Why does Gumroad suspend creator accounts?

As a small company, Gumroad is beholden to the interests of our banking partners and the companies that process our payments. In other words, we have to play by their rules if we want to continue existing. 

Sometimes, playing by their rules sucks, and we have to kick people off of our platform. 

As a Gumroad creator, this means that in order to process payments on your behalf (and pay you for the sales you make on Gumroad), your account has to be in compliance with the policies we are bound to. When you create a Gumroad account, you are agreeing to our Terms of Service, where we explicitly state that we are able to suspend and refund your sales when necessary (Section 8). 

We encourage you to read through these Terms before creating an account.

In short, if your account is in violation of these policies, it will be suspended. Your existing balance may be refunded, depending on policy we are enforcing.

We understand that from a creator standpoint, suspension may seem arbitrary, unfair, and cold. Unfortunately, in the bottom-line-is-everything world of online payments, there is no nice way to end a payment processing relationship. We wish there was. Really.

This page offers explanations for why an account will be suspended, and will attempt to dispel any misinformation you may have encountered elsewhere online.  

We unfortunately have to stay rather general on this page, because giving away specific policy details is, frankly, a terrible idea in an online world full of fairly clever scammers.

Reason 1: Terms of Service Violations

Gumroad's Terms of Service can be found here:

Terms of Service

And our list of goods that cannot be sold through Gumroad is here:

Prohibited Products and Activities

If you are using Gumroad in a way that violates our TOS, or are selling a product that we are not authorized to sell (common offenders include porn, services, tickets to events, health products, unlicensed software you didn't create, or unlicensed electronics), we have to suspend your account. Simple as that. 

What now? 

If your entire account and your sales are in violation of our Terms of Service, we will not allow you back on the platform. If only a single product is, however, you may be allowed back on. 

You may or may not be paid out your remaining balance, depending on the situation and the policies you have violated.

Reason 2: High-Risk and Fraudulent Sales

Our banking partners and processors insist that we only process and support payments for "safe", legitimate accounts. Accordingly, every account on Gumroad is reviewed by our Risk Team and processors before payouts can commence. 

If we find that your account is marked by high rates of suspicious payments, or evidence that your sales were made fraudulently and/or by compromised payment sources (i.e. stolen credit cards, hacked PayPal accounts), we have to suspend it, and we cannot pay you for your sales.

"Why me? I didn't do anything wrong. Why should I be punished for my customers' activities?"

This is a common and very understandable response to this kind of suspension. You might not be doing anything wrong - you may be selling an ebook about world peace, and donating all of your profits to blind orphans, but if your account is the source of high amounts of fraudulent payments, then the only thing we can do to enforce the policies of our partners is to cut off the fraud at its source, which in this case would be your products. 

Yes, it's not fair to you, but there isn't an alternate route here. We have to enforce the risk policies of our partners quickly and effectively. Suspension is the only way. 

What now?

Depending on your situation, your account may be reviewed again. If we find that our review was flawed we will allow your account back onto Gumroad. If not, we will refund your sales and ask you to find a different platform for your sales. 

Reason 3: High Chargeback Amounts

To learn how Gumroad deals with chargebacks, you can read this rather lengthy article. It offers tips on how to avoid chargebacks and how to help us if a customer does issue one against you.

In short though, if your account racks up a high number of chargebacks (the payments industry standard that is allowed is 1% of sales volume) your account is categorized as high-risk, and we are not allowed to process your sales or payouts. 

Why?

Let's say you have $1,000 in sales and you incur $100 in chargebacks. You now have a 10% chargeback by sales volume rate, meaning 10% of all of your sales have resulted in chargebacks (and from our end, the resulting fees that we swallow on your behalf as per our Terms of Service). Theoretically, if we were to continue processing your sales, we would continue to accrue fees and chargebacks on your behalf. 

From a business standpoint and the standpoint of our partners, this is unsustainable and your account has to be cut loose. 

"Why me? I didn't do anything wrong. Why should I be punished for my customers' activities?"

Again, a totally understandable and completely valid point. But, to restate - we have to enforce the risk policies of our partners quickly and effectively. Suspension is the only way to do this. 

Reason 4: Your account was rejected by our partners

If you have entered payout information into your Gumroad Payouts page, that means you have created an account with our partners, Stripe and/or PayPal. In addition to our reviews of your sales, they also review your account based on the information they have at their disposal. 

If, for example, you have been suspended from PayPal in the past and created a new account with us, they may not allow us to pay you. Or if your bank account has been connected to fraud in the past that Stripe has had to deal with, they may not let us pay you. 

What now? 

If this is the case, we will forward your case on to the support staff of either PayPal or Stripe. Depending on their decision, you may or may not be paid out in future. It is out of our hands at this point. 

Frequently Asked Questions

Q1. Why doesn't Gumroad inform users that their account is suspended?

A1: This one is a little tricky. A vast majority of the accounts we suspend are created by actual scammers. To inform them via e-mail that their attempts to defraud us was unsuccessful would effectively amount to us offering them a Mulligan

We have found it is more effective for us to allow users to email us for more information after their accounts have been suspended. We understand that suspension often comes as a nasty surprise, and we apologize for the seeming rudeness.

Q2: I have read that Gumroad keeps my customers' money after my account has been suspended.

A2: We're not entirely sure how this rumor got started, but rest assured, it's not true. If we were actually doing this, a few things would happen:

A) Customers would issue chargebacks at a rate that would quickly bankrupt us
B) Our payment processors would get wind of it and boot us from their platforms
C) We'd get a visit from the FBI for extortion

Since none of these things have happened since we opened our doors in 2012, it should be fairly evident that this is not how we do business.

If your account has been suspended and sales have been refunded, we are more than happy to provide proof of those refunds to your customers. 

Q3: Can I protest my suspension?

A3: Absolutely. To be clear, we don't enjoy suspending accounts, and sometimes our review process can be flawed. Just email support@gumroad.com and we will inform you as to why your account was suspended. We will then ask for pertinent information that may help us get your account back and running. 

Q4: Why doesn't Gumroad provide me with specific reasons why my account was suspended?

A4: The Internet is a pretty awful place when it comes to fraud and risk management. The more information we give out about our risk and fraud detection, the more information there is that's able to leak to fraudsters trying to make money off of us. 

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