A number of our customers have noticed that we collected some funds from their wallet on Thursday and Friday (July 8-9, 2021) last week using our Customer Refund Wallet.

We would like to explain what happened, why and how we plan to rectify the situation.

The collections affect users who made a deposit from their U.S. bank account that was subsequently not honored by their bank.

Banks often decline to process deposits if there are insufficient funds in a user’s bank account – and this can happen for many legitimate reasons, often due to simple timing issues.

The reason we collect funds from an Uphold user’s account in this situation is as follows:

It normally takes 3-5 business days for funds deposited from a U.S. bank to settle (i.e., for the money to reach Uphold’s bank account). 

During this short period, we allow the user to trade immediately on Uphold by effectively extending a temporary credit line until we receive the money from their bank. 

If the promised funds do not actually arrive from the bank, Uphold has to take back the temporary credit line it has extended. 

The point is, in this situation the funds being collected do not belong to the user. They belong to Uphold.

This collection process is normally a routine operation. Unfortunately in this case we did not handle the situation well because some of the collections relate to deposit failures that happened several months ago. We should have written to users in advance explaining the situation and the actions we were taking.

We also recognise that the wallet we use to collect failed deposits is cryptically called the “Customer Refund Wallet”, which is confusing. We will be changing this immediately. The reason it is called the Customer Refund Wallet is that it is also used to refund customers whose accounts we have had to close owing to compliance or fraud concerns. 

All outstanding ACH collections have now been completed. We do recognise the confusion and distress that has been caused by the way we handled this situation, and we will be writing to all affected users over the next few days and offering each of them 20% of the amount collected as a gesture of apology. 

We sincerely apologise for the inconvenience and concern this has caused. We will learn from this experience and ensure that it never happens again.

Thank you for bearing with us and understanding the situation.

Simon McLoughlin
President & Chief Operations Officer
[email protected]