Stripe's 210 Day Hold Practices

https://www.indiehackers.com/post/stripes-210-day-hold-practices-yes-you-read-that-right-a77dba9917

by stripesucks • 7 years ago

73 33 7 years ago

rgbrenner4• 7 years ago

This article is crap. Won't tell us even what industry their startup is in... If I had to guess, it's for good reason: it's probably on Stripe's list of prohibited businesses. (And this isn't really a list Stripe created.. it's all from Visa and MasterCards card rules that Stripe is required to follow.)

Then they continue with: it also hides behind federal regulations like KYC (know your customer) and the Patriot Act as a justification for requesting more documents

Yes... those laws apply to Stripe. That's why Congress created those laws. No, stripe won't commit a felony for you or help you evade those laws.

Then he ends it with saying he works at a bank... and everyone should use a merchant account instead (everyone should use the product his employer sells.. no issues there).

Hey guess what: all of those laws you mentioned and prohibited businesses... those apply to EVERY merchant account whether it's at a bank or Stripe.

I'm guessing this is his first merchant account, and he didn't read the contract (if the startup exists at all). For those of you in a similar situation, here's my advice (and not just for Stripe): read the contract and abide by the rules. If you can't, don't have your customers deposit thousands of dollars into it, and then violate your contract.

stripesucks3• 7 years ago

I did state "a small startup in the infoservices space" within the first couple of sentences, but I apologize if that was insufficient. If you'd really like granular details, it was a vehicle history report website. Completely mundane and most certainly not on the prohibited businesses list.

And I wasn't complaining about the documentation requirements. I was complaining about the fact that they weren't reviewing the documents, and used them as an additional barrier to block payouts.

As for the bank point -- I work for a consulting firm, and the client I'm on is a large US bank. I do not work anywhere near their merchant services division. I don't receive any sort of commission when someone signs up for their services, and I didn't mention them specifically here. Really don't know what else there is to say on that point.

rgbrenner4• 7 years ago

Thank you for those important details.

kristianc2• 7 years ago

It’s also worth remembering that running to social media and blaming ‘big bad Stripe/PayPal/Monzo’ for holding funds is part of the MO of fraudsters so it’s right that posts like these are treated with at least a reasonable degree of suspicion.

Having worked with companies in the fraud monitoring space I’d say that it’s likely that your case (new Stripe account starts taking loads of money for digital infoproduct) has fallen foul of an AML flag. The timeline for that is largely out of Stripe’s hands, but there are certain (legal) limitations on what you can be told about your case.

Rest assured though, it’s more trouble than it’s worth for Stripe to arbitrarily hold your money for no reason.

cstejerean• 7 years ago

I agree with you that the tone is suspicious, but what I don’t understand is why Stripe is holding the money. If the transaction was prohibited it should refund the money to the customers rather than holding it for itself. Having Stripe hold the money indefinitely shouldn’t the solution.

crashbunny• 7 years ago

Thanks, added insights I wasn't aware of and balance.

Even PayPal (yes, even PayPal) caps their holds at 180 days.

I imagine if PayPal held the account because of KYC or PA the 180 cap wouldn't apply...

rgbrenner4• 7 years ago

Yes, you're correct. PayPal (or anyone else) isn't going to let you run out the clock by not responding to documentation requests, and then go ahead and send the money to you (a potential terrorist) because you hit a 180 day time limit.

The 180 days mentioned in the article is BS too:

1) This sentence is false: "This is because the maximum timeframe a customer can dispute in is 180 days". The maximum is almost 2 years... and here's an example for why: Imagine you buy a plane ticket for 9 months from now, and then the airline cancels it and keeps the money... When the clock starts and how long it runs depends on the type of dispute.

2) PayPal can keep your money much longer than 180 days... that's just if they want to hold it for risk mitigation reasons. Their terms actually say they can just terminate your account (no funds) under certain circumstances. Or if you violated their AUP, they can charge you 2500$ per incident. That kind of a fine would wipe out most balances.

elliekelly• 7 years ago

This sounds like an AML or OFAC issue. I’d guess this has nothing to do with Stripe. AML laws in the US prohibit the financial institution from giving the customer basically any information about the reason for the hold.

This leads to (understandably) frustrated customers.

CaliforniaKarl• 7 years ago

On the one hand...

“a small startup in the infoservices space” is very vague. I wouldn’t be surprised if Stripe had some reason to be concerned. I’m not sure if it was explicitly mentioned in the post; how many chargebacks did you get, and how many refunds did you have to issue?

To me, without more background, the post strikes me as being overly sensational.

On the other hand...

It concerns me, assuming the references to Stripes T&Cs are accurate, that it is stacked so heavily in Stripe’s favor. At the very least, Stripe should be paying reasonable interest (say, the Prime rate) on the funds that it is holding.

It is getting tiring to see stories of incidents like this. Of T&Cs with draconian provisions, little transparency, and no followup. But I don’t mean that to say the stories should be removed from HN.

kristianc2• 7 years ago

At the very least, Stripe should be paying reasonable interest (say, the Prime rate) on the funds that it is holding.

If Stripe suspects AML, it certainly shouldn’t be paying interest on the funds.

SpicyLemonZest2• 7 years ago

Come on, this is the worst kind of drama boosting. An account named "stripesucks" posts a link to an article written today, discussing the author's individual billing dispute with Skype and urging everyone to use a specific named competitor, and it's on the front page?

stripesucks3• 7 years ago

I didn't use a specifically named competitor. I simply stated "direct merchant account." Authorize.net is not a Stripe competitor, it's a gateway, not a processor.

rgbrenner4• 7 years ago

Stripe is just a bundled merchant account + gateway. It isn't like you can break up the bundle, so Authorize.net is losing a potential customer each time a business goes to Stripe. So I would say they are a competitor who works with partners (merchant account providers) to provide the same service as Stripe.

mirimir4• 7 years ago

Well, they did steal $31K from him. And based on the numerous BBB complaints that he cites, he's not the only one they've ripped off. So it sounds like Stripe is just as bad as PayPal.

And about "drama boosting", if that's a real Stripe person who posted to this thread, I guess that it worked. A little, anyway. Sadly enough, it seems the only way to get attention from jerks like this.

SpicyLemonZest2• 7 years ago

My concern about public shaming as a dispute resolution tactic is that it's toxic, not that it doesn't work.

patio11• 7 years ago

Hiya. I work at Stripe. Mind emailing patio11@stripe.com and humming a few bars so we can look into this for you?

packetized3• 7 years ago

That you would have to communicate this to a customer via HN is pretty damning.

mirimir4• 7 years ago

Actually, it's better than the norm. I've seen many stories like this where nobody reached out.

nixgeek• 7 years ago

Au contraire, I sincerely appreciate the personal touch. Probably nothing to do with them, but he’s offered a conduit for them to send additional details, and committed to looking into it. That’s more than OP seems to have got through official channels.

Every company of some size has “WTF” edge cases, IMO it matters how we handle them, even if sometimes handling it takes an unusual or unofficial form.

jijji• 7 years ago

any changes you make to his account will be reversed by your crontab scripts so what is the point really

ping_pong• 7 years ago

I used to work in payments. There's a lot of info that the poster is willfully not posting, so I believe it's probably something to do with her business, or something she did to trigger the fraud alert. For example, why did Stripe hold the funds instead of refunding the money back to the customers and cancelling all the transactions? There's a story to be told here and she conspicuously ignores this. There is a LOT more to this story than what the poster is reporting on so until more details are given, I think it's probably something the poster did that triggered fraud alerts.

tomc1985• 7 years ago

Why is it so hard for these tech firms swimming in cash to hire and keep a live, human customer services team?

xiphias2• 7 years ago

Customer services don't scale (only linearly). There's a reason why these companies are swimming in cash.

amirhirsch• 7 years ago

It seems like the primary issue is the lack of a single human account manager maintaining consistent communication while your cash is held in reserve.

Perhaps the law should change to require interest paid for funds held in reserve accounts. This could prevent conflict-of-interest between fraud prevention and holding money to collect interest. Perhaps Stripe should offer interest and push for this law change since it will further contrast them with PayPal as the good guys.

I had a similar experience with PayPal reserves and enjoyed poor communication and arbitrary reserve extensions after a six figure spike in sales. I complained to the state banking authority when they deducted refunds out of my bank account instead of from their held reserves — PayPal was clearly in the wrong and they corrected it after numerous phone calls, while still holding our funds in reserve. The CA banking regulators proved incompetent.

hypewatch• 7 years ago

Indie hackers is owned by Stripe so it’s interesting OP decided to write their post there.

segmondy• 7 years ago

They are pretty much holding the funds till it's no longer subject to card dispute/chargeback.

stripesucks3• 7 years ago

As explained in the post, it's been 180 days, which is out of the window in which customers can even file disputes.

Stripe's 210 Day Hold Practices

Related Stories