Blacklist for disputing credit card charges concerns watchdog groups

merchant scans a credit cardConsumers no longer have to pay $99 to get their names off a notorious blacklist of customers who dispute credit card charges, but watchdog groups still worry that the list itself jeopardizes their rights.

As we told you back in March, the site BadCustomer.com keeps a running tally of customers who request a credit card reversal, called a chargeback, after paying a merchant. Even a single chargeback can land you on the list, which can lead to merchants rejecting your card in the future.


Previously, if a customer wanted to clear his or her good name, BadCustomer would take them off the list for a $99 fee. Many found this galling, because there are numerous legitimate reasons you could request a chargeback: You could have never received the item you paid for, or it could have been damaged, defective or was otherwise not what you were led to believe you were buying.

Now, BadCustomer founder Brien Heideman tells Walletpop his company no longer charges that fee. He says the company has tried to make getting off the list more user-friendly, adding, "We have agents helping individuals with any mediation process that may arise, whether it be going through the steps to remove themselves or dealing with a merchant as to the validity of their name even being on the list."

Due to some technical legalese, sites that blacklist customers who asked for a chargeback don't fall under the auspices of the Fair Credit Reporting Act, the very legislation that gives you the right to ask for a chargeback in the first place. This means they're not subject to the same kinds of regulations as the three big credit bureaus, a distinction that worries consumer advocates like Paul Stephens, director of policy and advocacy at the Privacy Rights Clearinghouse. He says BadCustomer's elimination of the $99 fee doesn't go far enough to reforming a system that can penalize customers simply for exercising their legal right to a chargeback.

Ed Mierzwinski, consumer program director at watchdog group U.S. PIRG, tells WalletPop in an interview that merchants do have a legitimate claim when it comes to people buying goods, using them and then returning them. (We've written about "returnaholics" here.) But while it's natural that merchants would want to avoid dealing with customers who are routine "return abusers," sites like BadCustomer can unfairly lump in consumers who have a legitimate claim against a merchant with chronic returners

"I believe the federal trade commission should investigate this," Mierzwinski says. Unlike regular credit bureaus, these sites are problematic in part because you can't get credit for doing the right thing; you only can be flagged for doing the wrong thing, even if that "wrong" move is a justifiable merchant complaint on your part. The problem, Mierzwinski says, is that a site like BadCustomer "doesn't give you As, only Fs."

Learn about investing from the comfort of your own home.

Portfolio Basics

Take the first steps to building your portfolio.

View Course »

Investment Strategies

Learn the strategies you need to build a winning portfolio

View Course »

Add a Comment

*0 / 3000 Character Maximum