The Chargeback Blacklist

The ChargeBackBureau sells merchants a blacklist with names of customers who have done chargebacks. Merchants are supposed to be able to access its lists and deny transactions to customers if they see they’re chargeback-prone. When a consumer is put on the list, they get sent an email warning them they’re “going to have trouble purchasing goods or services on the Internet in the future.” ChargeBackBureua’s headquarters are conveniently located in Panama, which is convenient for its American clients, as such databases are illegal in the US. Chargebacks are an important tool for consumers to fight back against merchants who won’t give you what you paid for. Here’s how to do one. If a merchant won’t do business with you because you stood up for your rights before, then you shouldn’t do business with them either.

Dispute charges at your peril [SFChron]

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  1. Concerned_Citizen says:

    If this kind of list is illegal in the US, how can US stores use such a list?

  2. Snarkysnake says:

    Well, I guess information works two ways.

    Open invitation to all Consumerist readers and bloggers:

    If you get one of these emails – NAME NAMES. Let the rest of us know who to avoid when we spend.

    Bonus points- If you work for a merchant that uses this outfit,got to a secure computer and send the name of your company. Blow the fucking whistle on this bullshit.

    I , for one, will not give up on this without a good fight…

  3. chartrule says:

    now what we need is a service that lists all merchants that sign up for chargebacks service so they can be boycotted

  4. sharki3232 says:

    According to the SF Gate story. The company is shrouded in secrecy and may not even be legit.

  5. loueloui says:

    @Snarkysnake:

    I agree. Maybe we should start the Chargeback Blacklist Blacklist.

    It never fails to surprise me how sleazy some merchants are. On the one hand they justify raising prices by complaining about everything under the sun, (shoplifting, the economy, fuel prices, labor, the phase of the moon, etc.) and in the same breath try to pass these same expenses on to the consumer.

  6. tedyc03 says:

    If anyone ever receives an email like this they should forward it to their state Attorney General’s office. Though they may not be able to go after the company itself, they CAN go after the company that employs this blacklist.

  7. courtarro says:

    Where does this company get its information? Surely the US credit card companies do not give away information like this. If that assumption is true, then I suppose this company’s clients (the merchants) tell it when a customer does a chargeback, which means the database is simply full of hearsay.

    Actually, I bet no reputable merchants actually use the database, and the SF Chronicle has fallen for a silly troll by ChargeBack Bureau and given them free advertising in return. SFGate even included prices for them – how nice. I think it’s safe to ignore CBB for now.

  8. Nighthawke says:

    Panama huh? Gee, I always wanted to see the Canal and the gates…

  9. How many of these 7,500 merchants that supposedly subscribe to this service are legit themselves, anyway?

    I doubt that the likes of Amazon use it, but I could certainly see Honest Bob’s House of Vitamins or Crazy Dave’s Playstation Modchip Circus as customers.

  10. Hawk07 says:

    Good, there’s nothing from any merchant that I would want badly enough where I wouldn’t want my name to be on this list.

  11. iEddie says:

    Chargeback the ChargeBack Bureau! :)

  12. Pennsylvanian123 says:

    I think Darwin’s theory will eventually weed out these kinds of companies. I wonder where the BBB and state Attorneys General stand on this? It’s clearly so anti-consumer it doesn’t pass the smell test. I’ll have to peruse our merchant agreement today if I have time and see what kind of language they have on chargebacks. I can’t imagine this is in compliance with those agreements.

  13. highmodulus says:

    Also, as discussed on several other comment threads, VISA, Mastercard and Amex are pretty vigilant regarding restrictions and charges for use of valid cards (because that is how they get paid).

    Turning a company in for using this sort of shady service to deny valid cards is likely to get them a rapid nastygram from the CC lawyers.

  14. Geekybiker says:

    I imagine visa would give them the pimp hand if it finds out about a company doing this.

  15. cheviot says:

    The problem is chargeback abuse, and although I have no doubt unscrupulous businesses may use this service to cut off service to people who use chargebacks in a reasonable and honest way, I know on more than one occasion we’ve had customer’s cheat the chargeback system to return items that were well past the return date, that they had physically damaged, etc.

    I would have loved to know they cheated other merchants and lied about the reasons for chargebacks before selling to them.

    Think about this. How many chargebacks have you had to do…I’ve done two… ever… and I’ve had credit cards for 20+ years.

    Now, if one of your potential customers had 5 or 10 chargebacks in the last 6 months, wouldn’t you want to know that before you accepted their credit card for a sale? I sure would!

  16. humphrmi says:

    @cheviot: That would be fine if the database only stored, say, customers who had done 5 or 10 chargebacks in the last ten months. But no, they are after every chargeback. From the linked article:

    When our members receive a chargeback, they enter the customer’s information into our database along with a short description of the chargeback case.

    … When our members receive a chargeback… as in ONE, one chargeback and you’re in their database. And it’s entirely up to the members how they use it – don’t want a customer that did ONE chargeback? OK! Here’s the data!

    It’s not a valid use of data and must be stopped, or at minimum counter-acted.

  17. Buran says:

    @cheviot: If the chargeback is invalid, though, you have an opportunity to fight it. And not only is this illegal, there’s lots of ways around it — I can generate virtual card numbers, for example, and can appear to be someone totally different if I choose to. If a business really is losing money from this, it needs to adjust its business model and pricing — not resort to illegal means.

  18. coopjust says:

    A company that would refuse you for being on that list is a company you wouldn’t want to shop with anyways.

    On the topic of chargeback abuse: Don’t the credit card companies keep an eye out for such abuse? If a consumer does chargebacks left and right eventually the issuer will rule in favor of the business, right?

  19. MayorBee says:

    @cheviot:

    although I have no doubt unscrupulous businesses may use this service to cut off service to people who use chargebacks in a reasonable and honest way…

    That’s exactly the problem. With what you’re saying, it would be better that twenty honest men be imprisoned rather than to chance one guilty man go free.

    Why should the fact that a customer previously exercised their rights give any merchant the right to discriminate? Of course, merchants want uninformed consumers. This goes double for unscrupulous merchants.
    I think a reasonable response to this would be to require BBB complaints to be displayed on the merchants’ sites (like advertisements on many webpages off to the right). That way consumers can have unrestricted access to the fact that something might be wrong with the merchant and merchants can use their chargeback database.

  20. bohemian says:

    I want a list of what businesses are using this service so I can never do business with them again.

    This service is sketchy to say the least and it sounds like a gateway to ID theft.

  21. spinachdip says:

    @cheviot: If a cardholder is a serial chargeback abuser, then that’s something the credit company would be bothered about too, right? Those chargebacks aren’t exactly non-strings-attached for the credit company.

    If you run a business, you can’t have it both ways – if you’re going to accept credit cards and reap the benefits, you also have to accept the possibility that a customer will potentially file a chargeback.

  22. P_Smith says:

    Get a load of this crap the company spokeswhore said in the article:

    “Thousands of other businesses like yours share their bad customers’ data in our database.”

    So a “bad customer” is a person who objects to being ripped off, being a victim of a bait and switch, a victim of fraud? Is it any wonder there was a chargeback in the first place?

    Here’s a thought: If you find yourself on the “blacklist” after a legitimate chargeback, sue the company for breaching your privacy by selling your personal information.

    If the suit gets any notice or publicity, it might make companies think twice about cheating customers, make consumers more confident about complaining, and maybe give politicians the spine to make it illegal…yeah, right.

  23. SadSam says:

    Who are these chargeback abusers? Do they even exist, how many chargebacks can you do before the credit card conmpany takes notice?

  24. dewsipper says:

    @Buran: Yes, you can fight it. And you are charged a $30 administrative fee each time you fight it – irregardless of whether or not you win. And…. you usually do not have enough information to take the complainer to small claims court to try to recover the fee. If you own a small business and several “shoppers” hit you with these in one month, it can seriously effect your liquidity. Of note, we had three in one month. We are a cash-n-carry, brick-n-mortar store. All three wrote in their complaints that they did not receive the merchandise from their internet purchases. So we were out not only the amount of their purchases for several weeks, we were also charged $90 just for the convenience of their stupidity. I think the credit card companies should provide vendors with that information updated on a monthly basis, at least until they charge the complainant the $30 if they lose.

  25. AlexJP says:

    @Buran: Not quite. In my experience dealing
    with the merchant side of credit card chargebacks, the cards are pretty
    much stacked against the merchant. Right off the bat, the exact rules
    that govern how these chargebacks are conducted are not provided to
    merchants. But any violation of those secret rules pretty much seals
    the deal.

    Chargebacks are a useful remedy for many situations, but if the same
    light that shines on other unfair business practices moves to
    chargebacks, it will be clear that the credit card companies are not
    being fair to merchants.

  26. BigElectricCat says:

    @P_Smith: “the company spokeswhore said”

    You, sir or madam, are A Great American.

  27. humphrmi says:

    @dewsipper:

    And you are charged a $30 administrative fee each time you fight it

    I love it. So now companies see how it feels to get hit with hidden fees. Good for them, maybe they’ll think twice about adding “fuel surcharge” fees to their invoices.

  28. vmxeo says:

    Happily, the website is no more (www.chargebackbureau.com), so this had very likely been some sort of scam. A google search for the seller’s contact phone number and/or email address (check it out, it’s there on the website) links the owner of the domain to various other spam-related websites and adverts.

    I’d bet this guy was making money from from businesses collecting user information, then turning around and selling it to spammers.

  29. howie_in_az says:

    chargebackbureau.org site is 404 or a link site. I’d love to get my hands on this list, oh the field day I would have.

  30. dewsipper says:

    @humphrmi: Ya… way to stick it to those poor little hometown hobby shops with low margins….

  31. Traveshamockery says:

    “If a merchant won’t do business with you because you stood up for your rights before, then you shouldn’t do business with them either.”

    AMEN. If they’re concerned about chargebacks, you should be concerned as to why they’re concerned!

  32. S-the-K says:

    @Geekybiker: I’m with you. I’d think that it would be a violation of Visa/MC agreements (in spirit if not in letter) to deny a transaction to a cardholder because they were on an illegal blacklist. If Visa/MC don’t like it when merchants deny transactions if the customer does not show their ID, then I wouldn’t think they’d put up with this. Especially if the company puts in writing that the customer is denied to due a blacklist. If the company was smart, they’d say their system was down or that the bank denied the transaction or something like that that would not raise suspicion.

    I hope we do learn who is using this blacklist so we can shine the light of justice on them, as well as launch an EECB against them. :-)

  33. MayorBee says:

    There’s still [www.chargebackprotection.org]
    I’d love to be able to search their database.

  34. Buran says:

    @dewsipper: You just bounce the $30 back on another chargeback. There’s no way for them to win as no credit card issuer would allow a rule like that (while I can and do see ID checks as being allowed).

  35. timmclargehuge says:

    I have no idea how they add names to it but spamming the crap out of the list with fake/bad names would make it useless to stores as well.

  36. dewsipper says:

    @Buran: Bounce the $30 back on another chargeback? I don’t get it. I’m talking from a merchant side here. We get stuck with a $30 fee we have to pay regardless if the claim against us (the chargeback) was completely false. They take out the fee from the deposit they send to our bank account.

  37. APFPilot says:

    @dewsipper: Cost of doing business.

  38. AlexJP says:

    @APFPilot: That reasoning is rejected.
    Consumers rightfully gripe about being treated unfairly, and merchants
    (especially the smaller ones!) should not have their concerns so
    quickly dismissed.

  39. Snarkysnake says:

    @dewsipper:

    Here’s an idea that’s so crazy that it might just work- Treat people the way you want to be treated.

    Are there people that will abuse ? Yeah.
    But the vast majority of us are honest and just want what we bought.

  40. AlexJP says:

    @Snarkysnake: No need to get abrasive! I’m sure @dewsipper practices precisely that.

  41. First of all, that news story is two years old.

    Second of all, the website it no longer in operation.

    Nice reporting job, consumerist.

  42. APFPilot says:

    @corporateamericabites: Other websites doing the same thing are still around, google does wonders.

  43. chrisjames says:

    @courtarro: Then technically the credit bureaus are full of hearsay, too. Don’t underestimate what a little information out of context can do.

    But I read a list of some companies that use a chargeback blacklist and quite a few were adult stores and small-time internet businesses.

  44. chrisjames says:

    @dewsipper: Is the fee placed by the service you are using to process credit card transactions? That would be fair payment for the service you are using. I ask because I don’t know who exactly you deal with when you set up such a service.

  45. BII says:

    As most people have mentioned, the chargeback system is really stacked against the merchant. We’ve lost on disputes that were totally bogus.

    It would be nice if the credit card companies policed their card holders and protected merchants, but that’s never going to happen, so the need of this sort of list is necessary, but I doubt we would ever use it, considering it might be illegal.

  46. davidr says:

    @humphrmi:

    They need to know about your ONE chargeback in order to recognize a pattern. A chargeback abuser probably only has ONE chargeback at any given merchant. But ONE chargeback at each of 12 different merchants last month would be a huge red flag.

    It’s the same reason that American Express will report your ONE missed payment to TransUnion.

  47. humphrmi says:

    @davidr: It’s fine to collect data about one chargeback.

    It’s not fine to give merchants the name of people who’ve had one chargeback.

    Since it’s been established that this business doesn’t exist, it’s a moot point now. But if it did, giving merchants access to data about customers who have one or two chargebacks is wrong.

  48. elisa says:

    The article is from 2006. Why is it being posted 2 years later, without updates?

  49. AmbroseP says:

    @elisa: I was wondering the exact same thing…

  50. Hawk07 says:

    @elisa: @AmbroseP:

    There was an article posted the other day regarding a retailer with a shady buying agreement that claimed they would bill you for whatever amount it cost them if you initiated a chargeback and the merchant won and they would report you to a blacklist database.

    There probably should have been some mention that this was a followup.

  51. pigeonpenelope says:

    I see things in a different light.

    First, I don’t think that the business using this list are bad, they are scared. Small business owners have a lot to lose when their merchandise is essentially stolen by chargebacks.

    Second, it would be nice to have a list of the businesses with the most percentages of chargebacks so that consumers know which businesses are sleazy.

    Third, people who do a lot of shopping online are likely to have more chargebacks versus someone who does maybe one or two. Is this list showing a percentage or a number value?

  52. dewsipper says:

    @chrisjames: Yes, it’s part of the processor. Every service in our area charges the $30, so switching to another provider is not a real option. Also, not accepting Visa/MC is not an option either unfortunately.

  53. dewsipper says:

    @Snarkysnake: Wow, I hope you were not really implying what I inferred. If so, then I’m sure you can infer a few insults I’d like to imply here.

    I’m sure none of the ladies were being malicious, but their hasty chargebacks for purchases they did not remember right off the bat were actually very hurtful to us. If they had spent even ten minutes investigation it would have saved us a lot of time and money.

  54. jstonemo says:

    This kind of list would be perfect for Ebay sellers. Since Ebay has decided to frack the sellers by not allowing us to leave feedback on buyers who are lowlifes, we could see who is abusing the Ebay/Paypal system with chargebacks after receiving merchandise.

    Chargeback lists shouldn’t be illegal in the USA since they allow credit scores to determine insurance rates.

  55. humphrmi says:

    @jstonemo: Credit scoring agencies are regulated by the FTC. Until the US can regulate this, it will (and should) be illegal.

  56. boomerrbu says:

    I am a seller, I sell online only, I have customers that have filed for a chargeback because the black color I sell is not the same black color he/she sees it. (not as described). Our terms and conditions states that customers will hold liable for re-stocking fee, shipping both ways. (normal stuff). Customers dont recognize terms and conditions, visa and master card do not recognize accessorial fees (shipping, handling, restocking) so they will refund the money to the credit card holder. If terms and conditions are to be followed by both merchant and customer.
    If you realize the internet has changed the way we are doing business, a customer can go to state attorney, BBB, police dpt, etc. We the sellers are just buy our selfs. I am using http://www.troubleshoppers.net (troubleshoppers.net) services. This service protects the merchant and the seller. Fair business.