Stripe froze $28K for 'high risk' — been selling for 3 years

I've been running an online store selling custom leather goods for over three years. Stripe has been my payment processor the entire time. My chargeback rate is under 0.3%, I have a 4.8 star rating on my site, and I process around $15-20K per month consistently.

Last Tuesday, I got an email saying my account has been flagged for "elevated risk" and that $28,000 in pending payouts are being held in reserve for 120 days. No specific reason, no specific transactions flagged, just a generic risk email. I can still process new transactions but all payouts are frozen.

I've emailed Stripe support three times and gotten nothing but canned responses. I can't reach a human on the phone. This $28K is money I need to pay my leather suppliers and my part-time employee. I'm going to have serious cash flow problems within the next two weeks. What are my legal options here?

Unfortunately, Stripe's Terms of Service give them broad discretion to hold funds and terminate accounts for risk reasons. However, that doesn't mean you're without options.

Here's what I'd recommend:

• Demand letter: A formal demand letter from an attorney often gets routed to Stripe's legal team rather than support. You can also use a well-crafted template — there's a good one at Stripe Frozen Funds Demand Letters. Cite the specific dollar amount, your account history, and your low chargeback rate.
• State money transmitter laws: Stripe is licensed as a money transmitter in most states. Depending on your state, holding your funds without clear justification may violate state money transmitter regulations. File a complaint with your state's Department of Financial Institutions or equivalent regulator.
• UCC Article 4A: If any of these were ACH or wire transfers, there may be additional obligations under the Uniform Commercial Code.
• Unfair business practices: If you're in California, Business & Professions Code Section 17200 (the UCL) may apply if Stripe is holding funds without a reasonable basis.

The demand letter is usually the fastest path. In my experience, about 60% of these cases resolve within 2-3 weeks once Stripe's legal team is engaged.

This happened to me last year with Stripe. $19K frozen for "risk review." I was selling handmade candles — about as low-risk as it gets. Zero chargebacks ever.

What finally worked for me was filing a complaint with the California DFPI (Department of Financial Protection and Innovation) since Stripe is based in San Francisco. I got my funds released in about three weeks after the complaint. Stripe also permanently closed my account though, so be prepared for that possibility.

I switched to a dedicated merchant account through a local bank and honestly it's been much better. Higher monthly fee but I've never had a hold issue.

Thanks for the detailed response, AttorneyLisaChen. I'm in Oregon — do you know if the state regulator route works there too? I'll definitely look at that demand letter template.

ShopifySellerKay — that's helpful to hear. I'm already looking at backup processors just in case. Did you have any trouble getting your existing customers transitioned over?

Just want to add — make sure you're documenting everything. Screenshot your Stripe dashboard showing your chargeback rate, transaction history, and the hold notice. If this ends up in small claims or arbitration, you'll want proof of your clean track record.

Also, check your Stripe agreement for the arbitration clause. Most Stripe ToS versions include a mandatory arbitration provision, but some states have carved out exceptions for small claims court. In Oregon, you can file small claims for up to $10,000, but your amount exceeds that so you'd need to look at circuit court or arbitration.

EcomNate — Oregon's Division of Financial Regulation oversees money transmitters. You can file a complaint through their online portal. Stripe holds an Oregon money transmitter license, so they're subject to state oversight there.

I'd recommend a two-pronged approach: send the demand letter and file the state complaint simultaneously. The demand letter puts Stripe's legal team on notice, and the regulatory complaint creates external pressure. In my experience, the combination tends to produce faster results than either one alone.