This article was originally written in December 2009. I am in no way affiliated to, and my goal is to keep this article neutral. In December 2010, Las Vegas Sun reported that FTC is suing the parent company of Please see the update at the bottom of this article.

Strangely enough, lately I’ve been getting some traffic with the google keywords “ scam”. Because the google index points to an article I had written a few weeks ago about fraud related chargebacks. In that article I had just highlighted how can be used to detect chargeback related scams.

Naturally my first reaction was to verify whether is indeed a legitimate site or not. So far, based on the following links, it seems legitimate enough. (Please see the update at the bottom of the article)

Here is an article from AOL…

Brien Heideman, the founder and CEO of, also believes he can help take friendly fraud con artists off the Internet. He has developed a free service for merchants where, if you suspect you have a dishonest shopper, you can report them to Retailers, meanwhile, can run their own customers through BadCustomer’s database, to see if they come up as a chargeback risk. Customers are refused service and told they’re in the database — although, interestingly enough, they can pay $99 to be removed from the list.

Another one from CNBC

Badcustomer claims that customers who’ve used chargebacks before are nine times more likely to use them again, compared to customers who resolve billing disputes directly with stores. The company provides its service free to merchants who hand over their own list of chargeback customers.

And finally from Yahoo answers

“Web of trust” lets you know is a site is safe, check it out?

Based on all the information above, I am fairly certain that is a legitimate site. But is it a good service for the merchants? I am not so sure.

Why does a service like exist? According to National Retail Federation, retailers lost about $11.8 billion to return fraud in 2008. During the holiday season of 2007, the return fraud was $3.6 billion. So a service to tackle this problem seems like a good idea.

Here is how works. If a customer processes a charge back, the merchant can report that customer to who then maintains this customer’s information in their shared database. Other merchants can use this central shared database to pre-screen their customers for charge-back risk. The customer who has been blacklisted can request to remove him/her from the list by paying a $99 service fee.

The author of this Information Week article clearly is not happy with the idea that “Customers are unaware they are even being checked against the database unless they’re on the list”. However, the more important issue is that of privacy. If every transaction is to be pre-screened by, they will be collecting a large amount of credit card information.

Indeed, the World Privacy Forum discussed these privacy issues related to with the Federal Trade Commission on November 6, 2009. (Access the detailed report here)

… to get off the badcustomer list, consumers must supply detailed information online. How are consumers supposed to hear about every database list like this? How is using the consumers’ information after receiving it? Is this company doing more than just taking people off of the bad customer list? We suggest that consumer data collection is out of control, with no balancing consumer rights orrequirements for transparency to counterweight the collection and usage activity.

Is the service legitimate? Yes. Is it appropriate? I am not so sure. Read the comment from @Erik below for another interesting perspective on this service.

UPDATED on December 29, 2010 – One of the commenters on this blog alerted me to this Las Vegas Sun article.

FTC sues Internet companies for credit card, debit card scam… “[The defendants] attempted to drive down their chargeback rates by threatening to report consumers who seek chargebacks to an Internet consumer blacklist they operate called that will `result in member merchants blocking [the consumer] from making future purchases online!’ And they have attempted to counter the large number of complaints about their conduct by flooding the Internet with supposedly independent positive articles and other web pages,” the FTC complaint says.

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