I lost all my customers and sales due to Gumroad suspended my account for one sale dispute
First of all, I'm not here calling Gumroad is a bad service or anything like that, partially I understand why they did what they did. I'm simply here to share this unfortunate event that happened to me over the weekend, along with my lesson learned, the hard way. 😭
Story Begins
At the beginning of this month, I launched my first product of this year, IH Bookmarks, a Chrome extension. And I was using Gumroad for the presale, I got my first customer soon after for the amount of $2, I still remember how happy I was that day. ❤️
Honeymoon
My experience with Gumroad at that time can be described in one word, perfecto. It was so good, so I decided to use its licensing feature as well. Basically, Gumroad issues my customer a license key upon purchasing, and I was using that for authorizating my customers over Gumroad API, and it just works. I was so pleased with it, so I introduced the same payment / authorization flow to my second product CSV Lint.
The Fall
Saturday morning after waking up, first I saw there's a refund email (I purchased a copy of IH Bookmarks myself, to make sure everything works), I was like, emm, what happened? Then more emails came into my eyes.
Sat, Feb 20, 2:11 AM: You have a new subscriber for CSV Lint Subscription
Sat, Feb 20, 2:30 AM: Activation error (came from my customer asking why s/he can't activate)
Sat, Feb 20, 3:47 AM: A sale has been disputed.
Sat, Feb 20, 5:26 AM: Regarding your Gumroad account (unfortunately, due to risk concerns, we have had to suspend your account and sales. Your remaining balance is due to be refunded to your customers.)
Everything fell apart while I was sleeping and dreaming about my wonderful indie hacking life. 😂
Allow me to recap what happened base on my knowledge.
- CSV Lint got its first customer.
- Customer was unable to active the service due to a bug in CSV Lint.
- Angry customer raised a dispute.
- Gumroad pulled the plug on me, suspended my account, took down all my products, and refunded all my sales.
I didn't went into full complain mode. First, I replied the customer apologized for the inconvenience, and removed the paywall from CSV Lint, so that customer can get his or her job done. Then I wrote back to Gumroad, asked politely for an explanation, knowing if I have not coded that bug in my system, none of these would have happened. But still, I just don't understand why Gumroad would suspend my account, and take out all my products for one single sale dispute.
After 4 days, Gumroad support wrote me back:
Our risk models detected behaviors in your Gumroad account that are considered, in the payment processing industry, to be fraudulent or correlated to fraud - to be sure, we apologize for the negative connotation that the word "fraud" has.
Due to the strict regulations by our business partners, we have suspended your account and will not be able to continue working with you. I would recommend contacting your clients to find a different means of payment.
Well, I guess all relationships end. 💔
Lesson Learned
Don't rely on one single vendor to take care of your core business
In my case, I was using Gumroad for both sales and user authorization. Losing all my sales was not really a big thing considering all money went back to my customers, they're well protected 👏. What's worse was I lost the ability to serve (authorize) the rest of my customers. 😱
I should have auto reply turned on for the incoming support emails
Support hours should absolutely be included, to set the right expectation.
Running the one-man show is darn hard, journey continues... 🧗♂️
@hilee I know I’m a bit late to reply to this, but I recently just started using Gumroad to sell subscriptions to my product as well.
Based on what I’ve read in their documentation the reason they suspended your account is because you purchased your own product to see if it works.
According to their documentation that is automatically flagged by their fraud prevention systems and it leads to the suspension of your account.
This is to prevent money laundering activities on their platform where a user pays for their own products, thus returning the money back to themselves.
It does make it harder to test that everything is working just right.
So definitely don’t buy your own products on Gumroad if you don’t want to be suspended!
Maybe you already understand this now, but I wanted to leave it here as a warning to other members to not do this on Gumroad and save them some trouble in the future.
Thanks Cosmin! Actually I just found out, if you switch to buyer mode, and go to your product page, Gumroad allows you to go through the purchase process with a test credit card, so you don't have to actually buying your own product. :)
@hilee Hopefully this can be a happily ever after. Gumroad did flag this as suspicious but after reading this post, support just double checked and approved you.
Thanks Randall, I hope so too! :-D