Bill Complaints Could Get You Blacklisted

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As a credit card consumer you may not realize it, but disputing a credit card charge can get your name onto a list of “trouble” clients. That, in turn, can lead retailers who subscribe to the list to reject your credit card purchase at the check-out counter.

The term for this collection of complaining card customers is a “blacklist,” which conjures up images of stuffy, Cold War-era Congressional hearings in search of communists.

While consumers are no longer “better dead than red” on this blacklist, it's still cold comfort for the 13.5 million shoppers who have tried to reverse a credit card charge — a practice known in the card industry as a “chargeback.” The number comes from a study by BadCustomer.com, which actually owns such a list, and distributes it to 1,200 U.S. retailers every year.

By and large, chargebacks are available to protect consumers when something goes awry during a credit card purchase like a sweater that never arrives after an online order or a video game that doesn’t work. For their part, retailers complain that some consumers are less than ethical in how they use chargebacks — for example, claiming that sweater never showed up when it actually did.

By coincidence or not, the rate of chargebacks is on the rise, just as the U.S. economy has declined. According to the credit card payment processing company Total Systems Services, chargebacks rose by 37% from 2008 to 2009 — to a total amount of $15 billion.

But now retailers are fighting back, wielding the blacklist as a formidable weapon. A consumer who disputes a charge automatically winds up on the BadCustomer.com list. Subscribing retailers, in turn, now have that blacklisted shopper’s name and address — without the consumer even knowing it — and when he returns to the retailer to make another purchase, the retailer can opt to reject the customer’s credit card.

Winding up on such a blacklist is completely legit, and retailers are protected by federal law. But consumers have rights, too — especially under the Fair Credit Billing Act, which allows consumers to request charge reversals under specific circumstances, such as purchases made with a stolen credit card. But even as consumers have the legal right to ask for a chargeback, backlists like the one BadCustomer.com uses fall outside of the regulatory scope of the FCBA.

What to do if you think you might be on such a list? BadCustomer.com used to charge $99 to remove consumers from their chargeback list, but they have since eliminated that fee. The company also offers dispute resolution services.

You can find out if you’re on such a list at the company’s Web site, at BadCustomer.com. If you are, get off as quickly as possible — before your next credit card purchase is denied, and before you’re labeled a “troublesome” customer.

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at BankingMyWay.com.

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