Update: We published this article in December 2009 about BadCustomer.com, a service that is no longer active. The Federal Trade Commission filed a complaint in December 2010 against companies connected to the service. We are keeping the article to document early eCommerce fraud tools, privacy concerns, and chargeback practices.
In 2009, BadCustomer.com promoted itself as a way for merchants to identify customers who might create chargeback risk. Merchants could reportedly submit chargeback information to a shared database and screen future customers against those records.
The service addressed a real concern for online retailers, but its approach also raised questions about transparency, accuracy, privacy, and consumer rights. Merchants could add customers to the database without their knowledge. The service also charged customers a fee to request removal.
The original BadCustomer.com website is no longer active.
Privacy Concerns Around Consumer Blacklists
BadCustomer.com allowed merchants to report consumers associated with chargebacks and made that information available to other participating merchants. Consumers could reportedly request removal from the list by paying a fee.
Customers might not have known about the screening. They also had limited ways to correct inaccurate information or control how the service used their data.
Why Merchants Were Interested in BadCustomer.com
Return fraud and chargebacks were significant concerns for retailers. A shared database may have seemed useful to merchants trying to reduce chargeback and return fraud losses.
BadCustomer.com reportedly allowed merchants to submit customer information after a chargeback. Other participating merchants could then use the database to screen future transactions for possible risk.
Questions About Transparency and Consumer Rights
Customers might not know they were being screened or how to dispute an inaccurate report. Consumers who were listed could reportedly request removal by paying a service fee.
The World Privacy Forum also raised concerns with the FTC about transparency, data collection, and consumer control.
What Happened Next with BadCustomer.com
In December 2010, this article was updated after the Federal Trade Commission filed a complaint involving companies connected to BadCustomer.com. The complaint said consumers were threatened with being added to an online blacklist after chargebacks. That development changed the context of the original article.
At first, the service appeared to offer an unconventional way to prevent fraud. It later showed the risks of shared consumer databases.
Related Articles:
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- 35% of fraud-related charges are charge backs
A Better Approach to eCommerce Fraud
Merchants still need ways to reduce fraudulent orders and chargebacks, but fraud prevention should rely on transparent processes and reliable transaction signals rather than unverified consumer blacklists.
Current approaches may include payment-provider fraud tools, address verification, order-risk rules, documented customer-service procedures, delivery confirmation, and clear evidence for responding to chargeback claims.
Businesses should also review applicable privacy requirements and avoid collecting or sharing more customer information than necessary.
