Stripe Disputes FAQ

When Stripe imposes a reserve on your California business account, your rights are governed by the Stripe Services Agreement, card network rules, and California financial regulations. Stripe may hold reserves based on chargeback rates, business type, processing volume changes, or perceived risk factors. Under California Financial Code Section 2000 et seq., payment processors must operate fairly as licensed money transmitters. California Civil Code Section 1668 prohibits contracts exempting parties from gross negligence liability, potentially limiting excessive reserves.

Document the reserve notice, stated reasons, and your account metrics. California Business and Professions Code Section 17200 may provide recourse if reserves appear arbitrary or violate stated policies. Under your agreement, Stripe must provide reasonable notice for reserve changes. If reserves significantly impact operations, consider whether they violate the implied covenant of good faith and fair dealing. File complaints with the California Department of Financial Protection and Innovation for potentially improper reserve practices. Maintain detailed records of reserve amounts, holding periods, and business impact to support potential claims for wrongful withholding.

Fighting Stripe chargebacks effectively in California requires understanding both card network rules and California commercial law. When a cardholder disputes a charge, Stripe notifies you through the Dashboard with the dispute reason code and deadline for response (typically 7-21 days depending on card network). Gather evidence addressing the specific dispute reason: for fraud claims, provide proof of customer authorization including AVS/CVV matches, IP geolocation, and order confirmations; for product disputes, include delivery confirmation, product descriptions, and customer communications.

Under California Commercial Code Section 2607, buyers must notify sellers of issues within reasonable time. California Business and Professions Code Section 17500 requires accurate product representations, so document listing accuracy. Submit evidence through Stripe's dispute response interface, organizing documents clearly with a written rebuttal. Stripe charges a dispute fee regardless of outcome, though some fees are refundable upon winning. If you consistently lose chargebacks, consider implementing Stripe Radar for fraud prevention. For systematic chargeback fraud, California Penal Code Section 484 may support criminal complaints.

Stripe's ability to terminate accounts without warning is addressed in the Services Agreement but subject to California legal limitations. The agreement typically allows Stripe to terminate for prohibited business activities, excessive chargebacks, or terms violations. However, California Civil Code Section 1639 requires contract interpretation based on reasonable expectations, meaning Stripe should follow stated termination procedures. California Business and Professions Code Section 17200 prohibits unfair business practices, potentially applicable to arbitrary terminations without cause or notice.

The implied covenant of good faith and fair dealing recognized under California law requires parties to act fairly. If Stripe terminates without following stated policies or providing reason, you may have breach of contract claims. Document your account history, compliance record, and termination notice. Under the agreement, Stripe typically must provide reasons for termination upon request. For fund recovery after termination, Stripe may hold balances for 90-120 days to cover potential chargebacks. File complaints with California DFPI and consider small claims court (up to $10,000) for wrongfully held funds.

Multiple California regulations govern Stripe's payment processing operations and provide merchant protections. California Financial Code Section 2000 et seq. (Money Transmission Act) requires licensing and compliance with consumer protection standards. The California Department of Financial Protection and Innovation oversees licensed payment processors and accepts complaints. California Business and Professions Code Section 17200 (Unfair Competition Law) prohibits unlawful, unfair, or fraudulent business practices, potentially applicable to improper fund holds or arbitrary account actions.

California Civil Code Section 1668 bars contracts exempting parties from gross negligence liability. The California Consumer Privacy Act (CCPA) governs Stripe's handling of California consumer data. For disputes involving California merchants, California courts have jurisdiction under the Services Agreement. Federal regulations also apply, including the Electronic Fund Transfer Act and Regulation E for consumer transactions, and card network operating rules (Visa, Mastercard). If Stripe violates these regulations, file complaints with California DFPI, the CFPB, and potentially the FTC. Document all violations with supporting evidence to strengthen regulatory complaints and potential legal claims.

Recovering funds after Stripe account closure in California involves specific procedures and potential legal remedies. Under Stripe's Services Agreement, they may hold funds for 90-120 days after closure to cover potential chargebacks and refunds. California Financial Code Section 2000 et seq. imposes obligations on money transmitters to maintain customer fund availability. Document your account balance at closure, all communications from Stripe, and reasons given for closure.

California Civil Code Section 3287 allows recovery of interest at 10% annually on wrongfully withheld funds. If Stripe withholds funds beyond stated timeframes without legitimate basis, California Business and Professions Code Section 17200 may provide recourse. Contact Stripe support to request fund disbursement schedule and any requirements for release. For significant amounts, consider filing complaints with California DFPI and the Consumer Financial Protection Bureau. California small claims court (up to $10,000) provides a venue for fund recovery claims. If funds exceed small claims limits, consult an attorney about breach of contract claims or challenging Stripe's arbitration provision. Document all damages including lost business opportunities and interest.

Winning Stripe disputes in California requires comprehensive evidence addressing card network requirements and California legal standards. For fraud-related disputes (reason codes 4837, 4863, etc.), provide Address Verification System (AVS) results, Card Verification Value (CVV) matches, customer IP address and geolocation, device fingerprints, order confirmation emails, and customer communication history.

For product/service disputes, gather delivery confirmation with tracking, proof of service completion, terms of service accepted by customer, detailed product descriptions matching delivery, photographs, and any customer acknowledgments. California Commercial Code Section 2607 requires buyers to provide timely notice of issues. California Business and Professions Code Section 17500 standards for accurate representation apply. Include a clear written statement addressing the specific dispute reason and explaining why the chargeback is invalid. Under California Evidence Code Section 1552, electronic records are admissible when properly authenticated. Organize evidence chronologically with clear labels. Stripe's dispute response format accepts PDFs up to 4.5MB. Submit responses well before deadlines as late submissions automatically lose.

Stripe's Services Agreement contains mandatory arbitration and class action waiver provisions that significantly impact California merchants' legal options. Under the Federal Arbitration Act (9 U.S.C. Section 2) and California Code of Civil Procedure Section 1281, arbitration agreements are generally enforceable. However, California courts apply Armendariz v. Foundation Health Psychcare Services standards to evaluate unconscionability.

Procedural unconscionability exists when terms are presented as non-negotiable in adhesion contracts. Substantive unconscionability applies if terms are unreasonably one-sided, lack mutuality, or impose excessive costs. Stripe's arbitration clause typically uses JAMS or AAA rules and excludes small claims court, meaning California small claims court (up to $10,000) may remain available. For claims under California Business and Professions Code Section 17200 seeking public injunctive relief, arbitration may not apply under McGill v. Citibank. Before accepting arbitration, evaluate whether costs are reasonable, whether you can effectively present your case, and whether any California statutory rights are being improperly waived. Consult a California attorney for claims involving significant amounts to assess arbitration challenges.

Stripe's PCI compliance obligations significantly affect California merchants and create potential liability exposure. As a PCI Level 1 Service Provider, Stripe handles card data under Payment Card Industry Data Security Standard requirements. California merchants using Stripe typically achieve SAQ A or SAQ A-EP compliance levels, reducing their PCI scope. However, California Civil Code Section 1798.81.5 requires businesses to implement reasonable security procedures for personal information.

California's data breach notification law (Civil Code Section 1798.82) requires notification within prescribed timeframes if cardholder data is compromised. Under Stripe's Shared Responsibility model, merchants remain responsible for their integration security, website security, and employee access controls. If a breach occurs due to merchant negligence, California Business and Professions Code Section 17200 may expose merchants to liability. Stripe indemnifies merchants for breaches in Stripe's systems under the Services Agreement, but integration errors or API key exposure remain merchant responsibility. Maintain documentation of your PCI compliance efforts, security procedures, and Stripe integration configuration. Review Stripe's Security documentation regularly and implement recommended security practices.

Stripe Radar false positives can significantly impact California businesses by blocking legitimate transactions, requiring careful management and potential legal considerations. Radar uses machine learning to assess fraud risk, but false positives occur when legitimate transactions are incorrectly flagged. Under California Civil Code Section 1750 (CLRA), businesses must not engage in practices that harm consumers, potentially including systematic legitimate transaction blocks.

Review blocked transactions in your Stripe Dashboard and identify patterns in false positives. Adjust Radar rules by creating allow lists for trusted customers, reducing sensitivity for certain transaction types, and using custom rules based on your business knowledge. California Business and Professions Code Section 17200 prohibits practices causing customer harm, so implement clear communication when transactions are blocked, including alternative payment methods. Document your Radar settings, rule adjustments, and false positive rates. For customers affected by false positives, provide immediate assistance and alternative completion paths. Consider implementing 3D Secure authentication to shift liability while reducing friction for verified customers. Monitor your false positive rate and adjust rules to balance fraud prevention with customer experience.

Stripe's payout schedules can significantly impact California business cash flow, with specific legal considerations when delays cause harm. Standard payout schedules range from 2 days (established businesses) to 7+ days (new accounts), with additional delays for disputes or holds. Under California Civil Code Section 3287, wrongful fund withholding allows recovery of 10% annual interest. If Stripe extends payout schedules without adequate basis, California Business and Professions Code Section 17200 may provide recourse for unfair practices.

Document your original payout schedule, any changes, stated reasons, and resulting business harm. The implied covenant of good faith and fair dealing under California law requires Stripe to honor reasonable payout expectations. For immediate cash flow needs, consider Stripe Instant Payouts (1% fee for immediate access) or Stripe Capital. If payout delays appear arbitrary, file complaints with California DFPI and the Consumer Financial Protection Bureau. California small claims court may provide recovery for damages caused by wrongful payout delays. For systematic issues affecting your business relationship, consider whether contract modification or alternative payment processors better serve your needs while preserving legal options.