Stripe Atlas is nothing but a bad marriage | Hacker News Reader

Stripe Atlas is nothing but a bad marriage

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107 pointsvietyork48 comments

The initial analogy made me cringe, and to be honest, the rest of the post didn't change that impression too much. Reading past the prose and paeans to loyalty, a couple points stick out to me:

> "we discovered that the specific charges flagged as fraudulent were not fraudulent charges" "where fulfillment was lagging heavily during the transition which led to some dissatisfied customers who opted to dispute charges"

Fulfillment lagging heavily is a fancy of way of saying people paid for orders, never got what they ordered, and so assumed it was a fraud.

> Despite understanding that our Stripe Atlas account was used across a number of businesses, and that the seemingly fraudulent/chargeback activity took place in a relatively short span of time through a single eCommerce store (that was no longer operational)

TBH, the actual percentages Stripe details in later emails would be alarming to me. 23% of charges disputed and 44% of volume are pretty red flags!

No kidding. This guy is so vague about his business. What does he actually make / sell? Socks?

Folks with 44% of volume in chargebacks should be shut down! I've found there are always excuses from the scammers, and the whole article is in the mode of I wanted to love stripe but they screwed me.

Reality = this guy is screwing his customers over big time!

As the author says, it pains me to write this.

I like to call this "Eddie Haskell Syndrome".

After some quick googling, it appears I'm not the only one to use this term.

> The percentage of volume on your account that has been disputed (you are currently 44.82%)

Holy. ANY payment process will drop you after something like this. A botched purchase of another company doesn't relieve you of any of the obligations they had made.

Indeed, approaching 1% is enough to get you kicked off any non-high risk payment platform.

I can sympathize because it was just one business unit that he had apparently recently acquired that was responsible for this and the rest of his businesses were ok. The biggest lessons are to be aware of what you are acquiring and the issues they are having, make sure it's very clear to customers how they can contact YOU to get a refund and finally, it's probably a good idea to have separate accounts for different businesses on Stripe.

That sounds like the real lesson here: have separate accounts for separate sites.

I haven't used Stripe for years, so I'm not sure: is that totally kosher? And if you enter the same business/tax/ID details for two different accounts, will there be any problems?

It'd be great to hear from someone about Stripe about this, as I know a lot of Stripe people hang around HN.

> And if you enter the same business/tax/ID details for two different accounts, will there be any problems?

I have no experience acquiring companies, but my first instincts are I would acquire a given company into a separate owned LLC, to firewall the rest of my assets from unknown snakes in the grass. If I'm doing that, plugging those LLC's details into Stripe seems like a non-issue.

Don't work at Stripe, but each business unit/product in our company has their own separate Stripe account.

My company uses 3 stripe accounts on the advice of our stripe representative, so I believe they’re ok with it.

When you're all talking about separate accounts - Are you talking separate login accounts or separate accounts as in the top left on your dashboard switch between these accounts

I can tell the other replies are from folks running honest businesses!

There is actually another business that leverages it's transaction flow to work with scammers / counterfeit product resellers.

Basically, you buy storefronts at high risk of charge-back or who on their own might have a 10% charge-back rate and can't hold a merchant account. For example, someone sells counterfeit apple chargers. Believe it or not, even though some people might realize it's bogus, maybe only 10% actually charge back. The rest either don't catch on or can't be bothered to charge back. That still is too high. But someone who can mix that in to their own account / high volume account less likely to be shut down - it's a business opportunity.

Exact same issues going on in the ACH space actually which is often used for bogus ongoing / recurring billing.

Details of fraud and chargebacks aside, I want to point out that this post really doesn't have to do with Stripe Atlas, insomuch as Stripe Atlas doesn't give you carte blanche to commit fraud on the Stripe platform.

FWIW, I'm a pretty happy Stripe Atlas customer, and it's pretty WYSIWYG, for better and for worse.

The Stripe Christmas Surprise: destroying your competitor's holiday season earnings by issuing a well-placed chargeback.

In all seriousness do they have any way to detect sabotage of this sort?

From the article, it appears they can't even detect obvious fraud, so I'm assuming that the answer is no.

The moral of the story was that Stripes REAL concern was to keep good numbers for their upstream provider. (as an agent/ISO). So... targeted chargebacks probably would have the intended effect.

My business had a 6% chargeback rate at one point because our biggest client's mom didn't recognize us and disputed hundreds of charges. Stripe sent me this same email, but they let me work it out and continue operating.

IMO if this questionable post is the worst story out there about Stripe, it shows that Stripe is doing a great job.

"our biggest client's mom"

What are you selling?

Sounds like power ups for video games.

Relationship coaching. It wasn't a kid though; a lot of people in their 20s aren't financially independent.

It sounds like he acquired a business that wasn't actually sending out the products that they were charging customers for. What surprises me is that he only discovered this after the chargebacks started coming in.

If my company stopped providing the service I was charging for, I would have 3,214 missed calls and 23,512 emails within about 36 minutes. Customers generally don't call their banks until multiple attempts to contact the business have failed, and something is deeply broken if the chargebacks are your first sign of trouble.

Yeah, this has to be a deliberate fraud outlet.

Back in 2009, I ordered a pair of boots for a Halloween costume online. They sent me an email telling me a window when the boots were supposed to ship, and I specifically ordered two-day shipping. Of course, they charged my card right away, which I didn't know at the time was a red flag.

They missed the shipping window. I thought "no big deal, there's a huge holiday coming up, so they're probably just backlogged, I'll wait another day". Another day passed. I sent an email asking what's wrong. No response. No phone number listed on their website, either; that's a red flag. Another day passed. And another. Another email sent. No response. Another day. By this point, it's been about a week after the boots were supposed to arrive, and they haven't even shipped; it's Friday, so I send them an email telling them that if it doesn't ship by Monday, I'm filing a chargeback. No response either.

Right after I sent that last email, I got curious and googled the name of the store. There were pages on Ripoff Report [0], Reseller Ratings [1], and other sites detailing the fact that they just take people's money and never ship anything. I also discovered that they used to have a phone number listed on their site, but they took it off. The BBB had listed them as an F, but it appears that's since been scrubbed from their website.

Well, fuck.

I contacted Chase and filed a chargeback that day. No way am I waiting till Monday now that I know it's a scam. After going into my whole spiel about how they never responded to my emails and I found all this dirt online about them, the person I spoke to just said "Wait, they said it was going to arrive on [date] and it still hasn't shipped?". I said yes, and she immediately approved my chargeback. I was surprised: I was expecting to have to fight them for it.

Also, according to the websites I found, whenever people issued chargebacks against them, they had a habit of running the charge again, sometimes from a different merchant account, again and again and again. People had to report their credit cards as stolen to get it to stop. I watched my statement like a hawk for months, and thankfully it never happened to me, but I just got lucky.

Also, just out of sheer spite, I filed a BBB complaint against them. A few weeks later, the BBB sent me an email telling me they closed my complaint because every attempt to contact the company failed. They didn't answer their phone or respond to any emails or letters.

Reading Viet's post and your comment, I am reminded of that incident. There is no way in hell the business wouldn't have known they weren't shipping product. People don't just issue chargebacks out of the blue. We call and email and do whatever we can to get the damn product into our hands first and only as a last resort do we light the bridge on fire by issuing a chargeback. And I wonder how many people just gave up and never even bothered to issue chargebacks.

[0] https://www.ripoffreport.com/reports/specific_search/Queen+F...

[1] https://www.resellerratings.com/store/Queen_Fashions

When it gets to that level, I would recommend reaching out to your state's Attorney General Consumer Protection unit. They usually have a form that you can fill out, and (unlike the BBB), they have actual enforcement powers and can take action against businesses like the one you described.

6.5% chargeback rate.

This entire blog post reads like other posts of its type from people who don't understand credit card processing or how it all works.

"Shortly after sending the above information we discovered that the specific charges flagged as fraudulent were not fraudulent charges. They were, in fact, due to chargebacks related to a recently acquired eCommerce store where fulfillment was lagging heavily during the transition which led to some dissatisfied customers who opted to dispute charges."

No, the transactions weren't fraudulent. However, selling something and not delivering is grounds for a chargeback and would be labeled as fraud, and to any reasonable person, would be considered fraud.

"Somehow we moved from an issue of fraudulent activity to whether or not we’re allowed to sell specific products."

Yes, because with such a high chargeback rate, they are going to reevaluate your entire business. It's called Know Your Customer (KYC), and it's critical.

But seriously, 6.5% chargeback rate. Even when I was still working in an industry know to be high risk, I never had a rate that high.

"Stripe is quick to put all blame and responsibility on us by claiming that it is not their responsibility to prevent fraud."

Because in the end, yes, that's where the fault lies. Don't believe me? Go to a bank and get your own merchant account and see what happens when you just let whatever you want go through your system. Just because it's on a computer doesn't change the fact that you are responsible for the fraud you are swiping through your system.

tl;dr: a legit 6.5% chargeback rate.

I would count myself in the category of people who don't know exactly how this all works, but this email[0] makes it sound even worse by the end:

> We calculate the dispute rate a number of ways, but the two most common are:

> 1. The percentage of charges on your account that have been disputed (you are currently 23.74%)

> 2. The percentage of volume on your account that has been disputed (you are currently 44.82%)

[0]: https://cdn-images-1.medium.com/max/1600/0*8f0gZoASFf20_-lM.

And this is over the lifetime of the account!

These rates are generally dictated by the card companies. We recently had a spike in chargebacks in one of our Stripe accounts, which put us over the warning threshold.

Stripe could have handled it a lot better. They withheld payments from us (over 250k) No notifications, or anything else. They waited until we contacted their support on why our payouts weren't processing before they lectured us on how we should be doing fraud review (we do. We also pay way to much to SiftScience to mitigate that as well)

tl;dr though, Visa, Mastercard, Amex, Discover, etc... all have their own hard limits.

And for others who aren't aware - the standard Visa threshold is 1%. [1] Supposedly with a warning at 0.75% from Visa and at 0.5% from Mastercard.

If you go above that, Visa reserves the option of "potential disqualification from the payment system" [2]. That is, you can be banned from accepting Visa cards ever again.

[1] https://www.braintreepayments.com/blog/changes-to-visa-charg...

[2] (see "Chargeback Compliance Program") https://www.citibank.com.sg/gcb/credit_cards/pdf/Fraud_Charg... [PDF]

I notice that this image was removed from the article as well.

That's disturbing. I distinctly remember seeing that image too when I read the article.

Thank you faitswulff for preserving the text at least for posterity.

I dug it out of my browser cache and uploaded it to imgur:

https://i.imgur.com/1CQkZPF.png

Actually a 44% chargeback rate by volume!

It only takes a little bit of reading between the lines to see the author bought a site that sold fraudulent gear, didn’t realise this for a bit and then shut it down.

If stripe hadn’t frozen payouts they would be stuck holding the bag for 44 percent of the total charges in the account.

The new account thing does sound beuracratic but I guess it restarts the KYC process.

> the author bought a site that sold fraudulent gear, didn’t realise this for a bit and then shut it down.

I don’t think that’s the case. It looks like they bought a flipping or drop ship site and they botched the transition process; orders weren’t getting fulfilled and customers were rightfully pissed about it, hence the chargebacks.

Stripe has a lot of rough edges once you have to talk to a person due to outlier activity, but this could’ve been mitigated by isolating businesses into their own Stripe accounts, as well as better handling the business acquisition that took place.

I mean, if you're selling branded products that you don't actually have available to give to the customer, aren't able to get quickly, and don't even have the legal rights to sell anyway, and then customers start filing chargebacks... that's kind of entirely on you.

Also keep in mind that for such a large number of users to go through the trouble of filing the chargebacks, it means that A) it's been long enough that they seriously believe your shop is fraudulent and you have no intention of shipping them what they paid for, and B) your communication and customer support is so terrible that they felt this was their only recourse.

There is no requirement for me to have an agreement to sell a branded product (first sale doctrine). If I go buy a cargo container full of North Face gear on clearance, there is nothing North Face can do to stop me from legally selling that gear.

Agree with the shipping delay points.

The problem is that many people, after exhausting the cargo container, don't bother to take down the listings and continue to take orders in the hope that they'll stumble on another cargo container for cheap.

Business is hard and fraught with peril.

Since most of the cargo containers of north face gear on "clearance" are actually fake product, believe it or not they can absolutely shut you down.

We really need to call out these types of scammers better. Nothing you can do to stop me selling my crap fake "Apple" charges on amazon (amazon should be doing a much better job screening), my "ecommerce store" that is experiencing "fraudulant transactions" == trying to scam users by not shipping anything, too I bought a container of "north face" gear from china and there is nothing you can do to stop me.

In all these cases, the seller had a reasonable ability to think - hey, this is probably a fraud and stop doing what they are doing.

Seriously, for reputation reasons North Face and many other brand retailers do not sell containers of product on "clearance" to rando third party retailers.. Some even destroy amazing amounts of product to avoid to entering into this scammy reseller chain.

You’re moving the goal posts. Counterfeit goods, entirely legal to shut down the sale of. Authentic goods, you cannot. It’s up to the brand to prove they’re not authentic goods being sold and pursue the necessary channels to shut the seller down.

Says the scammers. You are willfully ignorant here.

Your post did not consider the high likelihood that a container of product on "clearance" from north face is counterfeit.

My point is simple. We have to have less tolerance of the willful ignorance by scammers. The brand should not need to pursue this.

Stipe / Atlas CAN and SHOULD shut down merchants who exhibit characteristics of fraud. Amazon should shut down the fake apple product sellers.

And yes, my job interects with fraud / ripoff detection, and I've worked with folks like you. My advice to folks in business and elsewhere, someone that willfully ignorant is not someone you want to do business with.

I’m not willfully ignorant. The regulation you want to exist (brand gating) does not exist in US law. You must not seek brand approval to sell their goods. You’re attempting to spread misinformation because (it appears) you have an axe to grind.

When you are in business asking your partners to pay a bit of attention and not be willfully ignorant - is not misinformation, this is a business standard that should be encouraged.

I think folks like you confuse something not having a law against it as something that prevents honest businesses from doing anything about the issue. That is misinformation.

I'll let this lie here because you seem both unwilling to consider the source of the container, but unwilling to consider this a useful or meaningful business standard.

I worked for a high-risk merchant, and a 44% chargeback rate is utterly insane. IIRC, internal alarms would go off and the processors would be breathing down our necks if the chargeback rate started to approach 2%.

Stripe held our payouts when we got over 1%.

If you get put into a monitoring program, it gets real expensive, real fast. Though Stripe would probably rather just ban you.

https://stripe.com/docs/disputes/monitoring-programs

I've pushed $600K through stripe with >7K orders and only had 1 dispute, ever.

OP is definitely in the 'fraudster' category, and deep into it! I am surprised Stripe didn't flag way sooner.

TL;DR: OP is using a single stripe account for several, distinct businesses. One had a dispute rate so high that the overall dispute rate of this single stripe account went above some threshold imposed by stripe's upstream financial services partners. Account gets closed. Stripe offers OP to just open a new account. OP spends more time to write a public complaint than it would take to set up a new account.

Sounds like the Paypal horror stories.

Well at least they are expensive. So they got that going for them!

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