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Stripe has decided to nuke my entire business

1624 points yaythefuture | 4 comments | 15 Sep 22 16:33 UTC | HN request time: 0.001s | source

Saw https://news.ycombinator.com/item?id=32261868 from a couple weeks ago and figured I'd share my own story.

3 weeks ago, I woke up to a pissed off customer telling me her payments were broken. My startup uses Stripe Connect to accept payments on behalf of our clients, and when I looked into it, I found that Stripe had decided to deactivate her account. Reason listed: 'Other'.

Great.

I contact Stripe via chat, and I learn nothing. Frontline support says "we'll look into it." Days go by, still nothing. Meanwhile, this customer is losing a massive amount of business and suffering.

After a few days, my team and I go at them from as many angles as possible. We're on the phone, we're on Twitter, we're reaching out to connections who work there / used to work there, and of course, we reach out to patio11. All of these support channels give us nothing except "we've got a team looking into it". But Stripe's frontline seems to be prohibited from offering any other info, I assume for liability reasons. "We wouldn't want to accidentally tell you the reason this happened, and have it be a bad one."

We ask: 1. Why was this account flagged? "I don't have that information" 2. What can we do to get this fixed? "I don't have access to that information. 3. Who does? "I don't have access to that information" 4. What can you do about this? "I've escalated your case. It's being reviewed."

I should mention at this point that I've been running this business since 2016, my customers have been more or less the same since then, and I've had (back when it was apparently possible) several phone conversations with Stripe staff about my business model. They know exactly who our customers are and what services we offer, and have approved it as such.

After a week of templated email responses and endless anxiety, we finally got an email from Stripe letting us know that they had reviewed the account and reactivated it. We never got a reason for why any of this had happened, despite asking for one multiple times. Oh well, still good news right? Except nope, this was only the beginning.

This morning I woke up to an email that about 35% of my client accounts had been deactivated and were "Under review", the kicker here being that one of those accounts is the same one they already reviewed last week! This is either the work of incompetent staff or (more likely) a bad algorithm. No reasonable human could make this mistake after last week's drama.

So currently, my product doesn't work for 35% of my customers. Cue torrent of pissed off customer emails.

And the best part is, this time I have an email from Stripe this time: Apparently these accounts are being flagged, despite the notes on our file, and despite the review completed literally last week, as not in compliance with Stripe's ToS. They suggest that if I believe this was done in error, I should reach out to customer support. Oh, you mean the same customer support that can't give me literally any information at all other than "We have a team looking into it"? The same customer support that won't give me any estimates as to how long it's going to take to put this fire out? The same customer support that literally looked into this a week ago and found no issues!?

I feel like I'm going crazy over here. These accounts have hundreds of thousands of dollars in them being held hostage by an utterly incompetent team / algorithm that seems to lack any and all empathy for the havoc they wreak on businesses when they pull the rug out from under them with no warning, nor for the impact they have on customers when they all of a sudden lose all ability to make money. And all that for an account that has been using Stripe for nearly 7 years without issue!

This goes so far beyond "customer support declining at scale." If lack of customer support means that critical integrations start to fail, that's not a customer support failure, that's a fundamental business failure.

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orionint ◴[15 Sep 22 17:04 UTC] No.32855106[source]▶
Used to work for a “high risk” payment processor, we inherited tons of accounts that were terminated by Stripe, Square, and PayPal. Here’s one small bit of inside info that may help the newer businesses out there:

Most real payment processors (e.g. banks, merchant services companies) “underwrite” a company BEFORE allowing them to process. Underwriting means they look over the business model, financials, etc and make sure the business is an acceptable risk, not doing anything illegal or against their terms, etc. So you’re more likely to be declined initially, but if you’re lit up, you should be good for the future because the underwriters actually saw the deal and approved it.

While I haven’t worked for these other companies, a lot of experience seems to show that Stripe, Square and PayPal operate differently: they light up ANYONE, and then only underwrite when the account hits a critical threshold of revenue. So it’s easy to get an account there, but if you scale up, that’s when you’ll be scrutinized and potentially terminated. It’s a very unethical practice because it ends up hitting businesses at the worst possible time, when the termination or suspension causes a huge financial hit.

So basically, always have a backup processor and use these web based services at small scale to prove out your model, but NEVER rely on them as your sole payment solution.

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rchaud ◴[15 Sep 22 17:37 UTC] No.32855624[source]▶
> a lot of experience seems to show that Stripe, Square and PayPal operate differently: they light up ANYONE, and then only underwrite when the account hits a critical threshold of revenue.

Sounds similar to how subprime lenders doled out the mortgages without any due diligence. They skimmed their bit off the top in transaction commissions, but later dumped them before they became a compliance hassle.

replies(2): >>32856286 #>>32857428 #
marcosdumay ◴[15 Sep 22 18:24 UTC] No.32856286[source]▶
As a rule, there's nothing wrong about a default to accepting making deals with strangers.

And that's the only thing similar in here. The payment processors are not selling anything by fraudulent claiming they evaluated their quality.

What they do have is a very bad customers service that is prone to a different kind of crime (withholding people's money) and create a very unique kind of risk they don't communicate to their customers.

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1. illumin8 ◴[15 Sep 22 19:18 UTC] No.32857164[source]▶
I'm pretty sure this would be considered a deceptive business practice by most courts of law. You can't just straight up lie about the terms of a business agreement - i.e. if you say you've evaluated a customer's creditworthiness but you really haven't I think there is a very good argument that any agreement was not made in good faith, however, Stripe's ToS probably requires mandatory arbitration, etc, so I'm not sure what recourse you have as a customer.
replies(1): >>32857496 #
2. jacobr1 ◴[15 Sep 22 19:42 UTC] No.32857496[source]▶
Arbitration doesn't mean no-recourse or bias toward to the provider.
replies(1): >>32858129 #
3. marcosdumay ◴[15 Sep 22 20:38 UTC] No.32858129[source]▶
Arbitration does absolutely means a bias to the party that requires it. You can't have a long-term relationship with a company and not acquire some bias.
replies(1): >>32858996 #
4. bombcar ◴[15 Sep 22 21:59 UTC] No.32858996{3}[source]▶
Even if the arbiter is pure and just the company will learn how to represent its side in the best light before the arbiter; it has many chances to learn.

The other side has one chance to learn.