SANTA MONICA, Calif.—A new service called BadCustomer.com keeps a database of people who request credit card chargebacks on services or products they have bought and want to return. The list is made available to retailers. The idea is that retailers will decline transactions from people who are on the list. If a consumer is blacklisted and wants to get off, the fee for doing so is $99 for the first chargeback and up to $1,000 for repeat "offenders."
Launched late last year, BadCustomer.com also has an affiliate program that pays out 20 percent of the removal fee for customers blocked from affiliate companies.
"Sign up businesses that want to use the BadCustomer.com database to reduce their chargebacks and report their customers who issue chargebacks against them," reads the pitch.
Not surprisingly, the company takes a dim view of chargebacks. On its Business Center Introduction page, it lays out the problem for merchants.
"Imagine your [sic] standing at the cash register of a business you built with your own hands. A customer walks up and purchases several items. You ring them up, give him the total, and he pays for them. Now imagine that as he turns to leave, he reaches into your open cash drawer, takes out the money he just paid to you, and then smiles and waves as he walks out of the store with both your products AND your money. You'd never let that happen, right?
"The unbelievable thing is that this is happening at millions of businesses around the world, right this very moment. It's a form of consumer fraud called 'chargebacks' and if left unchecked, it can destroy a business faster than shoplifters ever could. Because of its hidden charges and negative ramifications, a chargeback should be the last resort of a customer who has exhausted all other courses of action. Instead, it is fast becoming the first resort of consumers who simply change their mind. Or worse yet: purposeful fraud to obtain goods and services without paying for them."
Besides discouraging customers from charging back at all, the blacklist is intended to "train" them to resolve problems directly with the merchant. The message to consumers is twofold: BadCustomer.com brings them together with merchants to work things out while simultaneously protecting them from their own bad behavior.
"Bad Customer is devoted to forming alliances between businesses and customers for the mutual benefit of both," reads the Causes of Blacklisting page. "BadCustomer.com also helps protect your buying power, by helping you avoid the repercussions that result from the misuse of billing disputes through your Bank and Credit Cards.
"Most billing disputes arise from simple misunderstandings. You may have failed to notice important billing information, or a member of your family may have ordered a product without your knowledge—the possibilities are endless. However, most billing disputes have one thing in common: they can be easily settled in a few minutes simply by contacting the merchant or business that issued the billing statement."
According to the only post on the BadCustomer.com blog, dated Nov. 3, 2009, the service was started by a "highly successful Internet marketing company to reduce chargebacks." It also claims that it is authorized to collect and sell information about the creditworthiness of individuals.
"If you're a business owner, it's helpful to know that BadCustomer is considered to be a Consumer Reporting Agency (CRA). That means we fall under the Fair Credit Reporting Act (FCRA), which is overseen by the Federal Trade Commission (FTC). (Wow, that's a lot of acronyms!) That means privacy and security of consumer data is REALLY important to us! So we have done everything possible to ensure the safety of consumer data, including data encryption, secure connections, following PCI Compliance Data Storage guidelines, and all of the other industry best practices that we know you expect to see to feel confident about entrusting your chargeback data with BadCustomer.
"If you're a consumer, we want you to know that we're looking out for you as well. For example, if you feel you've been unfairly added to the Badcustomer chargeback list, let us know and we'll help you get removed—for free. Even more important, if you have a dispute with someone you recently purchased a product from and just can't seem to get that refund you believe you're entitled to, then use our Dispute Mediation form and we'll contact the merchant and help you get a refund. That's free too!"
The site claims to have 7,756,120 records currently on file, and there is a link from the homepage to a form to fill out to find out if you are on the list.
To its credit (no pun intended), the company has allowed some comments on the blog page that question its business model.
"I appreciate what you are doing but as a merchant am uneasy that you are playing both sides of the fence - telling us merchants that you will protect us from chargebacks by putting these bad customers in a database, and at the same time offering to help consumers get a refund," wrote jojokinkaid. "Those are completely opposing standpoints."
"How about a list of Bad Companies that rip off customers," wrote Sudhir.
AVN.com was curious whether BadCustomer.com works with merchants in the adult internet industry, which has a extensive and profound relationship with chargebacks. A call to the BadCustomer.com offices seeking comment has not yet been returned.
