diff --git a/apps/sim/lib/billing/organizations/membership.ts b/apps/sim/lib/billing/organizations/membership.ts
index fa9169cb2..5fee8bb5c 100644
--- a/apps/sim/lib/billing/organizations/membership.ts
+++ b/apps/sim/lib/billing/organizations/membership.ts
@@ -15,7 +15,7 @@ import {
   userStats,
 } from '@sim/db/schema'
 import { createLogger } from '@sim/logger'
-import { and, eq, inArray, sql } from 'drizzle-orm'
+import { and, eq, inArray, isNull, ne, or, sql } from 'drizzle-orm'
 import { syncUsageLimitsFromSubscription } from '@/lib/billing/core/usage'
 import { requireStripeClient } from '@/lib/billing/stripe-client'
 import { validateSeatAvailability } from '@/lib/billing/validation/seat-management'
@@ -38,6 +38,10 @@ export async function getOrgMemberIds(organizationId: string): Promise<string[]>
 
 /**
  * Block all members of an organization for billing reasons
+ * Returns the number of members actually blocked
+ *
+ * Reason priority: dispute > payment_failed
+ * A payment_failed block won't overwrite an existing dispute block
  */
 export async function blockOrgMembers(
   organizationId: string,
@@ -49,17 +53,28 @@ export async function blockOrgMembers(
     return 0
   }
 
-  await db
+  // Don't overwrite dispute blocks with payment_failed (dispute is higher priority)
+  const whereClause =
+    reason === 'payment_failed'
+      ? and(
+          inArray(userStats.userId, memberIds),
+          or(ne(userStats.billingBlockedReason, 'dispute'), isNull(userStats.billingBlockedReason))
+        )
+      : inArray(userStats.userId, memberIds)
+
+  const result = await db
     .update(userStats)
     .set({ billingBlocked: true, billingBlockedReason: reason })
-    .where(inArray(userStats.userId, memberIds))
+    .where(whereClause)
+    .returning({ userId: userStats.userId })
 
-  return memberIds.length
+  return result.length
 }
 
 /**
  * Unblock all members of an organization blocked for a specific reason
  * Only unblocks members blocked for the specified reason (not other reasons)
+ * Returns the number of members actually unblocked
  */
 export async function unblockOrgMembers(
   organizationId: string,
@@ -71,12 +86,13 @@ export async function unblockOrgMembers(
     return 0
   }
 
-  await db
+  const result = await db
     .update(userStats)
     .set({ billingBlocked: false, billingBlockedReason: null })
     .where(and(inArray(userStats.userId, memberIds), eq(userStats.billingBlockedReason, reason)))
+    .returning({ userId: userStats.userId })
 
-  return memberIds.length
+  return result.length
 }
 
 export interface RestoreProResult {
diff --git a/apps/sim/lib/billing/webhooks/disputes.ts b/apps/sim/lib/billing/webhooks/disputes.ts
index 586c36a3f..647ad8a9c 100644
--- a/apps/sim/lib/billing/webhooks/disputes.ts
+++ b/apps/sim/lib/billing/webhooks/disputes.ts
@@ -1,7 +1,7 @@
 import { db } from '@sim/db'
 import { subscription, user, userStats } from '@sim/db/schema'
 import { createLogger } from '@sim/logger'
-import { eq } from 'drizzle-orm'
+import { and, eq } from 'drizzle-orm'
 import type Stripe from 'stripe'
 import { blockOrgMembers, unblockOrgMembers } from '@/lib/billing'
 import { requireStripeClient } from '@/lib/billing/stripe-client'
@@ -97,7 +97,7 @@ export async function handleDisputeClosed(event: Stripe.Event): Promise<void> {
     return
   }
 
-  // Find and unblock user (Pro plans)
+  // Find and unblock user (Pro plans) - only if blocked for dispute, not other reasons
   const users = await db
     .select({ id: user.id })
     .from(user)
@@ -108,7 +108,7 @@ export async function handleDisputeClosed(event: Stripe.Event): Promise<void> {
     await db
       .update(userStats)
       .set({ billingBlocked: false, billingBlockedReason: null })
-      .where(eq(userStats.userId, users[0].id))
+      .where(and(eq(userStats.userId, users[0].id), eq(userStats.billingBlockedReason, 'dispute')))
 
     logger.info('Unblocked user after dispute resolved in our favor', {
       disputeId: dispute.id,
diff --git a/apps/sim/lib/billing/webhooks/invoices.ts b/apps/sim/lib/billing/webhooks/invoices.ts
index d551ba645..2c1419631 100644
--- a/apps/sim/lib/billing/webhooks/invoices.ts
+++ b/apps/sim/lib/billing/webhooks/invoices.ts
@@ -8,7 +8,7 @@ import {
   userStats,
 } from '@sim/db/schema'
 import { createLogger } from '@sim/logger'
-import { and, eq, inArray } from 'drizzle-orm'
+import { and, eq, inArray, isNull, ne, or } from 'drizzle-orm'
 import type Stripe from 'stripe'
 import { getEmailSubject, PaymentFailedEmail, renderCreditPurchaseEmail } from '@/components/emails'
 import { calculateSubscriptionOverage } from '@/lib/billing/core/billing'
@@ -607,10 +607,19 @@ export async function handleInvoicePaymentFailed(event: Stripe.Event) {
             isOverageInvoice,
           })
         } else {
+          // Don't overwrite dispute blocks (dispute > payment_failed priority)
           await db
             .update(userStats)
             .set({ billingBlocked: true, billingBlockedReason: 'payment_failed' })
-            .where(eq(userStats.userId, sub.referenceId))
+            .where(
+              and(
+                eq(userStats.userId, sub.referenceId),
+                or(
+                  ne(userStats.billingBlockedReason, 'dispute'),
+                  isNull(userStats.billingBlockedReason)
+                )
+              )
+            )
           logger.info('Blocked user due to payment failure', {
             userId: sub.referenceId,
             isOverageInvoice,