. He indicated to Dell that he wanted to be refunded in Bitcoin with the same amount that he spent. To that end, he got a Coinbase account and waited for Dell’s response.

Unfortunately Dell support turned out to be completely clueless about Bitcoin. Many weeks went by with scant or incomplete responses. Eventually they told my son that they’re going to send a check for the purchase price in dollars. Of course they’re going to send the check to my son’s dorm, so he won’t have access to it until mid-January.

This whole situation is just absolutely wrong. Dell should not have sold an item to my son that they could not deliver in a timely manner. And the refund for their failure to deliver should be in Bitcoin, not dollars.

Since this mess began, Bitcoin’s price has settled around 11% up from where it was. So by sitting on this issue and not paying my son back fairly, they’re basically forcing my son to accept an unfavorable exchange to fiat.

My son is a hodler. He only occasionally buys things. He would never exchange Bitcoin for dollars, but effectively that’s what Dell forced him to do due to their incompetence.

I tried to help my son by contacting Coinbase on his behalf, but they were basically useless. They replied with some stock response about how a purchase is not an investment, and how we should feel good about being screwed by Dell’s perfectly reasonable policies.

I completely understand that a purchase is not an investment. Although I’m largely a hodler too, I do make purchases with Bitcoin fully aware of the tradeoff of future value for physical goods in hand now.

But I also expect that when I purchase an item (using any currency) that the seller will provide it to me in a reasonable time. The original expectation that Dell set for my son when he bought the 3DS was that he would receive it in about a week, which we consider reasonable.

Prior to the sale, Dell did not convey to my son that the item was unavailable and subject to huge delivery delays. If they had, then he would have never bought this unit from Dell. He would still have about 0.3 Bitcoin, which today is worth about $45 more than when this mess began.

So Dell misled my son (either intentionally or through incompetence), fumbled the refund process, and effectively stole about $45 of value from him in the process.

And all we got from Coinbase is the business rationale for why we should be OK with this situation.

What I’m inferring from all of this is that Coinbase doesn’t wait until an order is fulfilled to process payment. Instead Dell has them instantly convert Bitcoin to dollars at purchase time, at which point the customer is at the Dell’s mercy.

As much as people on this sub hate PayPal, at least they offer some level of customer protection by not processing payment until the merchant processes the order. Coinbase on the other hand provides all of the upside of Bitcoin transactions to the merchant, and zero protection for the customer.

Bottom Line

Probably none of this nonsense is new to seasoned Bitcoiners on this subredit. But it has really opened my eyes in regards to buying from merchants where Bitcoin is basically a “second currency”.

In the future I will likely limit my Bitcoin purchases to smaller shops that accept Bitcoin for the right reasons, not just because a payment processor sold them on the idea.

submitted by /u/edonkeycoin
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247 BTC

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