keep your mylisting website on stripe's good side
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The Keep Your MyListing Website on Stripe’s Good Side guide will give you some tips to stay in good standing, covering a real-world example of a MyListing website that fell on Stripe’s bad side.
Let’s preface the below, by saying this is not an indictment on Stripe. They are actually the best/preferred online processor on the market in our opinion.
Getting on Stripe's Bad Side. Real-World Example.
The Website Backstory
The website (as a lot of MyListing websites do) was selling products, that consisted of one-time fees (e.g. listing packages) and/or ongoing fees (e.g. listing subscriptions).
The website was newly-launched, so it didn’t have many sales running through WooCommerce. So, the website owners were using some of their service offerings (e.g. consulting) to drive business towards their products and to supplement their income while the website ramped up.
The website implemented an online payment processor (Stripe, PayPal, etc.) to collect fees. In this case, they were using Stripe, which actually is more lenient, helpful, etc. compared to the likes of PayPal.
The website clearly stated the details (cost, description, fee schedule, etc.) of each product, within the product pages themselves and in other areas of the website.
The website had policies in place that they had used for many websites over their two decades of being in business. The website owner adjusted the policies as needed for this particular website.
The website owner had never had so much as a single payment dispute, after decades of being in business…until now.
The website owner was hired for consulting services, receiving multiple micro-payments over the course of less than a month.
After the services were rendered and both parties went their opposite ways, the customer acted in bad faith by disputing every payment (4+) they made, in order to get the services for FREE.
When the customer filed their disputes, they claimed they were being charged for subscriptions that they had previously canceled, which is an option that Stripe gives.
If there is any silver lining here, the customer messed up by choosing “Subscription canceled” as the reason for their dispute. The micro-payments alone, clearly show these were not subscriptions being paid for.
The website owner lost the money from each disputed sale and had to pay $15-$25 per disputed sale, in fees.
With the overall sales being low on the new website, the disputes easily put the website over Stripe’s % threshold for disputes vs. sales.
Stripe, therefore, put the website on probation, withholding 25% of every sale until the probation period ends.
After a probation period ends (if it ends), Stripe states they will return any money left over after all disputes are settled one way or the other.
During or after the probation period, if additional disputes come in, Stripe could permanently ban the website from using its services.
In this case, even if the website owner wins the disputes, they are still flagged in Stripe’s systems. The only way to clear this is if the customer withdrawals their disputes.
Since the customer acted in bad faith, to begin with, there is pretty much zero chance they will take the time to withdrawal the disputes. This would also pretty much require an admission of guilt.
Stripe is critical to this website’s business, and this ordeal is potentially devastating in terms of reputation, lost hours fixing these issues, etc.
How to Help Prevent This
Aside from having a large number of sales each month, to offset the number of disputes, there is not much you can do to keep from being put on probation with a credit card processor.
No matter what measures you take, if a customer wants to dispute a payment…nothing can stop them.
If you run an online store for any length of time, it’s not a matter of if you are going to run into this situation…it’s more like…when.
The only guidance we can offer here is how to help prevent the disputes in the first place and/or how to react to them.
Products & Services Pages
WooCommerce product pages include areas where you can describe your product. Use these areas to clearly lay out what your product is, how it’s paid for (one-time fees, ongoing subscription fees, etc.).
Also, consider creating landing pages for your products, that go into greater detail about the product. Link to these landing pages, from the WooCommerce product page. Use landing pages to help leave nothing open for interpretation.
Where applicable, link to your policies within each product page or product landing page.
Areas to highlight:
- Product Description: Clear description of what the product is, what the product isn’t, and link(s) to any applicable policy page(s).
- Fees: Clear breakdown of the fee structure, what’s included in the fee, and link(s) to any applicable policy page(s).
- Payment Schedule: Clear breakdown of the fee payment schedule, whether it’s a one-time fee, ongoing subscription fee, etc..and link(s) to any applicable policy page(s).
- Cancellation Policy: Clear description and link(s) to any applicable policy page(s).
- Refund Policy: Clear description and link(s) to any applicable policy page(s).
Your Services may also be WooCommerce products (i.e. productized services), in which case the above Product guidance applies here.
If your services aren’t sold as an actual WooCommerce product, we still recommend a landing page for each service, highlighting the areas mentioned above.
Most MyListing websites will have the same core policies, which the exception of websites that aren’t selling anything.
We won’t get into the weeds of all the policies that could be involved in a website but rather will focus on this particular scenario.
So, in this scenario, the following policy areas would specifically apply.
Policies should exist, containing crystal clear language regarding Fees, and cover the following aspects at a minimum.
- Product(s)/service(s) included in the fees.
- When will fees occur.
- An easy way for you to be contacted.
Policies should exist, containing crystal clear language regarding Refunds, and cover the following aspects at a minimum.
- When/if refunds are allowed.
- How refunds can be requested.
- When are refunds paid out.
- An easy way for you to be contacted.
Policies should exist, containing crystal clear language regarding Cancellations, and cover the following aspects at a minimum.
- How cancellations can be performed.
- What happens once a cancellation is made.
- An easy way for you to be contacted.
For all policies mentioned, we recommend placing a link to them, where applicable, in the following locations, at a minimum.
- Product/Service page.
- Product/Service landing page.
- Policy page.
In this scenario, there’s really no way the customer’s actions were not malicious. However, for our purposes here, let’s assume that everyone is a kind human.
The first step would be to contact your customer, using email, so you have documentation of your communications with them.
If your customer responds and it’s pretty clear that the disputes were not meant to be malicious, kindly ask them to help you work to withdrawal the disputes following this guide from Stripe.
Take that opportunity to ask your customer if there is something with your website could have communicated better. If it’s something you could have done better, lick your wounds, and take the whole experience as a learning opportunity.
While it’s not likely this type of customer will respond, if they do, be the better person and kindly ask them to withdrawal their disputes.
Explain to them that what they have done has a major, negative impact on small businesses, and the only way to really fix the situation is to have the disputes withdrawn.
Reasoning with a malicious customer is typically a no-win situation, unfortunately. Depending on the situation, you may have no choice but to take legal action.
While Stripe would most likely have reached out to you by now, it’s a good idea to be proactive, and reach out to them with your situation, steps you’ve taken so far, and steps you plan to take.
You could also take this opportunity to ask Stripe if they have any recommendations for how to approach your particular situation.
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