Has anyone else experienced sudden store lockouts with Shopify Capital?

Shopify Discussion
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Let me start by saying that I thought long and hard about posting this… I truly feel there will be some sort of swift retribution from Shopify. But it feels important to be shared and after searching for similar problems from other Shopify users, I couldn’t believe I was the only one. My lawyer discovered they have filed over 7000 UCC liens in the last 6 months alone, so obviously not just me. Not sure why it’s nowhere online…

I’ve been a user of Shopify for about 4 years now. In general pleased with them, although they certainly have some bizarre company policies and pretty lame customer service. A few years back I was offered the Shopify Capital Cash Advance. Have gotten and paid back many of them. No problems. The interest is absurd, but the fact that they take a percentage of sales was always nice (I tend to have large sales a few times a month so they would get big chunks back instead of nickel and diming). It always worked out great. So I thought…

On the 12th of this month I was locked out of my admin. No explanation, no notice other than “store locked”. After contacting support and searching my emails, I discovered in my SPAM folders some emails from them. Gmail marks a lot of Shopify as fraudulent or spam (should tell ya something right there). The first one was from a week prior. It did have the RESPONSE REQUIRED on the header, but other than that it was an informal email asking me why my sales were slow, as they wanted to be able to offer me Capital in the future. NOTHING about closing my shop down without a reply. I was also very confused by the email, as my sales weren’t any slower than normal. I average about the same each month, and nothing was really different. The second one was an email stating I had committed a “bad act” and an hour after that email, the original rep (from slow sales email) then sent me an email stating they had filed a UCC lien against me and “with great discomfort” that my admin was locked until I could pay the loan back.

Now, I’m in a state of panic. WHAT JUST HAPPENED. The day they closed my admin, I had made a $400 remittance payment (from sales, not directly). How could they just lock my store at the HOLIDAYS when all of us are busting our buns getting orders out. I have zero access to anything. I call, I beg, I plead: PLEASE JUST SEND ME CSV OF MY ORDERS AND WE CAN SORT THE REST OUT LATER. But no reps can. Not until that specific department gets back to me. Each day goes by with me having to embarrass my store to customers to explain I can’t access their orders. Friends shut their Shopify stores down in fear it’ll happen to them. I call the number over 100 times and not ONCE did a human answer. Always an answering machine. Thankfully a follower of mine contacted me and let me know how to access addresses by their email. But with 100s going out what should have taken a few hours, ended up taking me about 20 hours to process. When I needed to be working on orders.

Meanwhile, I’m emailing everyday. Calling everyday. Live chatting everyday. Nothing. Finally I contact a lawyer, who is as flabbergasted as I am by this situation. They’re literally holding MY orders hostage, with no notice. They’re causing me emotional distress, detrimentally hurting my business and have gone completely silent. I was also contacted by the Secretary of State as they were confused by the UCC filed against me. A cash advance is not a loan, as well as there is no set due date not amount owed each month that I could have missed, so how could they file one? According to my lawyer it’s simply a scare tactic. They cost $10 to file and anyone can file one. My lawyer also kept asking me for the contract and I had to explain that I can not access it. It’s in my admin, which I am locked out of. Oh, they also offered me the ability to pay back just half the loan and call it even… but there was no way for me to send a payment. That’s ALSO in the admin! So I’m stuck, hands tied. At their mercy.

Finally FOUR days pass. I send a rather threatening email about my lawyer getting involved and lo and behold, I get a call. Not an email, so no paper trail of course. But at least they finally contacted me. She asks why my sales were slow. I explain I didn’t think they WERE slow. But if there was a reason it was because I was going through chemo (in August of 2018 I was diagnosed with ovarian cancer). I haven’t mentioned that til now, because it’s not RELEVANT! She says “Oh we didn’t know you had a medical condition, so if you agree to pay $200 a month I can unlock the admin” I ask MULTIPLE times, where did I not meet the required payments? What amount exactly do I need to meet each month? She will NOT give me a straight answer! Y’all, I almost punched a wall. I’m not kidding, literally at no point did she give me a straight answer!! Example of conversation:

ME: So what is the minimum payment I need to make each month? So this doesn’t happen again

HER: It varies from store to store.

ME: Um, ok. But MY store. What is the payment I need to make?

HER: It’s between and 10 and 17 percent.

ME: Ok what is my percentage?

HER: It varies.

ME: You can’t give me an exact amount?

HER: It’s usually a percentage.

I can’t make this up. It should also be noted, none of this was automated. Every step was hand done by her. She should have exact dates and amounts that I missed. Every single one of my questions was met with weird vague answers that got nowhere. So she asks me if I can pay back the $200 a month? I say yes of course. I average $900 payment back a month already. If it only takes $200 then why on the day $400 was remitted did I lose access to my store? She has no answer. So I play nice, jump through their ridiculous hoops and get access back (first thing I did was download my open orders CSV!!).

And it’s “over” right? I should be happy… but I’m not. She put me through 5 days of hell and can’t even give anything resembling a straight forward answer?! I truly assumed at the end of this I would get access to my admin, check the contract and see something I did wrong. Like my milestone was $2000 and I hadn’t hit that. In fact, it’s supposed to be 60 days milestones, with the remaining amount if you don’t hit it automatically deducted. According to her they no longer do milestones, but can’t give me a set amount I’m supposed to have paid?! Anyways, I’m still confused and lost as to why I was put through this, for them to just say “Can you pay $200 extra month? Cool. All set!” I still have no idea what my threshold is. It’s not anywhere in my admin. The closest she came to an answer is when she stated my account was marked for “growth” and I didn’t grow. I asked her to expand on that and she wouldn’t and backpedaled immediately. It’s important to note that you can’t request funding from Shopify. I can’t falsify information. I’m sorry if THEY decided my business was gonna grow and it didn’t, but I never stated it was going to. How can I be at fault for that and punished?

In conclusion, there’s nothing to really be done here. With cancer and chemo being my main energy source, I don’t have it in me to sue or fight them. I will pay the remaining loan off as fast as I can, and close my store down immediately after it’s paid off.

But if you’re considering taking the Shopify Capital Advance… DO NOT. Your store could easily be the next horror one.

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I’ve always wondered what these types of loans were like and felt their persistence on trying to get our company to do one was heavy, to say the least. We, fortunately, don’t need to do it and this just reinforces my suspicions. I can’t stand these types of “business” tactics and am glad that you spoke up so others are not caught in this trap.

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Wow this is happening to me right now. They closed my store down for two months making me have to close my business and told me I have to pay the balance in full or I can’t get the store open. My current balance is $48,000 mind you my loan was for $46,000. I have just contacted today because 2 other businesses were shut down today via shopify including my husbands because we are on the same IP address. I have contacted to make arrangements and yet have heard nothing back. I will never take out another loan again.

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Shopify Capital behaves worse than a loan shark.

It should be banned, and may even be unlawful.

Borrow an amount and get a large sale a few weeks later and they take their full percent.

In my case, it paid the entire loan plus 13% - for one month advance.

Plus their dashboard said the loan was paid when it hadn’t been yet.

They took an extra day to take the amount.

Imagine the confusion that caused.

I’m looking to leave shopify over this.

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DITTO to everything she said with the exception that our situation is still unresolved. I do find it interesting that they chose to do this just before the holiday sales season. For us they first emailed Thanksgiving week. Last year we did most of our business in December. This is probably our 4th or 5th round of financing. The whole thing is baffling. And shady as heck.

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Not only that, but we don’t even know who these lenders are .

They might well be foreign nationals possibly from China who have no reservations about violating privacy laws or ethics or flout international banking laws.

They could be spying on your sales data to undercut you.

Shopify has no business being involved with this shady practice and it is damaging their brand.

Shopify needs to end this shameful practice.

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Update: they offered me to pay $10,000 and they will clear my loan or pay $2500 monthly. I cant do either. I have switched to big commerce and opened a new business and boy it’s stress free. I have tried to get payments lower and affordable and yet no help from either. I have taken this as a loss as Shopify is the biggest platform but I’m happy I do not have to worry about my store being shut down every 10 minutes. Good luck to everyone I would not recommend

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They kept offering us amounts they knew we couldn’t pay as well. We offered to pay them the agreed 15% of sales plus an additional $300 per month. They wanted thousands per month on top of the 15%. We’re talking about $16,000 owed. What I don’t understand is how they can leave the website open for orders? They stopped paying out, but they kept accepting orders without allowing us to access the store. We filled orders from email notifications, and they kept every dime of that money. I can’t even believe it. We finally opted to let them proceed with the UCC filing. We really had no choice.

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I think it is time for Shopify Management to comment on this and explain why these are allowing this to continue.

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I’ve been contacted by 27 stores this has happened to… We’re all roughly the same size, with the same amount of business. Our theory is last fall when we all got our new cash advance loans, someone made a mistake. Offered us more than they mean to or something and are now sweeping the board trying to fix it. Rough theory I know, but the only thing we can think of. Nothing else makes sense. Why offer these loans and then punish the stores? What sort of business strategy is this? They also constantly offer people to pay back half and call it even, so they’re TRYING to lose money?! Maybe Shopify is on the verge of bankruptcy or something?

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Well, I don’t recommend speculating about Shopify’s financial circumstances, but I would criticize their management judgement in getting involved with this third party monstrosity.

Someone needs to be fired and this blight removed from the Shopify community.

Where is the president of Shopify on this?

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Honestly, I wouldn’t take it as a loss. Shopify might market itself as an Etsy type of platform, but it really isn’t. I don’t know anyone who goes to Shopify and searches for what they’re looking for. I even polled my large Instagram following (over 50k) and less than 1% actually searched on Shopify. You’re much better off switching sites. Big commerce is where I’m going once the cash advance is paid off. Their site has everything I’ve been wanting: WITHOUT having to pay an arm and a leg for a gazillion “apps”.

Even besides this nightmare from the cash loan, Shopify has always done very shady things. I recall a few months ago I was waiting for a deposit of about 8k to come in. I was flat broke from medical bills, so obviously quite excited. I shipped a few items (under a $100 that day) and the next day my site was locked. I had an outstanding shipping bill of $348. Which wasn’t due for another week, but for some reason they decided to collect early. They couldn’t answer me, AND THEY FROZE MY PAYOUT. I kept asking “how can you expect me to pay an outstanding bill when you’re holding my money?!” They had no answer. No wait, one rep suggested I “borrow from my mother or friends.” seriously. They also couldn’t answer why the bill was issued a week early. Just kept saying it was automated. In the end, I did borrow from a friend, pay the bill to get my payout. But it’s just one of the many bizarre situations Shopify puts you in. I look forward to the day I can move over to Big Commerce.

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I’m going through the same thing except my payouts are on hold. We came
To a monthly payment agreement and I assumed they would take the hold off my payouts but no. I don’t know how I’m supposed to pay when my funds are being held. No one will get back to me. It’s going on a week now of no cash flow and me having to use whatever reserves I have to fulfill and make products. Also we are in California where all non essential businesses are closed. I only have income from my online store right now and then shutting it off without warning is putting my family and I in a terrible situation.

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Hi all,

Since everyones situation is unique and personal details should not be discussed publicly if you have concerns related to Capital and your Shopify account please reach out to Recovery_Operations[at]shopify.com. When composing your message please replace [at] with the [email removed] symbol.

When reaching out provide as much detail as possible so the team can assist.

Thanks!
TyW

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Wow! Same here. I can’t afford to pay back the entire $2000 a month but I told them that I can make smaller payments until it’s paid off. They said they will file a UCC against my business. I’m not sure what’s the next step. What did they tell you? How will you finish making your payments ?

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They are so shady! What happens after the UCC filing ? Can you no longer use Shopify for a new store ? Do they sue your business ?

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I noticed that pre-covid, I was getting a really large offer that didn’t seem right. I didn’t take the loan at the time because 13% just seemed too high. Then when covid started, I saw the amount go down dramatically, about 50% less. Also the interest/fee went down as well. I’m not sure if there is a connection between this and the loans described here. I have taken a few loans from Shopify without any issues. Fortunately, my store has always been growing, so I’ve always been ahead on the payments.

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I’ve never had an issue with Shopify, but I was considering this advance. Thank God I looked up this thread! Thanks everyone for sharing.

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I’m having a similar issue with Shopify Capital. 4 months into the loan, sales are going at normal levels, and suddenly they want to call the loan. I have tried emailing multiple times and they vaguely respond and don’t address any questions. I requested a phone call, and she called once outside of the hours I listed I was available, and then shut down the admin.

This is amazing as the Shopify stock SHOP is trading at record numbers, yet they’re running mafia like scams on small businesses during the COVID crisis. Ironically, my loan was issued immediately following their earnings call, and then suddenly their stock sales went through the roof with all of the padded capital numbers.

If anyone wants to reach out and share stories/compile information, please do. I tried to contact to the OP, but Shopify won’t let me email them.

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@CAPITALSUCKS boy that’s scary. I’m a 1/4 way through my third loan. I’m ahead of schedule so I assume they won’t call in the loan as long as I stay ahead of the payments, which at current sales levels I am.