
Why won't Stripe put up a fight like Paypal does on illegitimate chargebacks? - jjoe
http://www.webhostingtalk.com/showthread.php?t=1341773
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anurag
(I work at Stripe). I agree that our chargeback management tools are far from
perfect, and we're working to improve them. We introduced PDF evidence uploads
last year (unfortunately too late to help in this case), and we're currently
exploring ways to make illegitimate chargebacks a non-issue for all our users.
We're also constantly fine-tuning our fraud detection systems which also helps
reduce chargebacks across the board.

If you have thoughts on how we can improve this process further, we'd really
appreciate hearing from you. Email me at anurag@stripe.com.

~~~
rschmitty
What is Stripe's recommendation for SaaS companies wanting to prevent
chargebacks?

For example, I sign up for Basecamp and pay monthly, then x months later I
issue a charge back and win. What is your recommendation to prevent situations
like that?

~~~
anurag
The best course of action to prevent chargebacks is to make it ridiculously
easy for customers to get in touch with you about refunds and other customer
service issues. If the refund process is quicker and easier than issuing a
chargeback, your users will be a lot less likely to try the latter.

If you do receive chargebacks, I'd recommend keeping extensive records that
you can later upload as a PDF file as part of the dispute process.

Things like:

\- IP addresses, logins, usernames and other proof that the customer used the
product.

\- User correspondence acknowledging the purchase.

\- All invoices sent to the user.

\- Emails or other documentation displaying cardholder consent for the
transaction.

While it isn't always easy to win disputes for SaaS business, submitting
comprehensive evidence in your dispute response significantly improves your
chances.

~~~
rschmitty
Thank you for the advice!

------
mehwoot
Yeah, now people are starting to realise that running a payment processor
isn't as easy as it seems. People bash paypal but there are very good reasons
they do what they do, to strike a fair balance between protecting consumers
and protecting sellers.

Companies like stripe put forward how good their technology is, but honestly
most of the real work that a payment processor does is the processes they have
for dealing with this sort of stuff.

------
anigbrowl
Because the value of their reputation for low fees/friction is worth more than
that value of their reputation for fraud prevention (which most people will
take for granted, since most people are not fraudsters). I think Paypal is
actually moderately efficient in this area, and its #% fees are not
unreasonable considering the scope and complexity of its operations. By
contrast I think eBay's fees are quite excessive, but because the Paypal fee
gets pulled out last and most people forget about it, much of the negativity
attaches to Paypal. Nothing will change until Stripe becomes too popular with
fraudsters for people to ignore it, and that'll take a while because it's
middleware and people have a different brand relationship with it than they do
with Paypal. Sorry :-/

------
shawnee_
What an interesting discussion. It should be noted that no matter how much
evidence you can provide to your payment company about legitimate chargebacks,
it's all useless if any one of the following is true:

(A) the person/s fighting the chargeback for you are incompetent / don't care
/ don't actually file the chargeback; (B) the person/s fighting the chargeback
for you are _bullied_ into minimizing or hiding or not reporting evidence that
can prove things like recurring fraud, identity theft, or bogus accounts;
ultimately, this evidence exposes weaknesses in the payment company's systems
that the payments company doesn't want "out there"; (C) the company is just
plain unethical and will actually go out of its way to get rid of employees
who _do care_ and are willing to spend time and resources fighting chargebacks
at an individual level -- such companies do this because they value company
"image" in the eyes of investors / VCs > "the little guys".

As the person who filed and fought -- with a decent success rate -- almost 100
percent of the chargebacks for _competitorofStripe_ but who was let go for
reasons (B) and (C) above, I would gladly testify that this is a real problem
that cannot be solved without employees who know right from wrong. A little
over a week ago I wrote to Patrick after reading another thread criticizing
Stripe's customer support and turnaround.

Clearly Stripe needs help in this area.

Ultimately, payments companies need technical people who care, but it's a
weird combination, and those people are few and far between. Those people need
to be allowed to make their own decisions and spend time on individual cases,
even when the cost:benefit math tells the managers or CEOs it's not "worth
it". I'm recently coming off a year of independent projects, and would like to
get back into the team environment. It really doesn't make sense for
experience and specialization to go to waste. If you hire me, Stripe, I will
help build the _best_ and most customer-focused chargeback-fighting machine in
the industry, enabling you to run circles around your not-so-ethical
competitors.

------
icelancer
I won both times clients charged back on me, but I shipped physical goods and
was able to provide a tracking number.

I thought it was common knowledge that it's nearly-impossible to beat
chargebacks on virtual goods?

~~~
jjoe
Stripe doesn't seem to try at all when it comes to intangible + chargeback.

It's tougher to prove illegal chargebacks on virtual goods (intangible).
Paypal is willing to take any logs, communication, correspondence, and user
information you give them and use it to challenge the chargeback with the card
issuer.

Stripe not so.

------
adambenayoun
It's true that Stripe have almost non-existent anti-fraud tools. We've been
using Maxmind's minFraud and have been building a bunch of filters and logic
on top of it. We shouldn't need to do this but as a marketplace we were being
hit by OBVIOUS fraud that we need to do something since Stripe wouldn't step
up their game, at some point the fraud amounted to ~20k in a very narrow
window of time and Stripe didn't stop these transactions as fraud even though
it was so obvious (US Card, IP from Thailand and 20 charges within a few
minutes), this is when we decided we had to do something about it.

We've even blogged about it here:
[http://www.binpress.com/blog/2012/07/31/fighting-online-
frau...](http://www.binpress.com/blog/2012/07/31/fighting-online-fraud-
pitfalls-and-solutions/)

Regarding chargebacks - I usually don't bother to fight them anymore, since
we're a marketplace selling digital assets - we are most likely to lose.
However the exception is when I'm 100% that charge is legitimate and was
disputed by its owner. Since we offer an unconditional 14 days money back
guarantee and make it really easy to request a refund (sometime even outside
of that 14 days window), whoever illegitimately dispute a charge is sure to
get a fight from us.

A few months ago we disputed 2 "fraudulent" chargebacks from a customer we
knew was behind these charges. We even reached out to him asking him to cancel
the chargebacks and offering assistance (maybe he just wanted a refund) but
never heard from him. I proceeded to collect all the information I could: IP
and location, email thread he exchanged with the developer selling the
component requesting support, his apps on the appstore and even his personal
information behind hid domain's whois for his email's domain.

I didn't expect much knowing that because that was an intangible sale we were
not protected, but few weeks later we received an email from Stripe that we
won that chargeback (Total was ~$1,000 which we already paid to our developers
- so that was a net loss for us).

I was pleasantly surprised and regained confidence in Stripe.

However from the original post of the author, it seems he was doing services
for that person. In case services - I recommend to collect as much information
as possible including getting the customer to sign on a contract. With all of
that information, I doubt someone could dispute a charge. Credit Card
companies will never dispute a charge that actually happened and that you
approved even if the service was partly rendered since this is not their role
to take sides, they will usually ask you to take this to court. Therefore I
think the author could have won that chargeback if he had collected as much
information as possible and put a PDF together highlighting the facts.

~~~
patio11
You can, indeed, lose chargebacks even if you have a signed contract or
whatnot in place. It is totally at the discretion of the issuing bank, and
generally something decided in 5 minutes by a fairly low-level employee. AR
has lost chargebacks where our evidence included a statement by the CEO of the
customer saying the charge was accepted and that AR was key to his business.
(His bookkeeper didn't know that so she reversed 6 months of charges at once.)

~~~
adambenayoun
You are completely correct that Stripe has no control over this and this is at
the sole discretion of the issuing bank. I think I was pointing that the "you
can't win intangible good chargeback" is not true anymore and if you can put
together a good case with lot of proofs sometime you might win.

By the way, no one really talked about this but there's always a possibility
to sue the customer if the charge is really big and the customer reside in the
same country than you are (for example US). Of course this is up to you to
decide if this is worth the effort (Most cases this isn't).

------
nathanbarry
I use Stripe for my SaaS app, but for all my digital download products (ebooks
and courses) I use Gumroad [1] which actually has really great fraud
prevention. Not only that, but Gumroad will fight a chargeback on your behalf
and if they lose they cover the fees. That includes both the credit card fees
and the $20-30 chargeback fee.

You know a company that has taken responsibility for the related charges will
work hard to fight fraud.

Disclosure: I really like selling through Gumroad (and once they sponsored a
workshop I taught).

[1] [http://gumroad.com](http://gumroad.com)

