HN Explorer

Cautionary Tale: Stripe force-closed my 9 year account

61 points by jjoe ↗ HN
After more than 9 years of using them for my SaaS business, Stripe has decided to close my account for the following reason:

"""Unfortunately, after conducting a further review of your account, we’ve confirmed that your business presents a higher level of risk than we can currently support, so we won’t be able to accept payments for XYZ LLC moving forward."""

This is after I've made drastic changes that help reduce chargebacks and asked for a review.

I've faded all posts and complaints here against Stripe thinking that people must be up to no good. And that it can't happen to me...

32 comments

[ 3.8 ms ] story [ 102 ms ] thread
smca
Hey Joe—what's your business's domain? I can't find any details via your profile other than cachoid.com which doesn't resolve for me.
jjoe
Can I send it to you privately?
smca
Why not publicly? But yes: my username@stripe.com. You mention something about reducing chargebacks, was your chargeback rate high for a particular reason? If so, you know we can't support businesses with excessively high chargeback rates. If you exceed the chargeback thresholds set by card networks, they can place you in a "dispute monitoring program" and the fines imposed on businesses can be very high.
jjoe
unixy.net
smca
I'm happy to take a look at this for you. I also won't share any more details on this post unless you want to provide them yourself.

I will reiterate that we'd like to grow with any user we have (particularly a long-tenured one!). However, we can't support businesses with excessively high chargeback rates, no matter what. Keeping chargebacks at an acceptable level is a financial obligation for every business: https://stripe.com/docs/disputes/monitoring-programs.

jjoe
I hear you. This is why I've gotten on top of this. I've essentially turned Stripe automation off in my system. So each and every customer wishing to go with Stripe for payment is fraud-checked and dd'ed.
brianwawok
What kind of chargeback rates were you talking to get in trouble? 10%? 5%?
smca
Using Visa monitoring program as an example here, high dispute rates thresholds are as follows: 0.75% is an early warning, 0.9% is standard and can lead to fines, 1.8% is excessive. Dispute counts and other signals are also taken into account, not just the rate. https://stripe.com/docs/disputes/monitoring-programs#vdmp
brianwawok
That’s rough when some percent of users will chargeback just out of regret for the purchase without even contacting the merchant. As a SaaS app on stripe the disputes are virtually unwinnable.
smca
I don't disagree—chargebacks can be abused by end-users, especially if you don't make it easy to get a refund or your communication is lacking. That being said, Stripe doesn't own any part of the process, we're an intermediary that communicates evidence and outcomes between a cardholder and their bank. The same painful fraudulent chargeback patterns exist with any PSP.

So, we make it as easy as possible to submit evidence. The cardholder's bank decides whether the chargeback is won in favor of the business or not. The card networks are aware that "friendly fraud" is increasing too, hence the introduction of Compelling Evidence 3.0 (more to come on this): https://support.stripe.com/questions/how-does-stripe-support....

brianwawok
I do like that a lot (CE3). Seems smart.

Is there a way in the stripe dashboard to see my chargeback rate? I think I’m closer to .1% than the .75% you said is a problem, but hard to know 100% how you are calculating it on recurring revenue.

figassis
You can make sure to always collect enough evidence such as agreeing to TOS (including date, ip/location), invoices, providing easy refund paths as well as a way to demonstrate usage, etc. you can also automate dispute evidence submission. But the business model is often what determines whether you’ll have higher cb rates.

With a SaaS, maybe try a trial period and monitor is the customer actively uses the service, and make sure you notify them before you start charging. Often I signup for a trial, find out the service is useless but forget to cancel. That first charge is a prime cb candidate.

sschueller
"Why not publicly?"

Because HN is not your support forum.

smca
The post was made here with no detail, making it look as though Stripe arbitrarily closed an account without cause. If you choose to post here, you should share details. If not, you should use our support channels (chat, email, phone, and @stripesupport on Twitter).
southernplaces7
>If you choose to post here, you should share details. If not, you should use our support channels (chat, email, phone, and @stripesupport on Twitter).

An unhappy Stripe user has zero obligation to do any damn thing you prefer for the sake of helping you with your PR. They were counting on you for a vital service and you failed to continue providing it through a very abrupt termination of that service with no further internal recourse available. Despite this they should keep their complaints private unless they detail them in just the way you'd prefer, where you prefer? Fuck outta here...

Stripe already has a burgeoning track record of shitty behavior to users from what many of us have seen reported here and elsewhere, but this smugness from one of its own staff on a third party site is a nice bonus.

porkbeer
i may be wromg, but I am just going to say whats on everyones mind; Seems a bit sus you want to bash a business without persuing legal remedy, publiclly, but not disclosing your own business.
runnerup
What legal remedies do you think might be available to a Stripe customer who is refused service by Stripe?
jacquesm
> This is after I've made drastic changes that help reduce chargebacks

You may not have reduced them enough to be eligible for service by Stripe. Chargebacks are a really nasty problem and no business is large enough for Stripe to risk their own: they are obliged to kick you off if you can't stay under a certain chargeback rate. The same goes for any other PSP.

jjoe
> You may not have reduced them enough to be eligible for service by Stripe

Not really. I made the changes while my account had payouts and payments paused by Stripe. I haven't been given the chance to show Stripe we take this seriously.

jacquesm
Well, if you did take it seriously then you would have reacted well before Stripe paused your account. I've had a business relationship like yours with another PSP (like Stripe) for many years and I was watching the CB rate like a hawk to make sure we never even got close to being labeled 'high risk'. This can be very hard, especially when customers engage in soft fraud, where all of the burden is placed on the merchant. There are a ton of things you can do to ensure that your rates are as low as they can be but even then it might simply not be enough. In your case I hope that you will be able to push things down to the point where you can continue your business and I also hope that Stripe will be able to work with you to determine if and if so under what conditions you will be able to work with them. But if Stripe can't then you have a much larger problem because every other PSP will have the same basic criteria and you'll end up with really low repute PSPs if you can't satisfy those. Typically those are the property of other parties that are unable to get normal processing in line so they make their own throwaway PSPs that get blown up in due course.
jjoe
The account has been paused for an obvious reason. I made it clear from the get-go: it's due to chargebacks. And yes it falls on me.

But if any of my long term clients were to genuinely mend their ways about whatever issue that affects the relationship, I'd definitely give them a second chance.

jacquesm
Here's to hoping then. Regardless of the outcome: consider setting up an entirely different payment route, one that does not have the the chargeback possibility and verify your customers identity by first having them pay a small amount (or even their first invoices) until the relationship is established.

If you're B2C then that may be a lot harder.

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mvdtnz
Yet another post complaining about Stripe's policies while being vague about the nature of their business. It's a meme at this point.
lproven
> while being vague about the nature of their business

Oh good, it wasn't just me.

grahamgooch
Do you sell to businesses? I.E., b2b ot b2c?