Practical Ecommerce

The PeC Review: Makes Good Business

A free service protects merchants from bad customers—both malicious and foolish—saving time, frustration, and money.
Ecommerce merchants love customers and love providing good customer service. It is at the industry’s heart. But some customers are not so loveable and knowing who they are before you do business with them is a great luxury.

Enter BadCustomer, a free service that lets merchants check a customer’s chargeback history against a massive database of bad customers before consummating a sale. If a problem customer comes to a site protected by BadCustomer, they can be prevented from making a purchase without first committing to try to resolve issues with the merchant, should any arise, without submitting a chargeback. BadCustomer can, as such, help merchants dramatically reduce chargebacks, earning this service four out of a possible five stars in this “The PeC Review.”

The PeC Review is my weekly column devoted to introducing you to the products or service that I believe can help improve your ecommerce business, and this week, I’m going to explain why I really like BadCustomer.

Video: BadCustomer

There Is A Need For BadCustomer

Louis placed his order on a Thursday at 3pm Pacific Time. Moments later the online merchant sprung into action, processing the order and shipping it in less than one hour. The order was delivered ahead of the promised delivery date in pristine condition. This is great customer service, right? Well not if you ask Louis, whose order resulted in a chargeback to the merchant.

Louis is a real person, and his chargeback is documented. 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.

Louis is a bad customer. In fact, as crazy as this sounds this was not the first time Louis has submitted a chargeback that was not real. But what can a merchant do? Not much, in this case the merchant had set proper expectations, both on site and in the emails that Louis never read. Nonetheless, the merchant lost the shipping expenses both ways (the merchandise was eventually returned) and spent more than ten man-hours responding to the chargeback.

Worse, there are other cases wherein fraudulent customers purposefully try to cheat online sellers. Bob, who is a real person, regularly orders items, doesn’t answer the door when the items arrives so the carrier will leave them on the porch, and then submits a chargeback to his credit card company claiming he never received the package. Bob is intentionally ripping off online stores, but because the chargeback system is skewed to favor customers there was little a merchant can do unless the police get involved.

In case like Louis’s and Bob’s, most merchants would have preferred not to take the order, and with BadCustomer, not taking the order is just what a merchant can do.

4 Stars

BadCustomer Stops Orders Likely to End in Chargebacks

BadCustomer’s most obvious benefit is that it gives merchants the opportunity to not accept orders from bad customers, who are known to have submitted chargebacks in the past.

Personally, if a customer has ever submitted a chargeback, I don’t want to take the chance of doing business with them, so I’ll use BadCustomer to just stop the transaction in its tracks. And if my competitors want to take all of the bad customers, that is fine with me too, since these sorts of shoppers drain a business’s resources.

BadCustomer Educates Customers

Louis, the customer that I mentioned above, did not really understand how he was harming the merchant. He just did not know how to properly respond and was, perhaps, embarrassed. BadCustomer can actually help educate customers about how to properly communicate with merchants to resolve issues or concerns, eliminating the need for a chargeback.

First, merchants using the service are encouraged to place banners and explanatory information on service. I would recommend carefully explaining the issue-resolution process for your customers.

Second, when a bad customer’s order is rejected, the service explains why the order was rejected and gives the customer a change to learn about chargebacks and why they are not fair to merchants. In the end, the customer can pay a reinstatement fee and complete their order, having promised to contact the seller with concerns rather than starting another chargeback.

BadCustomer Offers a Way to Sanction Some Customers

Finally, even with BadCustomer running, you are going to get some orders from foolish or malicious customers, and when you do, you can sanction them by adding them to the BadCustomer database ensuring that they cannot buy from you or any BadCustomer partner again.

You May Need A Developer’s Help

Integrating BadCustomer into your existing checkout process may be a little too complicated from some small merchants. So you may want to engage a developer to implement the BadCustomer API.

Summing Up

Being a responsible, friendly, and customer focused retailer does not mean that you have to do business with everyone that surfs to your online store, in fact, avoiding problem shoppers can save you time, frustration, and even money, not to mention protect your store’s reputation. BadCustomer is not without its issues, for example, you will want to modify your site’s privacy policies, since you will be submitting some customer data to the service in order to check a customer’s information against the database. And at least some of the shoppers you turn away will be offended, but BadCustomer is good for business, which is why it earned four out of a possible five stars in this review.

Armando Roggio

Armando Roggio

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  1. LexiConn October 1, 2009 Reply

    An interesting service, but I think the privacy issues of submitting customer data (including card numbers) to a third party that can blacklist that customer (and then charge them a $99 "ransom" fee to get de-listed) will have major repercussions in terms of lawsuits and generating "bad buzz" about the company.

    Reminds me of SORBS (email blacklist service) that was dubious in its fees to get de-listed. Also, BadCustomer better have a bulletproof reputation and stellar security, as they are processing and handling tons of sensitive information on consumers…

    Rob – LexiConn

  2. Armando Roggio October 1, 2009 Reply

    Great comment. We should always be concerned about handling and sharing customer information.

  3. jdpiehl October 1, 2009 Reply

    I feel that the branding of BadCustomer on my site would turn customers away (even good customers). The word BAD in big letters on crimson red background with negative sounding body text gives me a BAD feeling. I wouldn’t want my customer to feel that way while shopping on my site. I would like it better if the presence of BadCustomer on my site was more subtle and the text explaining BadCustomer encouraged good customers, instead of punishing bad customer. That would give good customers a better feeling, while at the same time getting the point across to bad customers.

    I also don’t like the fact that BadCustomer charges customers a fee to remove them from their black list. I know they have to make money somehow, but I don’t think that’s the most ethical way to do it.

  4. Armando Roggio October 1, 2009 Reply

    @jdpiehl, They also have a "Gatekeeper" brand which is the one I will be putting on my sites. You can see it at [](

  5. Mike October 3, 2009 Reply

    How about the false negative rate – how many customers will be denied incorrectly? Is that rate larger than your chargeback rate? I doubt it, unless you’re selling high risk items to high risk markets.

    Furthermore, this service can’t stop a new fraudster, nor a smart fraudster that frequently changes ip addresses and email addresses.

    What about friendly fraud? Wouldn’t the merchant want to communicate with the customer and try to work out a problem, rather than blacklisting the customer for good. I know it’s time consuming, but merchants can fight chargebacks and sometimes win if they have proper documentation.

  6. Armando Roggio October 5, 2009 Reply

    @Mike, BadCustomer is specifically for customers that won’t talk to the merchant and work things out. The Louis I mentioned in the article is a real case. No amount of talking would have helped. It is hard to believe, but some customers are just bad, and the best thing a company can do is not do business with them.

  7. LightHouse October 6, 2009 Reply

    Yeah, i am not sure of anyone caught exactley how it looks to the customer, but it is very negative when scanning the database. They have a flash picture slider on the side that shows the pop up telling the customer they are being check to see if they are a bad customer. The denial screen tells them they are bad and they need to pay a third party to get removed to purchase again.

    Unless you are a huge brand that no one can live without this would be a detriment to your conversions of good customers. I would also be weary of a new company comming in and dening random transactions to see if they can get a conversion themselves.

    I would never put something like this one my site. Possibly keeping my own database across my stores is one option, but no third party service should be used.

    Another scenario, Scammer gets him/herself on the list from chargebacks. Goes to buy expensive merchandise and gets denied, it will only cost them $99 paid to a thrid party to have access to the store to scam them out of merchandise. the store is the only loser in this scenario.

  8. Fred October 8, 2009 Reply

    I think it has the potential to be a fantastic service. However I feel the same way as LexiConn regarding customer data. doesn’t have any "trust" seal like TrustE, VeriSign, BBB or anything like that. By the way by having all merchants credit card customer information I can see a whole new deal coming.

    Best Regards.

  9. Grace December 24, 2009 Reply

    False chargebacks is big phenomenon across the UK – customers use their credit card to make a purchase and then, once they have got the goods they wait a few months and then ring their bank up and say they did not authorize the transaction. This idea emerge from means to counter genuine fraud and the chargeback system was put in place to protect cardholders.

    Once the card holder says they did not do it, the bank pulls the money back and they charge an admin cost of up to £50.00 to the merchant..without any questions [it’s also a money making idea for the banks]. The merchant then looses the money, looses the goods and get a penalty charge..the customers get to keep the goods, do not have to pay for them and neither do they have to pay any interests..they can then resell on Auctions sites or at the pub…Essentially they use their credit card to get thousands of pounds of goods and never have to pay a penny.

    Traditionally once the goods are dispatched to an address deferent than the billing address of the card this would be considered fraud and the merchant would bear the cost. For many large companies they absorb this cost as it is not worth the hassle of pursuing small amount from the customers who would do this. Most times there is no way to prove that the transaction is genuine if the items are sent to a deferent address, the customer could easily say their card or identity was stolen.

    Recently merchants are no longer sending goods to address other than the billing address just to ensure it’s genuine. this solves the problem of fraudulent orders but the loopholes remain that once the customer says I did not do it, the bank pulls the money and don’t ask any questions – its a hassle free way for customers to get goods without paying for them. I have suffered and lost many thousand to this scam, but now we are collecting and verifying all addresses to make sure that the transactions are genuine.

    The trick is the customer hopes this is not done and they will get away with it because the court system is expensive and full of hassle, the police are not interested, and debt collectors can’t force them to pay…also even if they are taken to court, they can ignore all and accept a CCJ..and continue to use their credit card to get goods for free…it’s a billion pound operations across the UK..and many people do it as a job…use their credit card to buy goods that they can resell and then have the transaction charged back.

  10. Jen May 23, 2016 Reply

    It’s really too bad this SCAM service got shuttered.


    Can you imagine writing such a glowing review of a service that was so obviously a FRAUD? Can you imagine how humiliating that must be?

    Doh! I guess you can!

    • Armando Roggio May 23, 2016 Reply

      Jen, Thank you for the comment. You are correct that was shuttered two years after I wrote this article.

      I was fooled by it.

      Fortunately, the idea, sharing information about bad customers, has not gone away. Retailers, particularly in similar industry segments and in similar geographic areas, now regularly share and report bad customer information on a number of services.

      It would be nice to see a formal, centralized service emerge for reporting bad customers.

      Here’s a recent example from the brick-and-click side of retail. A store in the northwest had a chargeback from a customer who told her credit card company she had not made the purchase. The store reviewed surveillance videos and found the recording of the woman in the store making the purchase. This video was offered to the credit card company; they refused it. Video evidence of it, would seem, was not enough to beat the chargeback. The store has asked the woman not to return, and is going to press charges.