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Stripe is wrongly suspending accounts
context: We are a SaaS for martial arts academies located in Europe. We are using Stripe for our payment integrations and all our academies have their own account connected to our platform using Stripe Connect (standard), since the last couple of days 2 accounts have been suspended due to "suspicious activity".
Stripe has implemented a new fraud detection system that is clearly flawed here. These customers are small gyms in local areas with accounts active for the last 11 months without no issues whatsoever, now all of a sudden they were both suspended (and payout blocked) due to suspicious activity. The suspicious activity is disputed payments, which for SEPA DD (the main payment method used) can simply be that the customer has no money in the bank account.
The Stripe response so far has been vague, to say the least. Has this happened to you?
I believe Stripe is a very good product and we have had no issue with them until now, but this situation is deteriorating trust very fast. Do they literally have the power of taking your funds hostage over a "suspicious" fraudulent activity that is clearly due to a bug in their automatic detection system?
Please let me know if you know someone that can help us here
- m0llusk 4y agoYou should research this more. Stripe is not a good product because this problem is widespread.
- Klonoar 4y agoStripe is a fine product; the loudest complaints just rise to the top. They have an incredible number of customers just going about their business and not experiencing issues like what’s in this thread.
- superkuh 4y agoIf only there were a system to transfer money between two people that didn't require a trusted third party...
- websap 4y agoAnd be reversible?
- web3isgoing 4y agoYes, if the application and its users demand it. Reversibility is possible in peer-to-peer and decentralized payment systems. But not every app needs reversibility and the centralized intermediaries that come with that.
- websap 4y agoWhat use case of money transfer doesn’t require reversibility for fraud prevention? I love credit cards because I can dispute transactions.
- saurik 4y agoCraigslist explicitly tells people selling on it to avoid accepting online payments (like, PayPal) and only work with cash because the online payments are reversible and sellers constantly get scammed. You have to remember that transactions involve two parties, and it isn't somehow always the case that only the ones on one side matter. The power balance simply isn't always "seller who is selling a large quantity of easily-replaceable items that might be a dud can easily amortize the cost of fraud across all of their payments by high margins"... sometimes it really is "seller who is selling a small quantity of expensive or precious items tends to get scammed by anonymous buyers who abuse chargebacks ".
- rvz 4y ago> ...sometimes it really is "seller who is selling a small quantity of expensive or precious items tends to get scammed by anonymous buyers who abuse chargebacks ". This. He's right you know. The chargeback system is rife with extreme abuse, and the banks will always give in to friendly fraud without checking the contents of the dispute. Both the customer and the merchant lose to chargebacks and friendly fraud.
- web3isgoing 4y agoVenmo[1] does not have reversibility. Cash does not have reversibility. If users really wanted credit card functionality at the expense of its costs, you could build that as a layer on top, without forcing everybody in the system to use it. And consider, most disputes is not just about the quality of a product. That is handled with regular refunds. Credit card disputes are a lot of times because of fraud or card skimming, which is very often because the system is not very secure to begin with. Secure cryptography can remove a lot of this type of fraud. [1] https://help.venmo.com/hc/en-us/articles/235171088-Cancel-Payment#:~:text=It%20is%20not%20possible%20to,payment%20for%20the%20same%20amount https://help.venmo.com/hc/en-us/articles/235171088-Cancel-Pa....
- web3isgoing 4y agoZK rollup with validity proofs and trustless escape hatches should really be the dominant mode of bridging and storing assets in the future.[1] To the OP: sorry to hear what you are going through. [1] See https://vitalik.ca/general/2021/01/05/rollup.html https://vitalik.ca/general/2021/01/05/rollup.html and https://vitalik.ca/general/2022/11/19/proof_of_solvency.html https://vitalik.ca/general/2022/11/19/proof_of_solvency.html
- gizmo 4y agoImpossible, because it's the 3rd party (government) that makes money money. Without a system of law, courts, and and people with guns to back them up you can't have trade or commerce at any kind of scale.
- pr337h4m 4y agohttp://www.daviddfriedman.com/The_Machinery_of_Freedom_.pdf http://www.daviddfriedman.com/The_Machinery_of_Freedom_.pdf ¯\_(ツ)_/¯
- semicolon_storm 4y agoYou're implicitly trusting the 3rd parties developing the software & protocols you use to send money anyways.
- searchableguy 4y agoFed now instant payments will go live in US next year. EU has similar cross country solution in work. Majority of Asia already switched or in the phase. In India, most purchases go through UPI already which is p2p without a middleman. It's tough time to be in payments and will only get worse as many custom integration with lending companies break down due to huge losses.
- marcosdumay 4y agoWe only need some way to integrate those.
- searchableguy 4y agoIn India, you can pick any payment gateway for UPI. They are easily replaceable. No payment gateway in India charges for UPI transaction too. So if similar payment system is incorporated in US, I won't expect stripe to be able to charge for it. The only major functionality these payment gateway provide is checking if transaction went through. They are wrappers on top of bank APIs such as federal bank. Anyone can generate a QR code for their payment ID and request payment without needing a gateway but it's manual. Most street vendors confirm payments manually since it happens in person. Additionally, we have other standardized framework for requesting account information from banks such as RBI account aggregator framework. So you don't need something like plaid to fetch bank statements from all your bank accounts. Recurring payments are also setup on the bank end as a mandate. Yes, you will end up using an off the shelf solution but you are not at the mercy of them if you accept UPI only.
- marcosdumay 4y agoYou can't transfer money from the India system to somebody using the EU or Brazil one.
- deleted 4y ago[deleted]
- okwubodu 4y agoThere’s an odd juxtaposition between the net negative sentiment towards The Technology That Shall Not Be Named and the near daily “X banned my accounts and my business will never recover please help” posts.
- gizmo 4y agoSEPA payments also support chargebacks. Gyms are notorious for making it easy to sign up and hard to cancel, so the other explanation is that people are upset with some of your gyms and disputing the subscription renewals. Stripe customer support is beyond useless, so I totally get your frustration, but I would encourage you to get to the bottom of this and verify that that your "insufficient funds" theory is correct by calling the customers with the failed payments.
- nerder92 4y agoHey, @gizmo thank you for your reply, I indeed checked. As I said the account affected here is a local business, they make like 1.1K MRR from the same people forever. I've checked personally the disputes and they are all due to these "insufficient funds", also one issue that happened like 3 weeks ago on the same account was that Stripe was incorrectly crafting the SEPA Mandate and for the reason the bank rejected it. It seems like their own mistake has caused their automatic fraud detection algorithm to incorrectly flag this account. This is speculation obviously, but with this timing...
- prirun 4y agoAre these insufficient funds on long-standing accounts, or relatively new accounts? It seems like it would be pretty easy for a competitor to target a small gym by signing up several new accounts, paying for a month or two, then emptying all the bank accounts at once, causing transactions to fail. If the gym has 1.1K MRR and charges $100/mo per subscriber (that's what my private gym charges for open gym w/o personal training), you're talking about ~11 transactions per month. Failing 3 out of 11 transactions (27%) would probably trigger automated fraud systems.
- nerder92 4y agoTo put this into context, we are talking about a small local gym, with 33 active memberships. This is exactly my thinking process tho. The other account blocked was just starting, had like 8 payments and one dispute and got blocked. I'm really afraid for our other accounts now, seems like is just a matter of time until they get blocked.
- rvz 4y ago'Thank you very much Stripe, for suspending and killing my business accounts for little to no reason.'. [1] [2] [3] [4] Thank you. [1] https://news.ycombinator.com/item?id=28085706 https://news.ycombinator.com/item?id=28085706 [2] https://news.ycombinator.com/item?id=33299222 https://news.ycombinator.com/item?id=33299222 [3] https://news.ycombinator.com/item?id=23881643 https://news.ycombinator.com/item?id=23881643 [4] https://twitter.com/zhovner/status/1384568453844066305 https://twitter.com/zhovner/status/1384568453844066305
- bicijay 4y agoMonthly HN Stripe customer support thread
- A4ET8a8uTh0 4y agoMaybe this is a good place to ask the question: 1. Why is stripe a seemingly preferred payment processor for HN crowd? 2. Is there no ( edit: real ) competition or is the competition similarly bad ( or somehow worse )? edit: Instead of replying individually, I decided to edit this section. Thank you everyone for the background(s). It does answer a lot of the questions I had. I perused their site and I can absolutely see the 'dev first' principle in play.
- deleted 4y ago[deleted]
- dibt 4y agoOne reason might be that the founders and some key employees are active on hn. Also, they have services like Atlas that may help the typical HN crowd.
- deleted 4y ago[deleted]
- lewsid 4y agoOnce upon a time, it was like a breath of fresh air. Originally pitched as a dev-first payment API, it was vastly easier to get up and running than other options at the time. In recent years it has suffered under the weight of its own success. The simplicity and ease of use it once promised has been buried beneath a now-bloated and obtuse API. The user interface has struggled to keep up with the feature creep and it too has become a challenge to navigate and interact with. The documentation, once considered an industry-leading example of how to write and present such things, has mutated into a frustrating byzantine mess that's riddled with contradictions and obvious omissions. As an early adopter and someone that was once very fond of this company and its approach to things, I'm disappointed to see the direction it has gone.
- theturtletalks 4y agoI'm sorry you're going through this. I'm sure someone from Stripe will pop-in here and help out. If they do not, you have other payment providers: - Paddle - Mollie - Paypal Many upstart small businesses will face false fraud inquiries, but you have to roll with the punches and move to a new processor if Stripe is not responsive.
- rapind 4y agoThey're using connect, so they're a marketplace (accepting payments on behalf of customers for their customers, and taking a cut). Not sure if any of these support that model (pretty sure Paypal doesn't).
- nerder92 4y agoYes, this was a big selling point for us, we are a SaaS/Marketplace for martial arts academies and part of our business models also rely on transaction fees we get from the payment integration. We are attempting to support mollie also to enter the dutch market but we are only 2 people writing the code here. :(
- c0brac0bra 4y agoHow does HN feel about Braintree?
- Operyl 4y agoIf I recall, PayPal bought them a number of years ago, but I haven't heard of any horror stories from that specific PayPal product.
- slotrans 4y agoOther than being owned by Paypal, it's fine. The APIs work and are well-documented. A company I worked for used them for ~7 years and never had any significant problems that I recall.
- n0tth3dro1ds 4y agoAt this point, I don’t know how any founder on HN doesn’t make their business… 1) Multi-cloud and… 2) Multi-payment processor These stories are horrifying. These cloud and payment processors simply do not care. They print money and provide no human support. Any venture that I make in the future will be cloud-agnostic containers on several cloud providers with at least two payment processors handling an even share of the load. Double work be damned. Stripe and GCP simply do not care.
- MarkPNeyer 4y agoThis is the best argument for bitcoin. Even Democratic “rule of law” places like Canada can seize your funds for engaging in “politically incorrect” behavior.
- rapind 4y agoAdmirable, but neither of these are light lifts. Most startups are potentially better off just gambling they won't be in the %0.1 that get shut down due to big company shenanigans.
- dibt 4y agoWhy? Can’t you have a dormant or lightly used gumroad account integrated into your site/app. It’s not trivial, but could be worth it. Most frameworks have these services already integrated.
- onion2k 4y agoThe suspicious activity is disputed payments, which for SEPA DD (the main payment method used) can simply be that the customer has no money in the bank account. Sudden changes of circumstances like trading for 11 months and then seeing multiple declined payments from multiple parties does sound quite suspicious to be fair. I imagine Stripe have extensive amounts of data about that sort of thing. That's not to say Stripe are in the right here, but I can see why they wouldn't just assume their threat model is wrong based on your word that the payments are valid.
- nerder92 4y agoTo add another piece of context here, less than a month ago we receive this email from Stripe for the same account: Hello, We’re reaching out to notify you that some SEPA Direct Debit payments created between September 26th to October 4th incorrectly show as disputed when they actually failed. We have confirmed this issue is resolved, and SEPA Direct Debits created after October 4th 04:00 UTC will not incorrectly show as disputed. Please note that as SEPA Direct Debit is an asynchronous payment method, you still may see new disputes on payments created before October 4th. We have compiled a list of all currently-known payments impacted by this issue, which you can download by clicking this link: We will be refunding any charges for the affected payments and disputes. We are very sorry for any inconvenience this may have caused. If you have any further questions please let us know. —The Stripe team
- nerder92 4y agoIs speculation of course, but seems to me that their own mistake caused their fraud detection algorithm to go off summing up with the normal disputes that the gym receives (ie: insufficient founds)
- RadixDLT 4y agosounds like you need to use https://www.twispay.com/en https://www.twispay.com/en
- mtmail 4y agotwinspay doesn't support SEPA direct debit payments
- Komodai 4y agoJust waiting for Stripe to send in that Edwin guy for the 900th time instead of fixing their support
- smca_ 4y agoCan you email me (smca@stripe.com) with more detail? I'll look into this. We don’t typically comment in detail on individual cases, but we do think it’s important for onlookers to know that we take every single case like this seriously. It looks like what happened here was an edge case involving SEPA payments that resulted in a dispute rate that’s far in excess of what’s generally permitted by financial partners. When we do this, our interventions are partly to protect financial partners/Stripe, partly to protect end customers, and in part to protect the businesses themselves. (For example, Visa will fine businesses that maintain high dispute rates.) This case is actually a bit more complicated still, since you said that you’re using Connect. In these cases, we also take seriously the importance of defending the platform (i.e. you) against users who are trying to defraud you. More broadly, we work hard to balance the rules of the financial ecosystem, ease of use, protection against fraudulent businesses, consumer protection, and continuity for businesses. We support millions of businesses across dozens of countries and payment methods, and we discover new scenarios every day. We plan to blog about our work here in more detail before too long (including some of our key metrics). If any HNers have suggestions as to what we should include, feel free to reply here. We’ll try to share anything helpful that’s not too sensitive.
- deleted 4y ago[deleted]
- joering2 4y agoan exception to that is Bank of America Merchant services. I have 2 clients with chargeback ratio above 3% for close to 5 years now, and processing volume about $1MM a month. I imagine they are simply too small of a fish for BOA to care about their CB ratio. I seen them getting accounts shut down with basically any other processor, most sensitive being Wells Fargo underwriter but somehow they remain open with BOA so maybe its worth a shot? BOA implements First Data gateway by default these days, so most likely your previous processor is utilizing same solution as well, so less work to switch.
- gommm 4y agoThat makes sense for cards but if most of the payments are SEPA transfers, then it doesn't make that much sense since there's no chargebacks for SEPA transfers. Maybe the issue is a fraud system designed for cards that's not well thought out for other forms of payments.
- timcavel 4y ago
- hankchinaski 4y agoSeems like the payment processing is monopolised by stripe - Are there any good alternatives to stripe?
- juanse 4y agoBraintree
- DwnVoteHoneyPot 4y agoNo way. Braintree was brain dead when i looked into them awhile ago. Despite the flaws of Stripe (and its downward trajectory in quality) it’s still better than Braintree.
- fknorangesite 4y ago> Are there any good alternatives to stripe? Yes, several. They're nowhere near any kind of monopoly.
- joering2 4y agoGood advise is always to have a backup processor (similar to ESP). The thing is while initially regular MSP may not want to do business with you, if you get Stripe account in somewhat good standing for 3 months, you will have hard time finding MSP that will not accept you to process. Once you have 3 months with Stripe, which I imagine you didn't start with tens of thousands of dollars in processing day one, get yourself another MSP which should be top priority. Either have your system split 25% second MSP, first the rest, OR if you are unable, at least do few "test" transactions a month to make sure your backup gateway remains open. Without backup sad thing is that its irrelevant whether Stripe had standing or you got suspended as an error - the bottom line is you cannot process and that hits your bottom line. Hope this advise helps someone going forward.
- kowlo 4y agoThis is terrible. I'm going to start looking into alternatives, which is shame, because we initially built around the Stripe API. We recently had one customer forget to cancel their subscription, and then without contacting us first they filed a dispute for 6 months of charges. That's 6 individual disputes, each with a $15 ($90) dispute fee. We got in touch and mentioned we'd have investigated, found the license unused, and refunded for those months. They contacted their bank to withdraw, but the bank and Stripe are just pushing ahead.
- jiggywiggy 4y agoMaybe add Mollie.com as backup?
- Animats 4y agoThis is a B2B service. Do they really demand a "we can terminate at our discretion" clause? Can your lawyers negotiate better terms when you sign up, like 30 days notice and termination only if binding arbitration says the provider can do it?
- m00dy 4y agoGo Crypto!! There are stable coins that you can use for payments.
- robertlagrant 4y agoLike "US dollars". Those are pretty stable. Still have this problem, though.
- drummer 4y agoUse monero.
- jonjo67 4y agoA small business nightmare with stripe this year. Given a small online subscription business, we don't have techie 24x7. We started receiving micro-payments from credit cards every other second on our stripe account. We immediately reported to stripe as soon as we noticed, multiple times. Every time same response. We will look into it. We wanted to avoid deactivating and hiring techies to reintegrate again. Eventually we did not get any support from Stripe. So, we did the nuclear option and deactivated stripe all together and also hired a techie to do it as we are not really sure. Then our real nightmare happened. We are subject to potential dispute fee running more than $50-80k. We wanted to avoid disputes and so we requested Stripe to help us immediately refund all the money. They again did not respond. So, we painstakingly manually returned every payment one payment at a time. Finally they agreed to cover the dispute fee (which would have sunk our company). With the promise that they won't cover next time. uff, how do we even control that, And then, they briefly suspended our account. And then revoked after some days saying it was a mistake. And then activated security radar, which basically is blocking all genuine payments now. But, we don't know what the alternative is. Is there an alternative? We are constantly working on the nightmare that any
- jonjo67 4y agoA small business nightmare with stripe this year. Given a small online subscription business, we don't have techie 24x7. We started receiving micro-payments from credit cards every other second on our stripe account. We immediately reported to stripe as soon as we noticed, multiple times. Every time same response. We will look into it. We wanted to avoid deactivating and hiring techies to reintegrate again. Eventually we did not get any support from Stripe. So, we did the nuclear option and deactivated stripe all together and also hired a techie to do it as we are not really sure. Then our real nightmare happened. We are subject to potential dispute fee running to several tens of thousands of dollars. We wanted to avoid disputes and so we requested Stripe to help us immediately refund all the money so we can avoid disputes. They again did not respond to solve. So, we painstakingly manually returned every payment, one payment at a time. Finally they agreed to cover the dispute fee (which would have sunk our company) of whatever was disputed (thanks to them). But they warned us they won't cover next time. uff, how do we even control that. And then, they briefly suspended our account. And then revoked after some days saying it was a mistake. And then we activated security radar, which basically is blocking most genuine payments now. But, we don't know what the alternative is. Is there an alternative?
- leobg 4y agoHad a similar thing happening. Never any problems. Then account disabled. I thought, well this is Stripe, they’re awesome. I’ll email them. They’ll help. Well, big surprise. Customer support was just bots and boilerplate answers, after weeks of waiting. Mentioned my issue in passing on a thread here (I resent having to make a fuss on social media just to get some special attention). I was told to contact one of their people directly. I did that a few months ago. And he actually did email me back. But then he first forgot about my case for another two weeks. And then he said he would look into it immediately, but all I got is a bunch of automated emails asking me to validate my email address and things kind that. I did all of that, but it changed nothing. And my account is still suspended. I will continue to use Stripe for MVPs and such. But I now consider it a toy solution that can’t be trusted for running a business. Stripe cut off my revenue and deactivated customer facing payment pages. They did so without giving me prior notice, and I haven’t found a single person to talk to who would know what is going on in almost half a year now. They’re putting their customers in serious risk of financial losses and potential insolvency. And they do not care, do not help and do not even explain. That is the inverse of customer obsession. I wonder if the Collison brothers have lost interest in running their business like Bezos did with Amazon a few years ago.
- SturgeonsLaw 4y ago> I will continue to use Stripe for MVPs and such Can I ask why? Wouldn't inertia see to it that it stays in place in some circumstances? I'd be moving to something else at every stage if it were me
- leobg 4y agoPerhaps you are right. It’s not something I have thought a lot about. It looks good, and I know how to implement it. So I thought for money I don’t actually need it might still be usable. But you’re right about inertia. There’s a real danger I’d end up sticking with them and hoping for the best, and then being in the same situation again. Thing is, after having such problems with Stripe, in whom I had a lot of trust, I am very much interested in cutting out the middleman as much as possible. See, a physical bank would never be allowed to simply turn off my ability to receive money without prior notice. And if they did, I could sue the hell out of them. But with all of these Internet companies, I don’t feel I have that security. I have heard that the European Union plans to offer their own payment system. So perhaps the government sector will catch up. The idea that one should depend on private sector companies in order to participate in commerce seems quite odd. Otherwise, these issues have made me a lot more willing to go old school and just send out invoices. That sounds like the 1990s, and surely has its own problems. But at least I am in control. I am definitely open for suggestions though! Interested in hearing what you would suggest.
- belushitime 4y agoI have the same problem.