Retailers are regularly reviewed by their customers online—now they can review their customers, or at least, their customers’ chargeback history. BadCustomer.com has launched as a shared database of frequent chargeback customers, offering free customer screening services to online retailers.
About 300 retailers contribute to the six-month-old database, which has the name and contact information for about six million customers who have initiated chargebacks with credit card companies.
Participating retailers contribute to the BadCustomer.com database information on customers who’ve used chargebacks. When a customer makes an online purchase from a participating retailer, the customer’s contact data is automatically matched against that database during the order process. If the shopper is found to be on the BadCustomer.com database, he receives a notification along with instructions on how to rectify the situation and the purchase is declined.
The process helps retailers avoid chargebacks and also trains shoppers to take up billing disputes with the retailer directly rather than the credit card company, according to BadCustomer.com, which cites a National Retail Federation estimate that customer chargebacks cost U.S. retailers $11.8 billion last year.
Chargebacks occur when a credit card company withdraws the money for a transaction from a merchant's account and deposits in a consumer's following a billing dispute. While retailers have protocols for resolving disputes with customers directly, many consumers instead seek a refund directly from the credit card company—often a simpler process for the consumer—which issues the chargeback. Retailers then may face fees or fines from the credit card company, in addition to the loss of merchandise that may not be returned.
“We help prevent that nightmare before it even starts by running the customer against our database during the purchase process to make sure they’re not a known chargeback risk,” says Brien Heideman, BadCustomer.com CEO.
Consumers listed on BadCustomer.com get off it by contact the database company, which educates them on working directly with retailers versus credit card companies to resolve disputes. Though they also must pay BadCustomer.com a $99 fee to get off the list, Heideman says the company derives most of its revenue from the other merchant processing services it offers. Heideman also says that if customers have made any attempt to contact and resolve their dispute directly with the retailers, they are removed from the list without charge.
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