Exposing Stripe Chargebacks
and what you can do to avoid them as a Substack Creator
Hey everyone,
Recently I saw a debate on Substack and it was about: Stripe chargebacks.
Creators were pleading via notes for subscribers to simply unsubscribe if they wished, instead of going on the chargeback route. This got me thinking… Legally speaking… is it even legal what Stipe and banks are doing?
So sit back, relax, and let this retired lawyer “lex-plain” what’s happening and what you can do as a creator.
Your friendly Substack ex-lawyer turned coach,
Noemi Apetri
Some Important Facts First
If you're unfamiliar with the term, a "chargeback" is what happens when a customer disputes a transaction with their bank, typically claiming they didn't authorize the payment or that the charge was fraudulent. The bank then forcibly reverses the transaction, returning money to the customer, and often imposing additional fees on the merchant (the Substacker).
What's a "consumer", anyway?
In the financial world, a consumer is typically defined as an individual buying goods or services for personal use—not in connection with a trade or profession. Globally, consumer protection laws are designed to protect individuals in this category, because they're seen as the less powerful party in transactions. These laws exist in most jurisdictions, including both the U.S. and the EU. As a result, banks are quick to reverse charges when consumers raise disputes, especially if there's any ambiguity around authorization.
But here’s the twist: when a Substack Substacker is hit with a chargeback, technically, they're also a consumer—after all, they're using Stripe and Substack as individual users, right?
Well... Legally speaking that's not really the case.. In the eyes of the law and banking system, they’re acting as a vendor and not a private person. So no! We are not consumers in the chargeback context. This is why Substackers lose the protections they normally would have as consumers: Chargebacks hurt real people... working really hard to make an honest living out of their writing.
For Substackers on platforms like Substack, this problem is becoming increasingly common—and deeply problematic.
Picture this: you've built a loyal audience, worked hard on your content, and clearly explained subscription renewals. Yet one day, you wake up to see funds withdrawn from your account. Not only is the original payment taken away, but Stripe also imposes additional fees as a penalty. Worse yet, repeated chargebacks could threaten your ability to use payment services entirely.
Why would this happen, especially when Substackers provide clear evidence that charges were legitimate?
Deep-dive: Why Stripe Side with the Consumers
Strong Consumer Protection Laws: U.S. banks operate under stringent regulations aimed at protecting consumers. Laws like Regulation E and Regulation Z heavily favor consumer rights in disputes, making banks naturally inclined to side with cardholders—even when claims seem questionable.
Stripe’s Limited Role: Stripe isn't deciding these disputes independently. Instead, it's an intermediary, passing along your evidence to the banks. The banks themselves are typically cautious, opting to quickly resolve disputes in consumers' favor because challenging them is riskier and costlier.
Subjectivity and Ambiguity: Many disputes labeled as "fraudulent" aren't outright fraud. Often, subscribers simply forgot they subscribed, failed to recognize the charge, or regret their purchase. Banks, however, often interpret these misunderstandings as genuine consumer concerns, defaulting to protecting their customers.
This creates a harsh reality for Substackers: even well-documented evidence showing consent (like clear Terms & Conditions, subscriber interaction history, email open rates, etc.) won't make a difference. And it stings!
What Substack Could Do?
(Some practical suggestions from this ol' IT lawyer that moonlighted as product manager back in the day:…)
There is one entity that could intervene to smoothen this issue. That entity is Substack. How? By creating functionality for the SS platform (functionality that a creator can turn on/off) to remind its subscribers that a new charge is coming. Extra brownie points if there's the option to add a message summarising highlights of the month/year they had with the creator, or value they already had.
What Can Creators Do, if Anything?
Well there is always something you can do. As an ex lawyer, of course I could think of a few options. Good lawyers don't advise just on laws and how they apply, they look at the situation holistically and suggest solutions that can address the concerns in a way that follows the rules and creates results.
My main suggestions for Substackers are as follows:
In the below, you find my practical suggestions of how to deal with the chargeback situation based on my legal, business, and experience dealing with clients. It is paywalled. Paid subscribers get T&Cs for your substack together with all guides available during your subscription period.
Get Yourself Publisher Terms & Conditions for your Substack: While T&Cs won’t help you win a chargeback—because banks typically ignore them in favor of the cardholder’s version of events—they still serve a strategic function. They signal to Stripe and payment processors that you’re running a legitimate, well-managed business. This matters if your account is ever reviewed for too many disputes. In short: they won’t save you in a fight, but they might protect your reputation with the platforms you rely on.
Timely Renewal Reminders: While Substack doesn't currently offer an automated way to notify subscribers of upcoming renewals, you can manually identify older subscribers and send a thoughtful reminder about the value of your content and the upcoming charge. Yes, it takes effort—especially with rolling subscriptions throughout the year—but it’s a powerful tool to build trust and reduce chargebacks. Downside? You're giving people that were on the fence, or forgot but would not do a chargeback the opportunity to unsubscribe.
Scientifically speaking...
Here's something ELSE to keep in mind about creator-subscriber relationships based on science:
The Parasocial Effect: Subscribers feel like they know you—even if you've never met. That one-sided emotional bond makes them hesitate to unsubscribe, even if they’ve stopped reading.
Reciprocity Bias: If someone once got value from your work, they often feel a subtle obligation to stay—even if that value has diminished.
Loss Aversion & Inertia: Cancelling feels like losing something. Add in the effort of navigating settings, and many will just let the charge auto-renew.
Trust Over Value: People don't just subscribe for content—they subscribe for connection. Familiarity and trust keep them around longer than pure value.
Legally Speaking…
So yes! Legally speaking… banks side with consumers primarily to comply with strict regulatory frameworks designed to protect consumers from unauthorized and fraudulent transactions. Banks aim to minimize THEIR legal risks, regulatory scrutiny, prioritise keeping their banking license, even if this means occasionally siding with questionable claims from consumers.
Practically speaking, "fighting" chargebacks rarely makes sense. It's costly, it erodes subscriber trust, and often leads to failure due to the consumer-friendly regulations banks follow.
While legally speaking Substackers may indeed be in the right, the smarter business approach is to adopt preventive measures instead.
Bring so much value that your readers won't want a chargeback.
Show up. Show your face. Share a personal detail now and then. Make it human. Because the more people feel connected to you, the less likely they are to dispute a charge.
Use your community to build a mini universe where your subscribers feel they belong.
Rooting for your success,
Your favourite Ex-Lawyer and Coach
Noemi Apetri 🎈
P.S. Lawyers can advise (not this ex-lawyer I am retired!). They expose the facts, the risks, but CEOs, they are the ones to decide based on the information they have. So for you, as the CEO of your publication, you need to weigh in the pros and the cons of this article. Think about:
How many chargebacks do you get? Can you just chuck those cases as operating costs?
Is it a big enough issue to thing of doing renewal reminders?
What is my relationship with my subscribers?
P.P.S. This article is not Legal Advice and does not create client-attorney privilege. This is a journalistic report and an opinion piece based on someone's experience in law, business and life. Think critically and carefully before making any decision based on this article or anything that Coach Noemi Apetri writes or says in any of her publications.