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Shopify pulled the plug in our 2nd month of launch!

Discussion in 'Selling online' started by Tbsco, Dec 15, 2018.

  1. Tbsco

    Tbsco Member

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    Hi everyone,

    So, unfortunately we woke up this morning to an email from "Shopify Risk Operations Support". They decided that 2 months into our launch and after considerable sales that they were going to pull the ‘pseudo-pharmaceuticals’ line for our range of handmade beauty products and essential oils range (that make NO health claims) and stop our payments.Just like that with no warning and not even a grace period so we can find an alternative provider!

    They did this on a Saturday morning, and unfortunately some providers don't work Saturdays, looking at you eWay :(

    But now the issue is we are going to be slugged a 2% penalty per transaction plus the new payment providers merchant fees. We can join Shopify's higher plan tier at $79USD instead of the current $29USD and this will reduce the penalty to 1%. But still, which business wants to lose any percentage of their sales to greedy corporations who are ultimately behind this decision to block our website from using their services.

    The issue is that eWay may even have the same restriction, which would make things very difficult. The payment processor Shopify recommends starts at 2.99%! They were kind enough to even share their referral affiliate link

    Thoughts, suggestions, or if anyone has been in the same situation I would love to hear from you. I'm scared of migrating to another platform, because everything is so smooth currently, but open to ideas.
  2. John Debrincat

    John Debrincat Well-Known Member

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    One of the downsides of dealing with Shopify is that they have to comply with USA laws and restrictions regardless of where you are located. This includes the US Food and Drugs Administration (FDA). Obviously laws and restrictions vary from country to country and if you are based and selling primarily in Australia then you should use an Australian based service provider. Australian businesses using overseas service providers have virtually no control when it comes to conflicts like this or even access to their own data.

    John
  3. Paul - FS Concierge

    Paul - FS Concierge Administrator Staff Member

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    Another story of what can happen when you don't control your own platform.

    It sucks.

    I hope you find a good solution for you.
    ContentCreative and Corey like this.
  4. bb1

    bb1 Renowned Member

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    It's good to see one online platform is taking a little bit of responsibility for what the traders on it are selling. I just wish others would as well, maybe one day google will fall inline as well.
  5. RunicConvenience

    RunicConvenience Active Member

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    I disagree, I don't think host providers should be left to police their clients. I would much prefer that the site creators or businesses get 100% of the risk. no just being in a different country or using a business as the out.
  6. John Debrincat

    John Debrincat Well-Known Member

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    It is not really about the platform. If you mean someone creating their own site on Wordpress or similar. The issue is really with the hosting service provider. So even a Wordpress or other open source website set up by the business owner may be removed if it contravened some specific laws like the USA FDA requirements. There are also strict requirements on payment service providers.
  7. John Debrincat

    John Debrincat Well-Known Member

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    They are not "taking responsibility" they are risk adverse. Anything that might represent a potential risk even if it is not in contravention to any legislation will be treated negatively. For USA companies that is in part because of The Sarbanes-Oxley Act which effectively makes the executives of a company liable for any issues that might impact the corporation. It puts strict requirements around processes like revenue recognition and profiting from an illegal act. So if the company thinks that a customer is using the platform in breach of some law then they will generally close that down.

    If they where being "responsible" they would not have allowed the business to start up in the first place.

    John
  8. LucasArthur

    LucasArthur Renowned Member

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    Howdy All

    Was not going to reply to this thread, just its a can of worms, although i just want to provide a little info about what is possibly really happening on the back end..

    Sadly, it is not Shopify per sae that are actually changing anything, it is their payment gateway (bankers) which i think is stripe? What is typically happening in this situation is that they gateway have pushed back to Shopify explaining that the product being sold is either a) unlicensed; b) not registered health product (tailored potentially to the OP); c) other infringement worthy reasons such as counterfeits etc etc..

    From what i understand, Stripe have to abide (similar to what @John Debrincat mentions) by local laws within USA and payment processing and the risks associated with 'supporting' some lines of items.. It looks like OP may infringe upon something, or it may also be a completely random halt asking the OP to prove something about the product that would allow them to progress..

    Generally the email says 'your shopify payments has been put on hold and you will not be able to withdraw any funds although you can still accept payments whilst we investigate and get some more information from you' or similar. Although the entirety of the email is actually quite offensive to someone not doing any wrong (it really needs better wording), it has merit and is Stripe pushing back on Shopify - not shopify stopping anything as such.

    Its similar to domestic merchant gateways, many WILL NOT touch a few industries - be it adult related, cosmetics (home brand) and so forth due to risks associated with it from chargebacks or other...

    Whilst i agree with most comments above abut platform taking ownership (it is good to see), owning your own site off a ecommerce ready to go option, or other - i can see that the not seen email and the unknown may be pushing the blame onto Shopify, which isnt necessarily the correct placement of said blame.. They are the middleman, believe it or not, in this situation from what i can see..

    My advice to the OP, is await a few days for a secondary email from the risk department (who liaises with the gateway from what i understand) to see what they are seeking in order to overcome this..

    Also note, this can happen routinely to some providers on Shopify out of the blue as a cycle/sweep is performed on the gateways activities and or items tested.. EG: beauty without labelling or promises or information about safety and so forth could raise red flags across most providers...

    Anyways, take this as you wish.. a novel had to be had, as its been a while. OP, keep us updated..
  9. Tbsco

    Tbsco Member

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    You make it sound as if we are selling illegal or unethical products. Shopify did not ban us, or kick us off their platform. They simply said they can't provide us with their merchant services due to limitations placed on them by their banking partners.
  10. Tbsco

    Tbsco Member

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    The email I received from Shopify was this; I've added the relevant parts

    (For some reason I can't paste the contents of the email, as the site keeps saying it's spam)

    We sell none of the examples listed above, in fact all of our products are 100% natural, legal and make no health claims.

    My only annoyance with Shopify was that they did it on a Saturday morning, with no grace period while we find a new merchant provider, and that they now charge a 2% per transaction penalty. In fact, one could argue they're much better off.

    The risk analyst made it pretty clear in their email that the decision is final. We only had a downtime of 30 minutes in the end, because we were able to migrate to another merchant quite quickly. It's just unfortunately coming at a cost of an extra 2%
  11. LucasArthur

    LucasArthur Renowned Member

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    Howdy

    IMO you have misread my reply, i am not inferring wrong doing or other on your part although was just providing some insight for not only you but others reading.. Being part of the forums, many people learn from the replies and seeing a more complete picture can sometimes enlighten those that this may have interested.

    There is obviously something about your product that has peaked there interests, be it natural or not is irrelevant.. There may be a claim somewhere or it may go against some ruling in the US.. there are a heap of reasons..

    Re being done on a saturday, friday shopify time, is crappy to say the least.. although you may find you will get a message to explain something and so forth.. ps.. you also keep blaming shopify, i read this as a gateway provider issue - another reason i replied as the blame may not be entirely shopifys.. Personally i am not convinced its them, although the timing is insane.

    Let us know how you go during the week though..

    Jason
  12. John Debrincat

    John Debrincat Well-Known Member

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    Hang on it is Shopify. The Op was using Shopify payments. Yes Shopify Payments was created through a partnership with Stripe but it is Shopify. They now make more money via merchant fees than they do from online store fees. So whatever was the trigger it was Shopify's risk. Under their terms of service they can terminate any account but they do also list Prohibited Businesses and one is "Pharmaceuticals or Pseudo pharmaceuticals".

    Other payments service providers and online shop providers have similar restrictions. But the due diligence is generally done before the customer is signed up and live. For example we need to show eWAY the merchants website with products, T&Cs, Privacy etc before an account is approved.

  13. Tbsco

    Tbsco Member

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    I blame Shopify for the way they handled it, and the exorbitant fees they've added as a result. I'm quite aware they use Stripe, and whether it's ultimately Stripe's policies that are the issue, the fact is Shopify has taken the decision to onboard their clients first and then asking questions later. Anyone who's used their service knows this, and anyone who's sold on their platform would be quite aware of their tactics. They do this so they have a high onboard rate, and then worry about the details later. It's good for them, and sometimes, like in my instance bad for the merchant. We were able to signup with another merchant within 30 min, anyone else could have been waiting for days and lost a considerable amount sales as a result.

    So, maybe it's Stripe Policy that's the problem here, but it's Shopify implementation that I was having a go at.
  14. LucasArthur

    LucasArthur Renowned Member

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    Sounds like you already knew the answers..
  15. bb1

    bb1 Renowned Member

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    [Mod Edit to remove content that break the Forum Golden Rule - Be nice, respectful].
    Last edited by a moderator: Dec 18, 2018
    RunicConvenience likes this.
  16. Tbsco

    Tbsco Member

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    [Mod Edit to remove content that break the Forum Golden Rule - Be nice, respectful].

    Even then, I dare you to find the particular policy, guess what, it's not even on their signup page. So, please go troll another thread, I asked for help and advice, not your opinion.
    Last edited by a moderator: Dec 18, 2018
  17. El Arish Tropical Exotics

    El Arish Tropical Exotics Active Member

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    It would be so much easier to comment and formulate advice if you actually had a link to your shop so we could see what you were selling and how it was marketed.
  18. BusinessTrade

    BusinessTrade Active Member

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    Unfortunately, like an earlier poster said - this is what happens when you have a website based on another platform. Not the same as being solely reliant on eBay for sales but it has similar downsides if and when you infringe on the platforms rules.

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