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.