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Bad Customer, Bad, Bad Customer

As regular readers know, I was forced to buy myself a long gownfor an event last weekend. It was probably the last time I'll wear it. I'm not really a gown-gala-hobnob kinda gal. So a few people jokingly asked me, "Are you going to take it back?"

No.

Returning perfectly fine clothes is, well, stealing. It happens a lot. Retailers claim that so-called "friendly fraud" added up to nearly $12 billion last year—not just customers returning used items, but returning different items from the ones they bought, or people buying something and then claiming they didn't make those purchases.

It may be harder to get away with that now, especially online. A new database of deadbeats is being collected at BadCustomer.com. On the Web site, businesses can check out a customer before a purchase is completed to see if that customer has a history of "chargebacks". A chargeback is when a customer has had a dispute with a merchant over a charge. 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.

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"By using the database," the website says, "you'll be able to screen out bad customers before they even get the chance to harm you!" What's more, the company claims that "customers are 98 percent less likely to issue a chargeback if they know they'll be put on a blacklist for doing so."

Badcustomer's website launched in July, and President Brien Heideman tells me the database includes information on five million people provided by 150 merchants using the service.

As for customer privacy, Ecommerce-Guide.com reportsthat at Badcustomer, "while customer data is shared, no single retailer or person--not even Badcustomer's own IT staff—is able to view the specific information. According to the company, the database only pings a response when data is matched during a query; you cannot view a file or see any details." It also says the company does not store customer credit card security codes, and sensitive data is stored through a double key encryption which is rotated every 30 days.

The service may be especially quick and easy for e-tailers to use. According to Ecommerce-Guide, "When a customer with a negative chargeback history attempts to checkout on your site, while the credit card is being processed, Badcustomer's database is pinged. If no bad customer information matches the person trying to check-out, then the transaction goes through. If, however, the ping results in a positive match, then the customer would be directed to Badcustomer.com where they can obtain information about chargebacks, learn why they cannot make a purchase from your site, and they can contact Badcustomer to get assistance."

That's where Badcustomer makes its money. To be removed from its list, customers pay a processing fee of $99, "multiple time offenders possibly more," says Heideman. Customers also have to sign an electronic statement saying they promise to try to resolve future disputes directly with a merchant's customer service department rather than calling the bank for a chargeback.

Badcustomer also makes money offering extra services to merchants, like dispute resolution and "more intense fraud screening".

Finally, Badcustomer provides a page where consumers can find out if they're on the blacklist. I submitted my own information, filling out only the required fields (not the field asking for a credit card number). Happily, I was notified, "You have no chargebacks on file, and are not on the Bad Customer blacklist!" I could've told you that.

Who makes the list?

The service got a positive review from PracticalEcommerce.com, which talks about a real customer named Louis, who accidentally placed duplicate orders for the same merchandise. "Louis is a real person, and his chargeback is documented," reviewer Armando Roggio writes. "He claimed that the merchandise was not received even after he had it in his possession-a fact he later admitted. In this case it was not intentional fraud. Louis, who is not computer literate, did not see the order confirmation or shipping notice emails the merchant sent and assumed that the order had not been completed, so he bought similar items elsewhere. When the package arrived, he wasn't sure how to return it, so he called his credit card company. There was not an option for returns, so he just said that he never received the items."

Is Louis a bad customer or just a stupid customer? Maybe the merchant needed to be clearer about confirming the order. Regardless, in the end, Louis lied. Bad, bad customer.

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