Comment by merek | Hacker News Reader

Comment by merek | Hacker News Reader

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I run a SaaS business, and whilst disputes are rare, I'm pretty sure most of them are from customers who forget to cancel their subscription. Rather than emailing me asking for a refund (which I'll be happy to give), these customers go straight to the dispute process.

Once a dispute is opened, what are my options?

- Send a super nice email to the customer asking to withdraw the dispute and promising to refund their payment/s

- Contest by submitting evidence. What evidence is there to show that the customer DIDN'T cancel a subscription?

Both of these processes are laborious and rarely worth the time. And regardless of outcome, the original dispute fee is not returned in my experience.

This feels unjust such that the psychological cost of a dispute outweighs the financial cost for me. I get that merchants should be disincentivized from engaging in dodgy businesses, but even when a merchant does everything right, disputes still happen.

I would like to see a simple, penalty-free option for dispute resolution, similar to:

1. Merchant receives notification of customer's intent to dispute. Merchant has 2 weeks to review the claim.

2. During this window, merchant can refund the payment/s, either accepting the dispute, or refunding as a courtesy. If payment/s are refunded, the case is closed, and no penalties are incurred (apart from transaction fees).

3. If the merchant contends the customer's claim or doesn't respond, the matter becomes a dispute as it exists currently. A fee is withheld, and the merchant can submit evidence within a given time. However unlike the current situation, the fee should be borne by the customer if the merchant is successful. If customers risked a penalty of opening an unsuccessful dispute (especially a non-fraud dispute), it would likely reduce the number of groundless/fake disputes.

This is the tradeoff of accepting credit cards.

Users access to a payment system that users trust because it generally gives them the benefit of the doubt, and they don't face liability for fraud.

Merchants get access to a fast reliable system connected to billions of worldwide users, but are forced to adopt extremely customer friendly policies.

If you don't like Visa or Stripe's terms, don't accept them. Use ACH, or crypto, or whatever else other payment system you prefer, but be ready to have a VERY hard time attracting customers.

I get that it's annoying, I used to do payment tech for a subscription box, and people loved to open disputes when they forgot to cancel. But, it wasn't hard to dispute: we would send a copy of our terms of service showing that they agreed to the charge, and a copy of the shipping showing that the item was sent, as well as a log of all communications and interaction with the client (to prove that they hadn't requested cancellation). We had a script that could package all of this info for the dispute, so it normally took almost no time at all. Sometimes we had to eat the cost because the whole process is biased against merhchants.

The reality is that credit cards are one of the most enabling technologies for the internet. Should it be this way? I don't know. But in the real world, it is, so you can either opt in to the most popular payment system that gives you access to billions of people n exchange for disputes, or you don't.

I get people claiming "fraudulent charges" when they forget to cancel. It is very hard to argue against that and the terms of service don't help much as evidence.

We could easily user activity logs that showed their login activity and what they did on each session. You can't prove a negative, but having all of that data for their entire account looks good. We could show that reminder emails were sent a week before fulfillment (with enough time to cancel), as well as shipping notifications.

We really weren't into tricking people, and we would do everything we could to accommodate if you contacted us directly.

Do you have an official written policy for customers that forget to cancel? It could be as simple as "in case you forget to cancel and are later charged, please email us". You could then add a mention to every renewal email. If the policy is not official, but you're already open to reimburse someone that emails you, then make it official. Why have it as a discretionary unspoken rule that lets your customer guess as to the outcome of them asking for a favor.

I like your resolution.

That said, subscriptions could also be opt-in for renewal.

I think all of this is friction over a bad/predatory business model.

Apple's App Store Refund policy:

Sell your $10 app, and get paid $7 by Apple. Customer disputes it, and you have to refund... $10 to the customer. Apple keeps their cut.

You are misinformed: https://news.ycombinator.com/item?id=23987584

This just shifts even more risk onto merchants while making disputes an even bigger headache.

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