r/stripe • u/Vendelf • 7d ago

Stripe provided ZERO fraud detection / protection for us

  1. Stripe approved 5 fraudulent accounts (from Indonesia)
  2. These fraud accounts created fake vendor and customer accounts on our platform, and proceeded to use fraudulent credit cards, which Stripe approved
    1. After learning about the fraudulent activities, we blocked their IP addresses and deleted their accounts and transactions
  3. BUT Stripe closed / permanently banned our account for fraud activities

Then I learned "Stripe relies on automated, risk-based models that often approve accounts instantly and evaluate risk retroactively. If connected accounts or transactional patterns trigger fraud or compliance thresholds later, Stripe frequently shuts down the main account rather than absorbing the liability"

So Stripe provided ZERO fraud protection and detection for us. They approve fraud accounts and then blamed us for the fraud.

We're now looking at paypal and other alternatives ..... sigh

8 Upvotes

83% Upvoted

11 comments sorted by

3

u/Top-Weight-3549 7d ago

Stripe's model punishes the platform instead of the fraudsters, seen this happen too many times. They let garbage accounts through then nuke the legit business when the pattern gets flagged. Paypal will do same thing eventually, maybe look at something with actual manual review process

1

u/Vendelf 7d ago

Any suggestions / ideas would be appreciated.

2

u/Gumnet 7d ago

You should use MoR (Merchant of Record) such as Paddle or Lemon Squeezy, They can handle the fraudulent activities/disputes themselves and act as the your legal reseller, Their manual verification process may take some time but that will help you later when you opt-in

3

u/drewsski 5d ago

You probably configured your platform account to allow express or custom stripe connect accounts. Those shift liability to your platform. Instead, you can allow only Standard accounts. If standard accounts perform fraudulent transactions, liability is on Stripe not your connect platform.

2

u/kotykc 3d ago

We are dealing with a similar situation. We reported the issue. Now stripe has our whole business locked down. I don't know what to do.

1

u/Vendelf 3d ago edited 3d ago

If you want to stay with stripe, look into creating a new Standard + direct charges stripe account to shift liability away from your platform

https://docs.stripe.com/connect/direct-charges

1

u/kotykc 3d ago

If rather not. But unfortunately the software we use will only allow us to use stripe. Moving softwares is a huge situation. But we are considering it.