Creator Subscription Platform Dispute Demand Letters

Scenario: Platform suspends or terminates creator’s account, often with vague explanation or no warning

Common reasons (stated by platforms):

• “Violation of Community Guidelines” (no specific violation cited)
• “ToS violation” (no details)
• “Suspicious activity” (platform thinks account hacked or fraudulent)
• “Payment processor requirements” (processor refused to process your content)
• “Chargeback threshold exceeded” (too many subscribers disputed charges)
• “Adult content policy violation” (even if content previously allowed)

Creator’s challenges:

• Loss of income: Immediate loss of all subscription revenue
• Stranded subscribers: Subscribers already paid for month; can’t access content
• Withheld funds: Platform may hold final month’s earnings (30-90 days or indefinitely)
• No explanation: Platform won’t specify what content violated ToS
• No appeal process: Automated customer support; no human review

Potential legal claims:

1. Breach of contract: If ToS requires “material breach” for termination and platform can’t identify specific breach
2. Breach of implied covenant of good faith: Termination was arbitrary, capricious, or in bad faith
3. Violation of state UDAP laws: Unfair or deceptive practice (withholding funds, false ToS violation claims)
4. Promissory estoppel: Platform induced you to build business on their platform, then terminated arbitrarily
5. Conversion: Platform wrongfully withholds your earned revenue

Scenario: Platform holds creator’s earned revenue, sometimes for months, citing “investigation” or “risk review”

Common triggers:

• Rapid growth: Subscriber count or revenue spikes suddenly (platform flags as suspicious)
• Chargebacks: Multiple subscribers dispute charges with credit card company
• Payment processor holds: Underlying processor (Stripe, PayPal) holds funds; platform can’t release
• Content review: Platform reviewing content for ToS compliance; holds funds pending review
• Identity verification: Platform requires additional ID verification before releasing funds

Legal issues:

• How long can they hold? ToS usually allow holds for “investigation” but don’t specify duration
• State wage laws: If creator is providing services (not selling products), withholding payment may violate wage laws in some states
• Conversion: Indefinite hold with no explanation may constitute wrongful exercise of control over creator’s property
• Unjust enrichment: Platform holding funds and earning interest while creator gets nothing

Scenario: Platform removes specific posts/content, sometimes retroactively

Examples:

• Patreon: Removes posts containing certain keywords or content types (even if previously allowed)
• OnlyFans: Removes posts after payment processor pressure (adult content restrictions changing)
• Substack: Removes newsletter issues containing “prohibited content”

Creator impact:

• Subscribers paid for content, can’t access it (may request refunds)
• Creator spent time/resources creating content, now removed
• Unclear what content is allowed going forward
• May trigger account suspension if multiple posts removed

Legal claims:

• Breach of contract: If ToS specified what content is allowed and removed content complied
• Estoppel: Platform allowed content for months/years, then retroactively banned it (creator relied on permission)
• Subscriber refund liability: If subscribers demand refunds due to removed content, is platform or creator liable?

Scenario: Platform increases fees, reducing creator’s take-home revenue

Example: Patreon announces increase in platform fee from 5% to 12% (or changes payout structure increasing effective fees)

Creator’s options:

• Accept new fees: Continue on platform; absorb reduced revenue
• Raise prices: Increase subscription prices to offset fee increase (may lose subscribers)
• Migrate to different platform: Move to lower-fee platform (Ko-fi, Memberful, etc.) – but lose subscribers who don’t migrate
• Challenge fee increase: Argue fee increase violates ToS or is unconscionable (weak claim; ToS usually allow fee changes)

Legal issues:

• Most ToS allow fee changes with 30 days notice
• If ToS guarantees fee rate for certain period, increase during that period = breach
• If increase is retroactive (applied to already-earned funds), may be unconscionable or breach

Scenario: Subscribers dispute charges with credit card company; creator loses money + faces chargeback fees

How chargebacks hurt creators:

• Lost revenue: Subscription fee refunded to subscriber
• Chargeback fee: Platform charges creator $15-$25 per chargeback
• Threshold penalties: If chargeback rate exceeds 1%, payment processor may suspend account or increase fees
• Subscriber keeps content: Subscriber already consumed content, gets refund, keeps access (platform may not revoke)

Common chargeback scenarios:

• Buyer’s remorse: Subscriber regrets purchase, disputes charge instead of canceling properly
• Family member dispute: Family member sees charge on card, disputes without asking subscriber
• Fraud claims: Subscriber falsely claims they didn’t authorize charge
• Content dispute: Subscriber claims content not as described or not delivered

Creator’s remedies:

• Dispute chargeback: Provide evidence to payment processor (proof of delivery, ToS acceptance, subscription history)
• Ban serial refunders: Block subscribers who chargeback (if platform allows)
• Sue for fraud: If subscriber committed chargeback fraud, may have claim (rarely economical for small amounts)
• Insurance: Some platforms offer chargeback protection (for fee)

Scenario: Platform goes bankrupt or shuts down; creators lose access to subscribers and funds

Recent examples:

• Various small creator platforms shut down with little notice, leaving creators scrambling
• Payment processors (e.g., Payza) shut down by regulators; funds frozen

Creator risks:

• Lost revenue: Final month’s earnings may not be paid out
• Lost subscribers: If can’t export list before shutdown, lose ability to contact subscribers
• Stranded funds: If platform holds funds in merchant account, may be tied up in bankruptcy

Legal options (limited):

• Bankruptcy claim: File as unsecured creditor for unpaid funds (pennies on dollar recovery likely)
• Payment processor direct claim: If processor holds funds, may be able to claim directly from processor
• Best protection: Diversify across multiple platforms; export subscriber data regularly; withdraw funds frequently (don’t let large balances accumulate)

Why platforms hold payments:

When payment holds may be unlawful:

1. No legitimate reason: Platform can’t articulate any ToS violation or fraud risk
2. Indefinite hold with no process: Holding for months with no investigation or explanation
3. Pretextual reason: Stated reason for hold is false (e.g., claims “fraud investigation” but no actual investigation occurring)
4. Violation of state wage laws: If creator is providing services (not selling products), withholding payment may violate state wage payment laws
5. Violation of payment processor regulations: Payment processors have obligations under card network rules; can’t hold indefinitely without justification

State wage law application:

California example (SB 1402 – “Freelance Worker Protection Act” proposed):

• Requires written contracts for freelance work over $250
• Requires payment within 30 days unless contract specifies different terms
• Penalties for non-payment: Double damages + attorney fees
• Other states considering similar protections

Step 1: Gather documentation

• Screenshots showing account balance and hold status
• All communications with platform about hold
• ToS provisions regarding payment terms and holds
• Evidence of compliance with ToS (if hold based on alleged violation)
• Timeline of hold (how long funds have been held)

Step 2: Formal demand letter

• Cite specific ToS provisions requiring payment
• Demand release of funds within specific timeframe (e.g., 14 days)
• Cite state consumer protection laws or wage laws if applicable
• Threaten legal action: breach of contract, conversion, UDAP violation
• If platform has arbitration clause, threaten to file arbitration (costs platform money even if you lose)

Step 3: Escalation

• File arbitration: If ToS requires arbitration, file claim; platform must pay arbitration fees (often $1,500-$5,000+)
• File small claims lawsuit: If amount under small claims limit ($5k-$10k depending on state); arbitration clause may not apply to small claims
• File complaint with state AG: Many states have consumer protection divisions investigating platform abuses
• Payment processor complaint: If processor holding funds, file complaint with card network or banking regulator
• Public pressure: Social media campaign highlighting platform’s payment hold (last resort; may backfire)

Risk mitigation strategies:

• Frequent withdrawals: Don’t let large balances accumulate; withdraw weekly/biweekly instead of monthly
• Gradual growth: Rapid subscriber growth triggers fraud alarms; if possible, pace growth
• Low chargeback rate: Keep chargebacks under 0.5%; respond to chargebacks with evidence; block serial refunders
• Clear content descriptions: Ensure subscribers know what they’re buying; reduces “not as described” chargebacks
• Verification compliance: Complete all identity verification and business documentation when account created (not after hold triggered)
• Diversify platforms: Don’t put all income on one platform; use multiple platforms to reduce single-point risk
• Direct payment option: Offer direct payment (Stripe checkout on your own site) in addition to platform; reduces platform dependency

What Section 230 protects:

• Platform’s decision to remove content (can’t sue for “censorship”)
• Platform’s enforcement of community guidelines (even inconsistent enforcement)
• Platform’s termination of accounts for ToS violations

What Section 230 does NOT protect:

• Payment disputes: Withholding earned funds is not content moderation – § 230 doesn’t apply
• Breach of contract: Can sue for breach of ToS provisions unrelated to content moderation
• State consumer protection laws: Unfair business practices (payment holds, deceptive practices) not covered by § 230
• Discrimination claims: If platform discriminates based on protected class, § 230 may not apply

Most platform ToS require arbitration:

Typical arbitration provision:

Challenging arbitration clauses:

• Unconscionability: Clause is so one-sided it’s unenforceable (high bar; rarely succeeds)
• Lack of mutual assent: Argue you never agreed to ToS (if account created before arbitration clause added)
• Small claims exception: Many arbitration clauses exempt small claims court; if claim under limit, can sue in small claims
• Statutory claims exception: Some state laws prohibit arbitration of certain statutory claims (e.g., wage claims)

Using arbitration strategically:

• Platform pays fees: Arbitration filing fees ($1,500-$5,000) and arbitrator fees ($3,000-$10,000+) typically paid by platform
• Settlement leverage: Platform may settle to avoid arbitration costs, even if your claim is weak
• Mass arbitration: If many creators have similar claims, file hundreds of arbitrations simultaneously (overwhelms platform; forces settlement)

Unfair and Deceptive Acts and Practices (UDAP) laws:

Every state has consumer protection statute prohibiting unfair or deceptive business practices. These laws can apply to platforms:

UDAP claims against platforms:

• Withholding payments without justification: Unfair practice
• Bait-and-switch: Advertising creator-friendly platform, then arbitrarily banning creators
• Deceptive fee disclosures: Hidden fees or unexplained fee increases
• False ToS violation claims: Suspending account claiming violation when no violation occurred

Joining class action lawsuits:

If platform has wronged many creators similarly, class action may be filed:

• Payment withholding class actions: Multiple creators experiencing same payment hold issue
• Fee increase class actions: Challenging retroactive fee increases or deceptive fee structures
• Account termination class actions: Systematic wrongful terminations

Arbitration class waiver problem:

• Most platform ToS prohibit class actions (“You waive your right to participate in class action lawsuits”)
• Supreme Court has upheld class action waivers in arbitration clauses (AT&T Mobility v. Concepcion)
• Exception: If class waiver is unconscionable or violates state law, may be unenforceable
• Workaround: Mass individual arbitrations (hundreds of creators file individual arbitrations simultaneously)

Government agencies that regulate platforms:

Impact of regulatory complaints:

• Individual complaint unlikely to result in your specific relief
• BUT: If AG receives many complaints about same platform practice, may investigate and force policy changes
• Regulatory pressure can supplement your individual legal action

• Demand letters for account reinstatement
• Demand letters for release of withheld payments
• Arbitration filing and representation
• Breach of contract claims
• State UDAP (consumer protection) claims
• Conversion claims for withheld funds
• Payment processor disputes (Stripe, PayPal)
• Regulatory complaints (AG, CFPB, FTC)
• Platform ToS review and compliance advice
• Multi-platform diversification strategy

• Recovered $47k in withheld Patreon funds via arbitration threat; platform released funds within 10 days of demand
• Reinstated suspended OnlyFans account; recovered $28k withheld revenue + damages
• Filed mass arbitration on behalf of 50+ creators against platform; platform settled and changed payment hold policy
• Obtained small claims judgment for $8k against platform for wrongful account closure
• Negotiated platform policy exception allowing creator to continue after ToS violation dispute

• Demand letter (account reinstatement or payment release): Flat fee ($1,500-$2,500)
• Payment hold dispute: Contingency (33-40% of recovered funds) or flat fee + success bonus
• Arbitration filing + representation: Flat fee ($3,500-$7,500) or hourly ($300-$500/hr)
• Litigation (if no arbitration clause): Hourly ($300-$500/hr) or contingency (33-40%)
• Platform ToS review: Flat fee ($500-$1,000)
• Mass arbitration coordination: Custom fee structure (contact for quote)

Book a call to discuss your platform dispute. Whether your account was suspended, payments are being withheld, or content was wrongfully removed, I’ll assess your options and recommend strategy.

Email: owner@terms.law