Don't use Shopify to sell pre-order items or to run a crowdfunding campaign

[divisionfurtive]

On September 1st, 2017 at 10:08PM, two days after the launch of the Type 77 presale campaign (where 50% of the Type 77 timepieces available had already been pre-ordered), Division Furtive was notified by Shopify that the proceeds of the campaign were going to be frozen for 90 days because of a “chargeback risk”. The email from Shopify included the threat that the situation would continue if a single chargeback was to occur during that period. You can read this email here (division-furtive.com/share/ShopifyNotice.png).

Division Furtive was immediately worried for its collectors. Having collectors’ money in limbo for 3 months can only create two things: fear and uncertainty. Which, ironically, is a perfect scenario to see chargeback starting to pop-up. A lot of the future Type 77 collectors are returning collectors from the Type 40 and Type 50 presale campaigns and are among the world’s most faithful and patient people (e.g.: feedback from the Type 40 and Type 50 Kickstarters) but they did not sign up for this and it is unfair to impose this situation on them.

As you can imagine, being imposed a three months delay out of nowhere from a minor actor in the project has devastating consequences on the project planning. This single action from Shopify has ruined more than a year of development and planning for this launch. What strikes the most is the unpredictable nature of Shopify’s decision. In addition to being a fellow Canadian company, Shopify had been chosen for its openness toward pre-orders. The rules instructed by the Shopify Guru in this post (division-furtive.com/share/ShopifyPreordersPost.png) on Shopify ecommerce university had been followed (division-furtive.com/share/ShopifyStoreEn.png).

Division Furtive has decided to put the money back where it belongs, that is in collectors’ pockets, not Shopify’s. At least by doing this, Shopify won’t be making 3-month worth of interest on the money of the presale campaign they decided to freeze out of nowhere.

[al2o3cr]

IMO it sounds like you've interpreted "pre-order sales" very differently than Shopify does. The below references this document:

https://help.shopify.com/themes/customization/products/allow...

"Pre-order" in that document appears to refer to products that authorize (make a "pending charge") at checkout but capture (make a real charge) later - the merchant doesn't receive the money until the capture, when the product ships. How far apart in time these two events can be depends on the processor's contracts with the rest of the upstream network; the Shopify doc specifically lists a maximum of 7 days. The Guru post mentions "capturing but delivering later", but how much later is unclear.

Combine that with the "no refunds after September 29th as the money will be gone" policy which seems (IMO, IANAL) in opposition to chargeback policy from the card networks and I can totally see why Shopify might not want to carry the risk of your customers.

Also, if this is the first time you've interacted with Shopify support you should've spent some of that "year of development and planning" making sure your partners were 100% on board...

[Powerofmene]

Shopify has a seven day window from charge authorization to shipment. I think you are stretching the bounds of what Shopify has been known to allow. I think this is either a severe miscommunication between you and Shopify on what you are doing or you need to be on a traditional crowdfunding platform for preorders as you have used in the past.

[divisionfurtive]

Not true. Not according to the terms terms of service of Shopify Payments (https://www.shopify.com/legal/terms-payments-ca):

"Stripe, on behalf of Shopify and/or Wells Fargo reserves the right to change the Payout Schedule or suspend payouts to your Bank Account should we determine it is necessary due to pending disputes, excessive or anticipated excessive Chargebacks or refunds, or other suspicious activity associated with your use of the Service or if required by law or court order."

"Further, if we reasonably believe that a Chargeback is likely with respect to any transaction, we may withhold the amount of the potential Chargeback from payments otherwise due to you under this Agreement until such time that: (a) a Chargeback is assessed due to a customer’s complaint, in which case we will retain the funds; (b) the period of time under applicable law or regulation by which the customer may dispute that the transaction has expired; or (c) we determine that a Chargeback on the transaction will not occur."

"Funds held in reserves are amounts of money set aside to cover Chargebacks, refunds, or other payment obligations under this agreement (a “Reserve Account”). We, in our discretion, will set the terms of your Reserve Account and notify you of such terms, which may require that a certain amount (including the full amount) of the funds received for your transaction is held for a period of time or that additional amounts are held in the Reserve Account"

These are the three parts in the Shopify Payments terms that concern the current discussion.

The first, I believe to be misleading because the payout was held back but not for none of the listed reasons. That cannot be it.

For the second part, to support Shopify's move, it would means that Shopify Payments believed that 100% of the transactions were going to result in a chargeback since they were freezing 100% of the funds. Again, the terms of the presale mentioned no refunds after September 29th, 2017 making the case for chargeback very easy to win for the payment processor. That cannot be it.

Which leaves the third "god" part which I'm sure Shopify would use to defend their move. Which brings me back to the title of this post: don't use this payment processor for presale/crowdfunds...it's asking for trouble. True story. Hope this helps someone in the future.

[BeguileCorp]

This is the first time I've read something that makes my blood boil enough for me to log in and comment.

When a company screws you more then Paypal, there's something wrong.

Wow.