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I was thinking of opening Stripe account and then saw this. This page says that if I have negative balance due to a charge back, Stripe can contact my bank and request funds from my bank account without my approval. Snippet of the relevant text from the site:

Stripe will initiate a withdrawal back from your bank account to cover the negative balance. This will show up in your Stripe dashboard as a withdrawal with a negative amount, and in your bank account as a debit. This withdrawal will be created the next day in Australia, Canada, or the US and in three business days in the UK—even if you have chosen to receive payouts on a weekly or monthly basis. Withdrawals will not be delayed in accordance with your regular payout schedule.

I wonder how this is even possible and what are legal grounds for this kind of actions?

  • I assumed US, but if not please edit and add the country tag. – perennial_noob Jun 20 at 18:51
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    If Stripe owes you money, they put it in your account. If you owe them money, they pull it out. Fairly simple. – ceejayoz Jun 20 at 21:20
  • I had misunderstood the negative as a bank balance negative for some reason but of course if it is a negative Stripe balance it kind of makes sense. So @ceejayoz I'm wondering why you didn't post it as an answer. – perennial_noob Jun 20 at 21:25
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    Ahh, I just saw the timestamps. My bad! – perennial_noob Jun 20 at 21:33
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    Surely this snippet you've quoted is from their 'terms of service' or something similar which you agree to when opening an account with Stripe? If this is the case, then it's legal because you agreed to it ... – brhans Jun 20 at 22:04
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When you link your bank account, you give approval. There's no specific approval because you've already given approval.

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They would have to be using some kind of pre-authorised pull mechanism, as quid says. In the UK, this would most likely be a Direct debit - at least, I'm not aware of any other way they could do this.

Direct debits do operate under fairly strict rules and you have some protection from the Direct debit guarantee, though I'm not entirely sure how it would apply in this case.

  • Second the suggestion that it's Direct Debit in the UK... the "three business days" is the normal cycle for these (submit instruction 1st day; gets processed 2nd day; accounts update on the 3rd). – TripeHound Jun 21 at 11:01

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