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Just one step away from being a bad customer

A company named BadCustomer is compiling a list you don't want to be on. If you have disputed a credit card charge, you may already be on it. Some consumer advocates don't like it.

What makes an online shopper a bad customer? According to the website, all you have to do is dispute a credit card charge — what’s called a chargeback — without contacting the merchant first.

The headline on BadCustomer’s home page is a real attention getter: “This Is One List You DON’T Want To Be On.” Get on the blacklist, the site explains, and you may be barred from making future online purchases with BadCustomer member businesses. “The bottom line is that being listed may dramatically decrease your ability to make a purchase with your bank card,” the site warns. is a small company with about 1,000 clients. It’s been around for a year and claims to have more than 18 million shoppers on its blacklist. Co-founder Brien Heideman says the site resulted from his personal frustration with the growing problem of chargebacks.  Heideman sold pharmaceuticals and business opportunities online.

Chargebacks are costly. The merchant loses the sale, may not get the merchandise back and may get hit with a fee from the credit card company.

Heideman says he is fighting return abusers who routinely order products, claim they didn’t get them and then ask their credit card company for a chargeback. He says BadCustomer is designed to both protect businesses from this “friendly fraud” and to educate online shoppers about the correct way to handle billing disputes.

“If there’s a problem, then we want to fix it,” he says. “But if there’s a problem over and over and over with the same individual, then that’s a customer we don’t want.”

How this blacklist works
It only takes one chargeback, reported by a member company, to get on the BadCustomer list. If anyone on the blacklist tries to make a purchase with another member company, that retailer will be alerted. Heideman tells me very few companies turn down a purchase based on one complaint.

Customers are not told they’ve been added to the database. They don’t find out until a purchase is denied.

And how do you get off the list? Originally, BadCustomer said it would charge a fee of up to $99 for a “first offense” and up to $1,000 for those who are removed more than once.  Heideman insists they never charged anyone, so the fee was dropped.

Now you’ll be taken off the blacklist if the site can verify that you contacted the merchant before you requested a chargeback from the credit card company.

“We’re very lenient,” Heideman says. “If you contacted the company at all, it doesn’t matter if you called and swore at them, we take you off the list. All we want is for the customer to give the business a shot to make it right.”

Consumer watchdogs are wary
“I’m worried that there’s something not quite kosher going on here,” says long-time consumer advocate Edgar Dworsky, founder of “If you’re allowed under federal law to request a chargeback, isn’t it unfair for this company to put you on a blacklist for doing what you’re allowed to do by federal law?”

There’s little doubt some people abuse chargebacks. But Paul Stevens, director of policy and advocacy at the Privacy Rights Clearinghouse, says it’s not fair to assume every customer who asks for a chargeback did something wrong. There are plenty of legitimate reasons to want a charge reversed. Maybe the product didn’t arrive and you can’t get a refund. Or the product came damaged and the company won’t send you a new one.

“Does exercising your statutory right to chargeback make you a bad customer?” Stevens asks. “The consumer should not have the onus placed on them to prove that their chargeback is legitimate.”

Heideman dismisses his critics. He says he runs “a very consumer-friendly site” that now has a dispute department to help online shoppers who have problems. BadCustomer says it will work with the merchant to get you the merchandise you want or your money back.

My two cents
I have lots of nagging questions about BadCustomer. For example, what’s the business plan here? The company doesn’t charge merchants and it doesn’t charge consumers. There’s no advertising on the site and Heideman tells me he does not sell his database. So how does he make money? Heideman says he isn’t making money right now.

What companies use this service? Heideman won’t say.

Why would a company called BadCustomer want to mediate consumer disputes — and for free? It doesn’t make any sense to me. I also can’t see why anyone with a fulfillment problem would go to a company like this for help.

And what about the company’s credit card database? Until recently, “bad customers” were identified by credit card numbers reported by member merchants. Heideman says they no longer collect credit card information. But the company already has a huge database of card numbers and expiration dates. That makes me nervous.

Heideman tells me BadCustomer is just an information site. He compares it to a credit bureau. But credit bureaus are highly regulated by the federal government. This site is not.

When I have a problem with a company I contact the Better Business Bureau, a trusted non-profit with a track record of success. If I suspect the company did something fraudulent, I also report them to the authorities. I suggest you do the same.