Doing a credit card chargeback, even once, can lead to blacklist

credit cardsDisputing a credit card charge by asking for a "chargeback" can lead to being put on a blacklist that merchants can check for customers who might try to defraud them.

Getting off the list costs $99, although the fee is waived if the customer didn't know they were committing "friendly fraud," said Brien Heideman, founder of, which keeps such a customer list for retailers that don't want to get hit with costly credit chargebacks.
But until they're denied by a merchant, either online or in a store, many shoppers probably won't know if they're on the blacklist and should contact to get their name off of it. Getting off the private list can be done online, and it's a pretty hefty list, with 6 million people on it from the United States and Canada, Heideman told WalletPop in a telephone interview.

"Friendly fraud" is an intentional action taken by a customer to cheat a retailer out of money and get merchandise for free. A common example is chargebacks, where customers contest a charge on their credit card, often claiming the item was never delivered or they never bought it. When a customer issues a chargeback, the retailer is fined and could lose the cost of the actual merchandise.

Most people on it know what they're doing when they fraudulently do a chargeback for goods they've bought, and have to pay a $99 fee to get off the list if they can prove it's a one-time thing that won't reoccur, he said.

Customer chargebacks cost retailers $11.8 billion in the U.S. last year, according to, including charges for bank fees, credit card fees, loss of merchandise and loss of customer service agent time.

"Most of the time it's almost cheaper for a company to send the merchandise again rather than to deal with a chargeback," Heideman said.

"The ones that are having the toughest time right now are with trial offers," Heideman said.

For example, a business will offer a 10- to 14-day free trial, and the customer won't return it by then, so the customer is billed and another product is shipped. The customer calls his credit card company, claiming he either never made the order or sent the product back in time, when in fact he still has the product, Heideman said.

Another sign of "friendly fraud," he said, is a customer who won't sign for delivery of a product, then claiming he never received it when asking for a credit card chargeback. Many credit card companies allow chargebacks to be done online.

"Typically you don't even have to make contact with the credit card company," Heideman said.

Disputes can include claiming the item wasn't shipped, it was sent to the wrong address, or was stolen from the front porch. can check with the shipping company to see if the package was delivered, and can track down a customer's IP address from their computer to confirm that they bought it online, Heideman said.

And for a legitimate customer thinking of doing a chargeback? Contact the company first for a refund. It's a lot easier than paying $99 to get off a blacklist.

Aaron Crowe is a freelance journalist in the San Francisco Bay Area.

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Eric J

Such a list would be a violation of the Fair Credit Reporting Act, and refusing a transaction on such grounds would also likely violate the contract that the merchant has with the cc company (i.e., visa, MC, etc)

May 11 2014 at 10:48 PM Report abuse rate up rate down Reply
James Stein

It is important to understand that chargebacks occur before the related dispute is resolved and still count even if the final decision is in the merchant's favor. So even if the charged back transaction turns out to be valid after all, the merchant still has to pay the chargeback fee and the transaction still counts against their chargeback limit. For a more complete explanation, read this:

March 20 2012 at 5:18 PM Report abuse rate up rate down Reply