Doing a credit card chargeback, even once, can lead to blacklist
Filed under: Shopping
Disputing a credit card charge by asking for a "chargeback" can lead to being put on a blacklist that merchants can check for customers who might try to defraud them.Getting off the list costs $99, although the fee is waived if the customer didn't know they were committing "friendly fraud," said Brien Heideman, founder of BadCustomer.com, which keeps such a customer list for retailers that don't want to get hit with costly credit chargebacks.
But until they're denied by a merchant, either online or in a store, many shoppers probably won't know if they're on the blacklist and should contact BadCustomer.com to get their name off of it. Getting off the private list can be done online, and it's a pretty hefty list, with 6 million people on it from the United States and Canada, Heideman told WalletPop in a telephone interview.
"Friendly fraud" is an intentional action taken by a customer to cheat a retailer out of money and get merchandise for free. A common example is chargebacks, where customers contest a charge on their credit card, often claiming the item was never delivered or they never bought it. When a customer issues a chargeback, the retailer is fined and could lose the cost of the actual merchandise.
Most people on it know what they're doing when they fraudulently do a chargeback for goods they've bought, and have to pay a $99 fee to get off the list if they can prove it's a one-time thing that won't reoccur, he said.
Customer chargebacks cost retailers $11.8 billion in the U.S. last year, according to BadCustomer.com, including charges for bank fees, credit card fees, loss of merchandise and loss of customer service agent time.
"Most of the time it's almost cheaper for a company to send the merchandise again rather than to deal with a chargeback," Heideman said.
"The ones that are having the toughest time right now are with trial offers," Heideman said.
For example, a business will offer a 10- to 14-day free trial, and the customer won't return it by then, so the customer is billed and another product is shipped. The customer calls his credit card company, claiming he either never made the order or sent the product back in time, when in fact he still has the product, Heideman said.
Another sign of "friendly fraud," he said, is a customer who won't sign for delivery of a product, then claiming he never received it when asking for a credit card chargeback. Many credit card companies allow chargebacks to be done online.
"Typically you don't even have to make contact with the credit card company," Heideman said.
Disputes can include claiming the item wasn't shipped, it was sent to the wrong address, or was stolen from the front porch. BadCustomer.com can check with the shipping company to see if the package was delivered, and can track down a customer's IP address from their computer to confirm that they bought it online, Heideman said.
And for a legitimate customer thinking of doing a chargeback? Contact the company first for a refund. It's a lot easier than paying $99 to get off a blacklist.
Aaron Crowe is a freelance journalist in the San Francisco Bay Area.
MoreOli Scarff, Getty Images
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Reader Comments (Page 1 of 6)
3-03-2010 @ 10:40AM
itguy08 said...
Nice scam company this badcustomer.com.
Nothing like a list that you can get on that's not public that infringes on your legitimate rights as a cardholder.
Reply
3-04-2010 @ 11:18AM
Lisa Woods said...
Scam? I don't think so. If you think this is a scam, I hope one day you own a small business that you depend on for your livelihood only to see scamming customers order goods and services and then dispute those transactions.
Whenever there is a charge back, the business looses the entire amount and has to pay a fine on top of it. This is nothing more than outright theft and a form of fraud/shoplifting committed by customers who repeatedly do this this to obtain goods and services for free. If you think, this only affects businesses, think again, as these costs are passed along to honest customers in the form of increased cost for products ad services they buy.
I have been looking for a service like this for a while and I am going to sign up with them for my business.
If you still think charge-backs are okay, imagine how you would feel if your boss goes into your bank account, withdraws your last paycheck amount and then fines you and takes that fine also out of your bank account because they dispute the word you did.
3-04-2010 @ 11:46AM
Mike said...
Dear Ms. Lisa Woods,
Your telling us that if I make a purchase from some company that doesn't send me a product I order (which has happened to me) and I try to call and/or write them (which I did) and they don't respond, you will not take my business?
DO NOT GIVE THAT WEBSITE YOUR INFO!!!!
THINK OF THE MAILING LIST THEY ARE COMPILING OF UNWITTING CONSUMERS. I WONDER WHAT THEY WILL DO WITH THE INFO YOU GIVE THEM?
DON"T DO IT!!!!!!!
3-05-2010 @ 2:15AM
HateScammers said...
I agree... and totally disagree with Lisa Woods. First, the merchants using this service are illegally distributing private information (for example, if you have a Visa card, Visa has a privacy policy that prohibits this kind of thing, but it seems like a merchant can do whatever they want). Second, badcustomer.com is acting like a credit bureau by working with merchants to determine whether a customer can or cannot make a credit purchase. Unfortunately, that violates many state laws and certanly violates the Fair Credit Reporting Act. The legitimate credit bureaus (Experian, Equifax, Trans Union) are regulated by the FTC. If there is bad info on your credit report and you can prove it, it gets removed... for FREE. This outfit charges $99, and there is no other way to get oft the list EVEN IF THE MERCHANT MADE A MISTAKE. On top of everything. the information requested for a person to check whether they are on the list includes CARD NUMBER??? Finally, there are NO safeguards... I can plug in anyone's name and address to check their status. It's a scam and needs to be shut down.
3-04-2010 @ 6:15AM
Jen said...
This article overlooks something. If you chargeback an item that was delivered, and can be proven by a tracking number, and claim non delivery then its possibly a crime.
I had a customer claim she did not receive her refund via money order and then chargeback her credit card payment for the item. I went to the police station and then filed a report. The crime is called larceny by credit card. The police called her and although she kicked up a fuss she eventually reversed the chargeback.
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3-08-2010 @ 9:31AM
colleen said...
Yes, but most police departments will not work with you on this. I had this happen when I was selling on ebay. I tracked the item to their house but they insisted the item didn't arrive and they pulled the money out of my account. They took the item and my money. Nice. When I called the house they didn't speak english.
3-04-2010 @ 6:35AM
Kris Marshall said...
How about CapitalOne and their practice of disregarding charges on stolen cards? I am paying an attorney to bring them into compliance with the law, meanwhile being charged interest on $5000 worth of merchandise, despite having provided ample information to identify and arrest the perpetrator. My attorney says this is a regular pattern for them. Do you know what's NOT in my wallet?
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3-04-2010 @ 8:29AM
Jeri said...
I found a better way to handle it....and would havl only cost you $36.bucks, Not $5,000 Ever hear of the Kroll ? Contact me & I'll tell you more when I have more time..
3-07-2010 @ 5:33PM
Andrew M said...
I had no problem with Capital One when my card was illegally used online. I was not charged for anything that was charged using my card. Perhaps there is more to your story than you are revealing.
3-08-2010 @ 8:17AM
bev said...
Kris: I use to work for Capital One. My job was outsourced and yes I had to transfer a lot of calls to Merchant's resolution for one reason or another. Never transferred a call and heard from the cap one rep that they were eager to help. I hope you get your point across to them. This is a company many should look further into for a lot of reasons. Best advice I could give anyone is to get rid of their cards. Call them first and tell them you are closing your account because even if you don't use the card it wont close automatically. Then call back and ask the next rep to read the notes back to you. Bet they never closed it out per your request.
3-08-2010 @ 11:11AM
B said...
I had theft/fraud on a Capital One credit card, they worked with me just fine. I did have to jump through some hoops, but it was resolved.
This bad customer list seems like fraud, assuming the customer is always in the wrong. There is a long line of places where theft could occur before it gets to the customer.
I wouldn't pay them $99, I would hire a Lawyer and they would pay me a lot more than that!
3-04-2010 @ 8:23AM
Kitty said...
$99 to be taken off a list? I would have a lawyer write them a letter if I saw my name on their list. Being on a list is one thing, cbeing charged $99 to be taken off is another. Someone needs to file a class action suit against this company.
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3-04-2010 @ 7:04AM
seavet1 said...
The game of credit scores and what affects those scores needs to be standardized and regulated. I its absolutely crazy that there are three companies that up with their own score and some how it is the consumers responsibility to straighten out what these companies do. If you really want to have fun try and ascertain exactly how these scores are computed. Here is a case where government intervention actually makes sense.
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3-04-2010 @ 3:12PM
Pat said...
This is just another way of blackmailing citizens. There are many reasons to put a stop to a charge. Can anybody think up another way to wring money out of us? What a scam.
Reply
3-04-2010 @ 7:23AM
suzyteaser said...
I agree. The reality of the matter is that I've received items that didn't work and returned them and had to fight to get the chargeback. Or never received the product and had to fight to get the chargeback. Overall, if I don't receive what I purchased or if the item is defective I want my money back. In the end, we need to pay off our credit cards, close out all but one card that we use in emergencies and do like our parents did. Save for what we want and pay cash. The credit card companies think that they're running things; however, if we control our desires and pay cash they would change their practices.
3-04-2010 @ 9:39AM
poot said...
That's for sure, and AOL should be severely chastised for even publishing it. I had a $700 charge to my card that I didn't make... is the author implying that I should've just gone ahead and paid it so I could use my card in the future? Another time I was double charged for something that was $200. Again, am I supposed to pay it? Guess what, if I'm blacklisted, I'll stop shopping at your lame ass business, and if the cc company gives me any crap, their card goes in the shredder... I have my own blacklist too.
3-04-2010 @ 11:26AM
Steve Pipenger said...
I went to this "badcustomer" site and something really occurred to me. As I started putting this information in there...wow...what a great way to compile a mailing list. The person GIVES their phone number, address and email address. There is probably "fine print" somewhere in which any person "checking to see if they're on the list" consents to having their contact info being put on a list. Complete BS. One day, I'd LOVE to see regular folks like us get the same deal corporations get...particularly credit bureaus. You have to pay THEM for YOUR information. Then if THEY make a mistake, it's YOUR information. You have to correct THEIR mistake regarding YOUR information because, after all, THEY only report information. What you end up with is nobody is responsible for any mistakes, except you. Think about it: they claim all they are doing is recording information, which is about you, you have to pay them for and they have no responsibility to make sure it's right. That's your job. However, when YOU want YOUR information without paying THEM, it's THEIR database...get it?
3-04-2010 @ 12:05PM
Mr Clean said...
Paying & eliminating debt is the most sound financial decision one can make, although banks have and will punish you for doing this. Credit scores are merely a form of control imposed by our corrupt financial system. in addition to their ambiguity, as banks continue to fail, scores become less relevant.
3-04-2010 @ 7:34AM
MiddletonRM said...
Credit card companies who are unfriendly to their card holders should just be pressured by not using their credit cards. Speak with your feet and walk away from the card (in other words, stop using the card). We Americans would be so much better off if we gave up credit cards anyway. Pay cash and trade with local suppliers that you know and trust.
Reply
3-04-2010 @ 8:02AM
chicobombico said...
Many good people lost their jobs due to the problems are country is facing. Many of these problems were caused by BANKS, CREDIT CARD COMPANIES, INSURANCE etc. The unemployed defaulted on their credit card payments so they could pay the rent, put food on the table, heat their their homes etc. In return these same institutions turned in negative credit reports against these people. These reports could stop the unemployed from getting jobs and new credit. This will only compound the problems our country is facing and slow the recovery. I feel their should be credit card amnesty for anyone who was unemployed for 6 months or longer. Nothing will be gained by denying these people jobs and new credit. We have already done this for many major american companies for example AIG, the airlunes over and over again and of course the banks \ credit card companies who are now making record profits. CREDIT CARD AND CREDIT REPORT FORGIVNESSFOR THE UNEMPLOYED!!!!!
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