Merchant Tries To Forbid Chargebacks

A reader wrote in to ask us if we’ve ever seen anything like the “Chargeback Abuse Policy” that Luxury Car Tuning in Las Vegas includes in their terms—”You agree not to file a credit card or debit card chargeback with regard to any purchase,” and if you do anyway, you have to pay any fees that normally the merchant must pay when dealing with a chargeback. The reader wants to know, “Is this allowed by any merchant agreement that you know of?  Sounds pretty ridiculous to me. How likely would it be that they could get away with this?”

We’ve never seen any merchant try to interfere with consumers’ rights on this level. So why would Luxury Car Tuning resort to such a bizarre statement? It could be because they’ve been burned by chargebacks before—banks tend to err on the side of consumers when a chargeback request is made, and merchants can and do lose their ability to accept credit cards if they exceed a certain number of chargebacks.

Having said that, we can’t imagine how the company can enforce such a demand, but maybe the best thing to do is simply take your business elsewhere and avoid them altogether.

Here’s the actual text, taken from their terms and conditions page:

Chargeback Abuse Policy
Purchases will appear on your credit/debit card statement as “Tuning Concept” or “Luxury Car Tuning”. You agree not to file a credit card or debit card chargeback with regard to any purchase and instead abide by the dispute resolution procedures outlined below. In the event that you breach this agreement and file a chargeback, upon a resolution in our favor of the chargeback by either the credit card issuing bank, the credit card processor or by VISA or MASTERCARD, you agree to reimburse us for any costs incurred in researching and responding to such chargeback, including without limitation, our actual costs paid to the credit card processor or our banks, other third parties, and the reasonable value of the time of our employees and owners spent on the matter, as determined in our discretion in good faith. You further agree that all dispute resolution procedures below will be deemed waived by you, and that these amounts will be added to the original amount of the order, and that this total amount will then be immediately due and payable. If your chargeback is upheld, you agree to pay all of the same costs, in addition to the original purchase price, but we will use the dispute resolution procedures below to confirm and collect such amounts.
 
In the event that a chargeback is placed or threatened on a purchase, we also reserve the right to report the incident for inclusion in chargeback abuser database(s) of our choosing and in our sole discretion. The information reported will include name, email address, order date, order amount, IP address, full address, and phone number. Being listed on such databases may make it more difficult or even impossible for you to use (any of) your credit card(s) on future purchases with us or other merchants. Chargeback abusers wishing to be removed from the database shall make payment to us for any outstanding amount owed to us + $50 for processing and handling by wire transfer or such other means as we may require.

Comments

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  1. hills says:

    They should just wave around a big red flag – that would be easier.

  2. MPHinPgh says:

    It’s pretty unlikely that I’m ever going to need the services of this merchant (especially after reading this), but you can be sure I’m going to be looking for the same type of verbage in the boiler-plate for other sites.

    Once one sleazebag merchant starts with something like this, you can bet a whole bunch of others will jump on that particular bandwagon…

  3. bohemian says:

    That kind of statement just says not to ever do business with them.

  4. homerjay says:

    They must be pretty sleazy if there have been enough customers submitting chargebacks to make them implement a policy like this.

  5. Wormfather says:

    It’s really hard to get to the point where you can no longer accept cards. They should know that both MC and Visa have a department called compliance that does nothing but levey fines against companies.

    Also that’s why they probably dont take Amex, they’re tought on merhcants but fair, if a merchant has done there job, they should be clear.

  6. opfreak says:

    They waved a flag: dont shop here

  7. backbroken says:

    So, just do a chargeback for any ‘fees’ they assess you for the original chargeback. Rinse. Repeat.

  8. cuiusquemodi says:

    @Wormfather: Aren’t chargebacks for those times when a merchant DOESN’T do his (her) job?

  9. dcaslin says:

    “Chargeback abusers wishing to be removed from the database shall make payment to us for any outstanding amount owed to us + $50 for processing and handling by wire transfer or such other means as we may require.”

    So, for argument’s sake, I’ll give them the benefit of the doubt for the rest of their contract. Now they’re saying that if they identify you as a “chargeback abuser”, someone we’ll presume they believe is guilty of fraud, they’ll still happily remove you from their list for $50 plus what you “stole”? Doesn’t that remove any trace of legitimacy from their blacklist? Also, isn’t it basically extortion?

  10. B says:

    Hmmm, crappy, overpriced “tuner” mods for people looking to ruin the look of their luxury cars. No wonder they suffer from an excess of chargebacks.

  11. azntg says:

    I wonder if they call their customers “criminals” as a matter of everyday discourse.

    All they have to do is to meet up with one “bad” customer… my speculation is that sh*t probably won’t fly in court if those guys actually mess up the job big time anyway.

  12. Snarkysnake says:

    Okay-

    Anybody that actually reads that clause in their agreement and actually goes forward with a CC purchase deserves what’s coming to them. (No, I am not blaming the victim. they are not victims-YET). This outfit is telegraphing their customer service attitude loud and clear and you ignore it at your peril.

    If this catches on, I will be doing a LOT less business.CC chargebacks are about the only thing standing between most consumers and total gang rape by companies.

  13. tcp100 says:

    Heh, none of this matters. Your agreement for payment is with the credit card company, as it goes with the merchant.

    In order to accept cards the merchant must agree to allow chargebacks – they can’t make up arbitrary rules. Granted, I’m sure dealing with them will be fun, but Visa/MC would “take care of them” in a heartbeat.

    (I work with e-commerce daily; we have seen many a merchant account terminated for such “policies”.)

  14. satoru says:

    @B: I hear ya. I once saw some retard in San Francisco. He had lowered the car, put on spinners, a spoiler, 20 inch sports tyres, and a deafening sound system. This all would have been pretty ho-hum except he did it on a god damn Lexus ES330.

    I mean I like Lexus, I have a 97 ES300 and love the car. But let’s be honest, its a pretty bland looking car, and no amount of accessories is going to make that thing look cool. Needless to say the moron looked incredibly stupid in his ‘tricked out’ Lexus.

  15. MeOhMy says:

    @dcaslin: Sounds like extortion PLUS publishing your personally identifiable information on list declaring you to be a chargeback abuser without any reason to believe your chargeback was made in bad faith would probably set you up to hit them with a libel action, especially if you merely THREATENED a chargeback. This may also run afoul of privacy laws. They are really playing with fire with that statement.

    However if you read carefully, the policy does say that they will backcharge you only if your chargeback is overturned, which I thought was fairly common practice anyway.

  16. chrisjames says:

    “You agree not to file civil or criminal charges in the event that we steal your car, drive it around in circles on your lawn, and hang our asses out the windows. If you do so, we will put signs on our property stating you are a complete jerk and we had sex with your mom. We will charge you $50 if you wish to have the signs removed, though we choose when and if we remove the signs. You jerk!”

  17. Landru says:

    “Chargeback abuser database”???
    Just think, a whole new unregulated consumer reporting con that can mess up people’s lives. Do a google for “chargeback abuser database”; in addition to the actual database service (it looks like there is only one), you’ll pull up the policies of companies that use them.

    The best part is where they charge you to be removed from the list – some of them go up to $1000.00, plus what ever amount you were contesting in the first place. And I’ll bet you are removing only that merchants entry from reporting agency.

  18. axiomatic says:

    I assure you there is another auto tuning company you could use. This idiotic company will be out of business soon.

  19. Difdi says:

    It seems to me, after reading that EULA, that they’re basically saying that if they fraudulently or mistakenly bill you, and you file a chargeback, you pay their legal fees plus what they say you owe…even if they LOSE.

  20. Ryan Duff says:

    I like this… basically they’re saying if you file a chargeback and they have to pay the invoice amount back to the credit card company, they’re going to re-bill you for that amount plus fees. Seems highly illegal to me.

    You further agree that all dispute resolution procedures below will be deemed waived by you, and that these amounts will be added to the original amount of the order, and that this total amount will then be immediately due and payable. If your chargeback is upheld, you agree to pay all of the same costs, in addition to the original purchase price, but we will use the dispute resolution procedures below to confirm and collect such amounts.

  21. WayneK2 says:

    This company is far from alone. Google the following:

    “chargebask abuse” database

    They’re everywhere, and most of them use the exact same language.

  22. dantsea says:

    I wonder what their merchant processor for credit card payments thinks of this arrangement. I have a feeling they’ll soon find out!

  23. Barbarisater says:

    Sounds to me like a company’s way of covering up their sh***y accessories and customer service.

    And since when is Jeep a luxury car?!

  24. IrisMR says:

    That sure rings a big “Don’t buy with us!” bell to me.

  25. MeOhMy says:

    Nevermind…didn’t see that last part that they will still seek payment even if the chargeback is resolved in your favor. I guess they would have to use scamtastic binding arbitration, because somehow I don’t think showing up in small claims court and saying “Bob ordered a cold air intake, we sold him a garden hose, he filed a chargeback which was upheld by the credit issuer, but we still think we should be paid the full value of the cold air intake plus fees, even though the record shows that we sent a garden hose.”

    They can eat a bag.

  26. Buran says:

    @Ryan Duff: And then all you have to do is file a chargeback of THAT charge, since you didn’t agree to be charged.

  27. SpenceMan01 says:

    “Being listed on such databases may make it more difficult or even impossible for you to use (any of) your credit card(s) on future purchases with us or other merchants.”

    Good. Makes it easier to avoid dumb merchants that employ these stupid, anti-consumer policies.

    PS: How do you get the little “quote box” in a comment?

  28. BigBoat says:

    For most of the reasons one files a chargeback, the clause is probable unenforceable.

  29. Traveshamockery says:

    “If your chargeback is upheld, you agree to pay all of the same costs, in addition to the original purchase price, but we will use the dispute resolution procedures below to confirm and collect such amounts.”

    Whaaaaa?!!?

  30. This contract is pretty much null and void if they didn’t do the work (which is why you would be doing a chargeback anyway).

    So I’d sign it and if I needed to chargeback and they publish their information, I would figure that I could sue for slander.

    But anyway, yeah. This isn’t enforceable as I see it, but I’m not a lawyer.

  31. ottergal says:

    I’m not coming to the defense of the company in this case, but if you read the actual line in the contract it says: “You agree not to file a credit card or debit card chargeback with regard to any purchase and instead abide by the dispute resolution procedures outlined below.” (Emphasis mine, of course)

    They’re not saying you don’t have recourse, they are trying to lock you into their method of resolution dispute… which I really hope includes a joust or at least a hearty game of Rock, Paper, Scissors.

  32. akede2001 says:

    @backbroken: Exactly. Merchants cannot charge you for fees incurred by a chargeback. The merchant can claim to charge you whatever you want, but once the initial chargeback is resolved, any further charges to your credit card which you do not authorize are fraudulent. Storing your credit card information beyond the duration of a one-time purchase without consent is a violation of CISP/PCI Compliance standards and can open the merchant to penalties. Bonus points if they store your CCV.

  33. akede2001 says:

    @Snarkysnake: Exactly. Whenever I make purchases now, I put it on my credit card, then pay off the credit card. This way I always have the ability to dispute the payment later on if I find something wrong with the product and/or services. Must better than using a debit transaction or a check.

    And the reason VISA/Mastercard doesn’t care about issuing a chargeback? Because the merchant eats the cost.. not your bank, not you, not VISA or Mastercard. If you are really due the money back, then chances are you will get it back.

  34. Parting says:

    Is this merchant an IDIOT? What do you think Visa/MC/Amex will do when they have ONE complaint from one of their customers? This merchant is breaking his agreement with credit cards. So after couple of events, where its customers speak up, he won’t be able to USE credit cards in the first place.

  35. Parting says:

    @Snarkysnake: Visa/MC will simply bar this merchant. Do he will be stuck with cash/check/money order options.

  36. highmodulus says:

    If VISA didn’t know about this, I am betting some helpful soul has brought it to their attention by now.

    Also, in a related matter, I bet someone at this crappy tuner shop is having a “bad case of the Mondays” right about now.

  37. SadSam says:

    I don’t regularly use credit cards so maybe I’m out the loop but are there consumers out there abusing chargebacks?

  38. chrisjames says:

    If anyone is on the fence about the importance of information privacy, here’s a quote directly from the Chargeback Protection service that maintains a/the database. This is from an on-site FAQ.

    My privacy policy bans me from disclosing customer information. Now what? Abusers are not customers, but criminals. “

    It also compares it’s service to hiring a lawyer in case of fraud in terms of disclosure (why not just take legal action, eh?) and suggests that a minimum level of protection for merchants is to collect as much personal information on each customer as possible to assess, by unclear means, their legitimacy.

  39. Richardsonke says:

    These policies seem to be very popular with web hosting companies. I have run into multiple of them that that charge $50 or more if the client initiates a chargeback. One of them even has in its terms and conditions that they can take legal action to get the fees they charge if this happens.

  40. howie_in_az says:

    Looks like a shitty fly-by-night store anyway, as if one needed more reason to avoid them.

  41. digitalgimpus says:

    This isn’t that uncommmon. Someone even wrote a story on this before (might have been CNet).

    You’d be surprised what companies forbid if you read the terms. Often there’s also wording to try and stop you from publicizing bad service or a bad product.

    Enforceable? Likely varies from state to state. Uncommon? Not at all.

  42. EarlNowak says:

    Comment on Merchant Tries To Forbid Chargebacks Does not vary from state to state. It’s unenforceable. Look up the
    Truth in Lending act. Consumers have rights under federal law that
    can’t be abrogated by a Merchant or Issuer.

  43. Their policies are superseded by their agreement with MC/Visa/Amex.

    That’s the end of the story.

  44. linedpaper says:

    I am familiar with this site from some of my car enthusiast forums and can say they probably do this because they never send out the products you order! A bunch of people on my forums ordered an accessory (that is almost too good to be true) for their cars, paid and have yet to receive their item. There were actually a few who were denied a chargeback by their bank, but most were able to have the chargeback go through.

  45. MPHinPgh says:

    This is somewhat off-topic, I understand, but has anyone looked at the website?

    They have very few products listed, and most of them are “sold out”, “backordered” or “hurry, only a few left”. There are no pictures of any of the items that are listed. Everything just shows a box with the site’s logo.

    This looks to be a bunch of scumbag morons out for a very fast buck, and after that they’ll be slipping away int the night. I seriously doubt anyone with sense would buy from this site to begin with. There’s red flags all over the place with this site.

  46. Nenne says:

    @chrisjames: That’s basically what I read.

    I don’t see how anyone who filed a chargeback against them previously would want their names removed from their list so that they could use their services AGAIN.

  47. LibraryGeek says:

    @Troy F.: Actually, if you continue reading it states: “If your chargeback is upheld, you agree to pay all of the same costs, in addition to the original purchase price, but we will use the dispute resolution procedures below to confirm and collect such amounts.”
    So, this company wants to make you pay their fees no matter if you win or lose.

  48. StevenJohn says:

    @B:

    yep overpriced tuner mods that are desirable by stupid underage teens using mommies CC without her permission.

    The type of business just smells of a high rate of chargebacks.

  49. brettt says:

    My question is, if they show this policy to VISA, will VISA reject my chargeback? I wonder if this policy actually works.

  50. FightOnTrojans says:

    @Barbarisater: When your car is a Yugo. :)

  51. gjaluvka says:

    @brettt:

    Apparently No – somebody already picked up on this article:

    [gadgets.boingboing.net]

    specific quote:
    VISA specifically prohibits these “no chargeback” policies” in its rules.

    “No Chargeback” Sales Receipts Independent entrepreneurs have been selling sales-receipt stock bearing a statement near the signature area that the cardholder waives the right to charge the transaction back to the merchant. These receipts are being marketed to merchants with the claim that they can protect businesses against chargebacks; in fact, they do not. “No chargeback” sales receipts undermine the integrity of the Visa payment system and are prohibited.”

  52. afw says:

    @akede2001: You might want to verify that – we had a Visa card with exactly one transaction on it, and we disputed it (the company did not perform the service they charged us for) and were specifically told by the credit card company NOT to pay it until the dispute was finalized. They told us that paying it took away our rights to dispute. Paying off your credit card in full is a good thing for your finances, but it may remove your right to dispute a charge.

  53. abbamouse says:

    A lot of scammers do this sort of thing. If they can just get people to delay chargebacks, they can continue the scam as deadlines pass for consumers. One example is HomeTownCandy.com, which appears to STILL be scamming people after years of this behavior. Check out their chargeback policy:

    Should we wish to cancel your order for any reason, or require a refund, please email us at support@HometownCandy.com with the word CANCEL in the subject block. If your order has not yet shipped, we will cancel and refund your order promptly. If your order has shipped, then a refund will be issued after the package is returned to and received by us per the return policy set forth above. Chargebacks not preceded by a cancellation request email will be assessed an administrative fee of $25.

    Since they just don’t bother shipping orders, this makes it easy for them to continue the scam…

  54. fud says:

    There is a large thread on vwvortex forums about a beta test where certain things were promised and lct manipulated their wording to save money. Btw it seems like their product isn’t very good either.

  55. heavylee-again says:

    Has anyone contacted Visa or MC to alert them of this merchant?

  56. cerbie says:

    @SpenceMan01: <blockquote>text</blockquote>

    text

  57. aaronw1 says:

    There are a lot of companies (usually those that deliver ‘services’ like the web hosting person above) that have gotten *lots* of “fraudulent” chargebacks and are sick of it. The problem for service is, let’s say that your server is delivered, and it works fine, but for some reason it’s slower than you think it should be or you can’t transfer files at the speeds you think you should be able to transfer them at. Should you do a chargeback or just not continue with the service? The problem is a *lot* of people do a chargeback but the web hosting company’s position is they delivered what you ordered… and the circle can go on for a while. For products it’s obviously a lot more clear unless they’re describing them differently than what you get, which is a whole other set of problems…