Supplement companies face FTC scrutiny and elevated chargeback rates. Learn how nutraceutical merchants can structure compliant operations and secure stable processing.
The nutraceutical industry — including dietary supplements, vitamins, nootropics, and weight loss products — is classified as high-risk due to FTC scrutiny, elevated chargeback rates, and health claim compliance issues. If you operate in this space, understanding the payment processing landscape is critical to your success.
Payment processors view nutraceuticals as high-risk for several interconnected reasons. The industry has historically high chargeback rates, often exceeding 5-10% for some merchants. This is driven by customer dissatisfaction, subscription billing disputes, and buyer remorse.
The FTC requires that all health claims be substantiated by competent and reliable scientific evidence. This is not a suggestion — it is the law. Common violations that trigger enforcement actions include:
Many nutraceutical companies operate continuity (auto-ship) programs. These are heavily scrutinized by the FTC under the Negative Option Rule. Key requirements:
Despite the challenges, nutraceutical merchants have viable processing options. The key is working with processors who understand the industry and have structured their risk models accordingly.
"The difference between a nutraceutical merchant that thrives and one that struggles often comes down to payment infrastructure. Invest in compliance and redundancy from day one."
To secure and maintain payment processing, nutraceutical merchants should:
Yes, but Amazon has strict supplement policies including GMP certification, proper labeling, and restricted ingredient lists. Many supplement sellers also maintain direct-to-consumer channels for redundancy.
A continuity program automatically enrolls customers in recurring shipments and billing. The FTC requires clear disclosure and easy cancellation for all continuity programs under the Negative Option Rule.
No. Supplements are regulated under DSHEA (Dietary Supplement Health and Education Act) and do not require FDA pre-approval. However, facilities must be FDA-registered and follow GMP (Good Manufacturing Practice) requirements.
While 1% is the card network threshold, nutraceutical merchants should aim for under 2%. Anything above 3% will trigger processor reviews and potential termination.
Cybin Enterprises is a payment services intermediary specializing in high-risk merchant accounts. Our team brings decades of experience in payment processing, compliance, and risk management.
Expertise: High-risk underwriting, payment compliance, chargeback management, multi-processor routing
Understanding the factors that classify a business as high-risk is the first step to securing stable payment processing.
Chargeback disputes can threaten your merchant account. Discover how early dispute alert systems help merchants resolve issues before they escalate.
Whether you're dealing with account termination or launching a new high-risk business, we can help you secure stable payment processing.
