Santa Monica, CA–The recession may have stifled consumers’ purchases, but retailers are reporting a spike in “friendly fraud”—where consumers try to get out of paying for their online purchases. A new databank of frequent chargeback consumers hopes to help.
Consumer chargebacks, or “friendly fraud,” is defined by unscrupulous or “just plain lazy” consumers who demand purchase refunds directly from their credit card companies rather than following proper return/credit protocol with the retailers.
In an effort to thwart the growing problem of customer chargebacks—which the National Retail Federation say costs retailers about $11 billion in 2009—BadCustomer.com has launched the Internet’s largest shared database of consumers who have frequent chargebacks and offers free consumer screening services to all online retailers.
“In an attempt to appease their customers, credit card companies are making it easier for them to use chargebacks, often sticking the retailer with hefty fines and fees, not to mention the loss of the merchandise, which is usually not returned,” says Brien Heideman, founder and ceo of BadCustomer.com. “We help prevent that nightmare before it even starts by running consumers against our database during the purchase process to make sure they’re not a known chargeback risk.”
As consumers shop more online, chargebacks are on the rise, too. BadCustomer.com aims to help cut those costs dramatically by providing its database scrubbing service to all retailers for free.
How It Works
Participating retailers contribute to the BadCustomer.com database, providing the details of known chargeback risks they have encountered. The result is the Internet’s largest aggregated frequent chargeback shopper “blacklist.”
When a consumers attempt to make a purchase from a participating BadCustomer.com retailer, the consumer’s contact data is automatically scrubbed against the list during the order processing. If the consumer’s name appears in the BadCustomer.com database, the consumer receives a notification, along with instructions on how to rectify the situation, and the purchase is declined.
“Consumers are unaware they are even being checked against the database unless they’re on the list,” Heideman said. “If they are, we direct them to visit our site or call our customer service line to be removed. And, because we realize that some customers may not understand the damage their chargeback behavior can cause, we explain that, as well as the proper process to resolve a dispute or process a return in the future, so they can stay off the list.”
Consumers can contest their inclusion on the list by contacting BadCustomer.com which will mediate the issue between shopper and merchant. Once removed, consumers are free to shop as they choose and can even return to complete the purchase process. BadCustomer.com also operates a fully-staffed remediation department to help resolve disputes. Heideman says representatives will even call the credit card companies and/or retailers to settle any misunderstandings.