I followed the link to the "real story" on Reddit. It has nothing to do with bitcoins or Localbitcoins, same would have happened if selling Monero, this specific problem is all at the banking side of things, so it's an extremely bad example of "bitpay and coinbase spying on you".

Some traditional payment methods are just unsafe, particularly credit card payments.

I've experienced the same problem with the Norwegian mobile payment system "Vipps" (install a "mobile app" and transfer money from a credit card to a bank account - the provider takes all the chargeback risk) which is heavily promoted and slowly becoming the domestic de-facto replacement for cash - my access to the said system was revoked without any notice. I thought I had simply forgotten the password. Months later I learn that it's because someone had bought bitcoins from me, paying it through the "vipps" solution using stolen credit card information.