Stripe Chargeback Protection

But this isn't the product I want.

I don't want to ever fight chargebacks. Because my policy is to never take money from people who don't want to give it to me. I want to automatically refund every chargeback attempt without it affecting my ability to charge credit cards.

One of my businesses targets consumers, who have this amazing ability to "forget to cancel" or to have "cancelled 3 months ago, but for some reason we're still billing them" or to just plain decide that the last six months of charges were fraudulent and that their bank should get them reversed.

All of that is fine with me, and in fact every invoice I send out says as much: We'll happily refund every penny you ever paid us if you simply ask. But lots of people aren't comfortable asking for their money back. They are, however, plenty comfortable asking their bank to ask for their money back.

I just want a way to streamline that process that doesn't involve me having to handle fighting disputes that I'd prefer to lose. And of course to not have those lost "disputes" count against me.

Any ideas on how to do that, Stripe?

We can send you a webhook on every dispute being created (https://stripe.com/docs/webhooks) and you could use the API to either refund the underlying charge or accept the dispute (and refund the underlying charge).

We can also give you access to receiving early fraud warnings from issuers (like Visa TC40s). These are notifications from the issuers that the customer is likely going to dispute a charge. If you're happy proactively refunding customers you could do so without incurring the dispute fee (though TC40s and the MasterCard equivalent can still count towards monitoring programs). Let me know if you're interested (eeke@stripe.com).

This gets you most of what you want. The subtleties:

1) The credit card ecosystem wants to discourage chargebacks as a routine mechanism for canceling, and so there will still be a fee assessed by the networks and hence by us.

2) The credit card networks have thresholds for how many chargebacks a customer can be doing while making responsible use of their rails, and if one routinely exceeds that, they will give a very serious warning to change business practices and, if one’s numbers do not improve, they will terminate one’s access to the rails. We have substantial experience with B2B SaaS businesses and it is _extraordinarily_ unlikely that a B2B SaaS business comes close to those thresholds, even after accounting for unfortunate user behavior.

How does that work? When I'm notified of a dispute, the first thing I do is go in and refund the charge. I still have to watch the whole dispute resolution process play out and have it be ruled against me.

How would I go about stopping it before it starts, as you seem to imply is possible?

Edit to add: Does it even make a difference if I go in and refund the disputed payments? It sounds like I get dinged either way and the customer gets their money back either way. Should I save myself the effort?

Card issuers are often able to detect that a transaction is fraudulent before it is disputed, and when this happens, they will send us a notification. These notifications are commonly called TC40s (Visa) or SAFE reports (MasterCard). On average ~60% of early fraud warnings end up being disputed, and most disputes have an early fraud warning (though there’s a wide range depending on your business). If you refund these charges before they become disputes, you can avoid the dispute entirely. It doesn't solve all dispute problems but it can be pretty effective. I’m happy to take a look at your account to calculate what percent of disputes have an early fraud warning.

60%… I've had some of my customers' cards get reported as stolen, and a recurring charge pop up (on a customer who had subscribed months ago) and get flagged. I do not act on it, a dispute gets filed, and the customer wins the dispute despite me providing evidence that this was clearly an intended charge (and clearing that up with the customer afterwards!).

Winning a dispute on Stripe has always felt impossible to me. I stopped trying after a while, and just let the disputes default to a loss after they time out.