Customer disputed annual subscription charge — is "no refund" enforceable?

Customer signed up for annual plan ($2,400/year). Used the product actively for 3 months. Then filed a chargeback claiming the charge was "unauthorized."

Our terms clearly say "annual subscriptions are non-refundable." We have their email confirmation, login history, actual usage data. Stripe still ruled in their favor.

What's the point of having a no-refund policy if customers can just chargeback anyway?

Welcome to the chargeback game. Your contract is between you and the customer. The chargeback is between the customer and their bank. Your terms don't bind the bank's decision.

Banks default to customer-friendly decisions because (a) consumer protection regulations require it, and (b) they'd rather lose a merchant than a cardholder.

Your no-refund policy is enforceable — against the customer. If they win the chargeback, you can still sue them for breach of contract. The $2,400 they charged back is still owed to you under your agreement.

Whether it's worth pursuing is a business decision. Small claims court in most states caps around $10-15K and doesn't require a lawyer. But collection is a separate problem if the customer doesn't pay voluntarily.

This customer is in Ohio. I'm in Texas. Do I have to sue them in Ohio?

Check your Terms of Service. Most SaaS agreements include a choice of venue clause — "all disputes shall be resolved in [your state]." If your ToS says Texas, you can sue in Texas. They'd have to travel or default.

If you don't have a venue clause, add one. You want home court advantage.

Question: what evidence did you submit with the chargeback response? "Unauthorized" chargebacks (reason code 10.4 on Visa) require you to prove:

• Cardholder participated in the transaction (IP address, device fingerprint)
• Cardholder received benefit (login timestamps, usage data)
• This matches their historical pattern (previous purchases, account age)

Screenshots of usage aren't enough. You need a narrative tying everything together, ideally with timestamps that prove ongoing engagement after the charge.

@ChargebackPro — I submitted a PDF with their email, subscription confirmation, and a couple screenshots of them being logged in. Didn't know I needed to structure it like a legal brief.

That's the problem. The bank analyst reviewing this sees thousands of cases. They're looking for specific evidence tied to the reason code. Generic "they used the service" doesn't address "this charge was unauthorized."

For future disputes, consider using a service like Chargebacks911 or at minimum create a template response that hits all the required points for each reason code.

Prevention is better than fighting. For annual plans specifically:

• Send a reminder email 7 days before charging
• Include cancellation link in that email
• Use clear billing descriptor (your company name, not payment processor)
• For large charges ($500+), consider a confirmation step before processing

This doesn't stop fraud but it eliminates "friendly fraud" where customers genuinely forgot they subscribed or didn't recognize the charge.

UPDATE: Sent the customer a demand letter citing our Terms of Service and attaching their usage data. Gave them 14 days to pay. They responded within 2 days — offered to settle for $1,200. I accepted because $1,200 now beats maybe $2,400 never.

Also adding the pre-renewal email notification to our billing flow. Good suggestions all around.