Stripe is about to refund €147k worth of payments to my all of my customers
I have been running 2 eCommerce stores with Stripe, where we have shipped physical products out to our customers, from a local warehouse, which have been delivered within 5-10 business days of the order being placed.
After about a month of running the stores, we received a notice about Stripe having to conduct a manual review on our account, and thus payouts would be frozen.
We submitted the requested info, for both accounts.
In the case of account 1 (which has approximately €101.000,00 on hold) led to an initial closure and a 120 day hold. But then later a notice about refunding all of these payments back to the customers.
In the case of account 2 (which has approximately €46.000,00 on hold), Stripe deemed that we’ve been performing unauthorized charges on the account, and that they will have to refund all the “affected charges”.
Now in the case of account 2, there are no unauthorized charges, all customers have received their products and we have tracking numbers to prove this.
In the case of account 1, we requested a further review and got the reply that our money would be held for 120 days, and that “the affected card payments in 5 business days from the account closing day,” with a link referring to all the charges in our dashboard.
Obviously we also have tracking numbers to prove that literally every succeeded payment from account 1 have received their products, and we have submitted this to Stripe as well.
The reason for closure of both accounts is that our business is “high risk”. I’m not sure what this really means in our case, as we just sell consumer electronics in the $100-200 price range from a local warehouse (no dropshipping or anything like that).
Effectively what I can take away from this, is that Stripe is about to refund all the payments from my customers which evens out approximately €147.000,00.
When calculated in that stock has already been paid for and sent out, this translates to about a total net loss in the range of €250.000,00 for our business.
I’m not sure if this is a result of Stripe’s automated fraud protection systems, or if an actual human has decided that it’s adequate to try and refund €147.000,00. Worth of customer payments that have already received their order.
Regardless, I can understand an X day hold of the money, although it is annoying, but as far as I can tell, it most likely is not legal for Stripe to actually just refund customers who have already received their orders? If the payments do end up being refunded, we will of course be taking legal action and contacting media outlets in efforts bring this story to the public eye, and to hold Stripe accountable for this.
Has anybody had a similar experience where they lost over 6 figures worth of payments, basically for no good reason?
196 comments
[ 3.4 ms ] story [ 264 ms ] threadSupport (email, phone) is a joke played by people who selectively read your question and regurgitate a script, short of posting on HN your just not gonna get anywhere useful with Stripe :(
I have some webshops serving local markets and transitioned to a local provider (mollie) after reading many posts like this. I found their APIs and documention, for which people always praise stripe, to be just as good and the support is better.
works out perfectly for stripe
EXCEPT, what I really wish is that large companies like STRIPE stopped treating gross account mismanagement cases as small frequency regrettable but acceptable outcomes.
How can any of us sleep at night with these deaf capricious overlords managing our important information & services?
It is getting dystopian. Welcome to Brazil (the movie).
Sometimes you get lucky and reach a helpdesk droid, but they’re not permitted to deviate from script. Posting to HN can put you in contact with someone who actually is able to do independent thinking, and take action too
HN could ban posts asking for support, but then people don't get support and companies have even less incentive to create sensible support systems.
It's embarrassing for Stripe to have HN flooded with support requests, and that's a good thing.
As much as this is a request for acutal support from Stripe, I also do hope that readers who are in a business of taking online payments will become fully aware of the risk of using Stripe, since I weren't (and now I'm in a situation of possibly losing 250k).
Then don't.
Stripe might be (or not, the laws can be crazy) in the wrong here, and it would be interesting if you take them to court or take a legal action to see what their reaction is.
Really, I don't see what this contributes to the discussion, I would assume that if the OP was able to sign up for their own merchant account they would have done so. To process six figure sums on someone else's merchant account is usually for a reason other than convenience because the fees are high enough that you will want to cut out that particular middle man as soon as possible.
And yes, it's a better solution than Stripe, assuming you are not a high risk merchant, in which case banks won't touch you.
Next time I need a payment provider, I'll probably do that, collate the provider names, check out the recommendations, and of course like you avoid the ones I've had bad experiences with before, which are too many :/
If I share accurate info about what and how we sell things, It's very easy for opportunists and competitors to undertake us in this specific project while our processing solution is down temporarily.
What I will say though, is that we're not speaking vapes or anything borderline, more like kitchen and household appliances, and so on.
This is nonsense, sorry. It really sounds like you're selling something Stripe would understandably want nothing to do with.
It says all. You are most likely a scammer or criminal.
Search below for response from 'caitb' who works at Stripe:
> I work at Stripe, and we're already in touch with OP.
> We don’t comment on specific user cases for privacy reasons. As a reminder, facts presented in a public forum can often be misleading or untrue.
Along with:
> We were in touch with OP over email before this post was made.
> We know that confirming we review cases posted here provides an incentive for bad actors to post.
> We wish that weren’t the case–but we do pay attention to both internal case reviews and to any public complaints where users are having a bad day (or, in some cases, profess to be having a bad day).
And the resolution posted by OP below was:
> UPDATE : Stripe has just closed our account without further notice and refunded the whole balance.
So, this story is that Stripe just protected a whole bunch of people paying around $100 for scams worth up to $250k or so.
As an exercise everyone should spend some time on r/tifu, r/ChoosingBeggars, r/antiwork, etc and play spot-the-fakes, particularly when some story that hits the front page of reddit sounds very appealing to your biases.
How do you get customers if you tell nobody what you sell?
We all want to believe you and help out, but you're not doing us any favors.
This is such a lie
Yeah, right.
Now we know why you got banned - you're a scammer.
Frankly I'm sick of seeing these articles on HN. You're not having technical issues with Stripe, you're having legal issues. Get a lawyer and get off of HN.
However, there have been so many of these recently that we're tweaking our approach to downweight them more—maybe not quite as much as non-YC-related cases, but more than we used to. That's because we're starting to see a community allergic reaction to the high quantity of these, and that's as close to a hivemind verdict as we get here.
Recent explanations:
https://news.ycombinator.com/item?id=34190090 (Dec 2022)
https://news.ycombinator.com/item?id=33745192 (Nov 2022)
Good docs and a sane technical API make my life as a dev easier.
But I'd rather use a payments vendor that I can trust not to deep 6 my company a year later.
Any recommendations? Ideally they still have good docs and a sane API.
As the business grew, they have contacted us a few times for risk related reviews and asked us to submit supporting documents. But they don't hold the funds first (unless you don't comply I guess) which I find a better approach on how to treat your customers and establish trust.
Microsoft and Amazon get this, with differing strategies. Google and Stripe seem to not get it.
Sure it doesn’t scale for the long tail, but it’s a necessity for any large enterprise account. Heck call it “stripe premium support” and charge an additional fee.
We also offer premium support if you need a dedicated support team for your business (https://stripe.com/support-plans).
When you introduce elements of risk (where fraudulent actors try to game our processes) it can affect how we speak about things.
I ran a business on Stripe before I joined Stripe and feel much more comfortable trying to get support here than at other larger orgs.
You look at the 2-3 bad stories posted on HN every month but ignore the hundreds of thousands of companies using Stripe that don't have any issue.
Having your company destroyed because an automated system flagged it is an unacceptable risk.
With AWS, I can pay for a support contact and be confident my company won't blow up.
Stripe? Google? Not so sure
You've read 5 stories saying it's hard to contact support at Stripe, and chose to ignore the fact that hundreds of thousands have NOT raised this problem.
On top of that, if you follow the development of those stories, it usually becomes apparent that the account was restricted for a very good reason.
Its frustrating. While I understand, businesses do not want to give hints to scammers, there should be some way for a person to get details. For small businesses, being given the silent treatment while their livelihoods are at stake feels like bullying.
Those stories are always one-sided. It's very easy to believe that those 150K are indeed fraudulent, especially when the OP is so elusive.
I need to see some horror stories about authorize.net or the big banks for comparison. At least the banks have staff you can talk with.
> At least the banks have staff you can talk with.
Some banks do, some don't. I posted two days ago of a problem with a bank that turned out to have only useless staff you can't really talk with when there's a serious problem, unless you post to social media: https://news.ycombinator.com/item?id=34234259
Ironically my comment was on another Stripe customer complaint HN article. The cash amout on that was even higher than the current one, $400k. Fortunately the issue with Stripe did get resolved, but the customer had to make their complaint public first and get it noticed by upvotes, before it was dealt with.
Maybe start with Stripe because it's easy but use only the very basic functionality. If the business starts to grow, add an old style bank, one with humans to talk with, and move all the transactions there. Then say goodbye to Stripe.
Could that work?
In the last year or two I noticed they have become more and more arrogant. I am talking early/mid 2010’s Facebook / Google arrogant.
I understand stripe is a successful company and it’s not easy to infuse a culture with so many people. But I surely hope they can turn this around.
All these anonymous posts might as well be competitor's marketing strategy. I know that maybe in Stripe's case it might be all true, but where are we going with all this blind one-sided outrage?
All the other low barrier to entry, no underwriting payment processors are either crypto scams or known to have poor support and randomly hold your funds (PayPal, Amazon Payments, etc).
Companies in distress due to mistreatment by a financial services provider should be able to get the support they need without having to face the additional problems of a permanent stain on their public reputation that may not be their fault at all.
Second step is to collect all the information you currently have about verified deliveries, returns, etc. Forward these to your lawyer so they can answer any queries from Stripe council.
Then wait until they either fix the mess or indicate that it's time to escalate to actual legal action.
Also for the love of God (or whatever is holy/whatever in your religon) get the fuck off Stripe.
I do not want to defend Stripe (I hate all that kind of companies), but there are so many unclear details here. - What were those unauthorised charges? - What are exactly the goods you sell? - What is the time spread across those transactions were done? Is that one business day? a month? quarter?
I really cannot conclude stripe is shitty based on this post.
If everything is so clear and arbitrary like it seems in the post, is a no brainer to get 500k back in a court of law. So, relax.
Stripe is now "considering" refunding all these customers, while holding 150k of our generated revenue.
Due to the products being bought and shipped, (and not even factoring in marketing costs) this easily equates to a total net loss of 250k for our business.
One thing that people that use services like Stripe really ought to do is to make sure they understand exactly what the position is that they maneuver themselves into, it looks like a lot of this is driven by wishful thinking rather than understanding.
Legally speaking Stripe has the option to refund a customer during the hold-back period at their discretion. Technically you are not supposed to send any physical goods until you have received the payment. If you do so that is at your own risk.
The moral of the story: do not enter into an agreement without understanding the terms and the practical implications of those terms when applied to you and the relationship with your customer as well as the transactions themselves if you don't want to be surprised by some of the potential outcomes.
Also: note that Stripe has all kinds of technical countermeasures in place to detect money laundering and other terms violations and it may well be that everything looks totally above board to an outsider whereas they have valid reasons to deny a party service.
The difference between a payment service provider and a payment gateway is substantial, in the first case you likely won't ever see the customers card details other than what is required for shipping, in the second you will have all of the data including CVV and expiry and you will have to deal with the associated overhead.
Waiting until funds hit your bank account is cash basis accounting and even in that case, I am not sure how having a third party like Stripe holding the money affects things.
You buy the product and ship it, costing you $75k. Your balance is now at $25k.
You expect revenue of $150k from customers. This would take your balance to $175k with net profit of $75k.
But Stripe refunds the customers, and the revenue never comes. Your net loss (excluding labor, marketing etc.) is now either $75k (the money that is no longer in your account) or $150k (expected balance vs. the actual balance).
It doesn't make sense to take the sum of those two. Your expectation was that the incoming revenue would cover the procurement and shipping.
So it's not just an estimate. The money is not imaginary, it has already been collected from the customers.
This is double counting, and not how you calculate net loss.
You can't take both a negative and a positive cash outflow, then make them both positive and add them together.
Companies magically going out of business after getting their money is one of the reasons these hold backs exist in the first place.
The reason for closure of both accounts is that our business is “high risk”. I’m not sure what this really means in our case, as we just sell consumer electronics in the $100-200 price range
No judgment here, but is it sex toys? Because US-based companies are just really weird about that stuff and treat it as crime-adjacent for no real reason other than historical prejudice.
EDIT: you answered my question while I was writing it. I think you'll get better responses if you specify that it's kitchen/household goods.