Forgive me, readers, but we're heading off the gadget reservation for this one.
The Consumerist has a piece today on a custom-auto shop whose contract forbids chargebacks. For those not in the know, that's when you call your credit card issuer to dispute a charge, a procedure that the auto shop will have agreed to abide by in its own agreements with Visa, Mastercard and the like. Most interestingly, however, another clause in the contract says that if you do so, it will add your name to a "chargeback abuse database."
The problem, for merchants, is that credit card companies usually side with the customer when disputes arise, even when it's abundantly obvious the merchant is in the right. That said, the idea that someone maintains and shares an unregulated database of possibly-defamatory information, to which may be added any customer's personal data (regardless of whether their complaint is merited or not), seems deliciously unscrupulous.
Curious, I googled the phrase "chargeback abuse database." There are a number of online businesses that threaten to add you to this mysterious chargeback database – but who will happily remove you from it if you pay a cash penalty.
Behind some of them, at least, is a website calling itself Chargeback Protection, founded to "address the problem of chargeback abuse and minimize the related economic losses."
The odd part: what use would such a database be to merchants if it can be wiped by the very "abusers" it ostensibly tracks? Even those who merely warn a merchant that they'll contact their credit card holders are targeted for inclusion: Chargeback Procetion's homepage asks for reports of "chargeback threats" as well as actual chargebacks.
VISA prohibits its merchants from imposing "no chargeback" policies on customers. Read on to read some of the novel anti-chargeback terms and conditions we found.Comersus Cart
This shopping cart firm's terms and conditions claim that because it has a "clear and explicit refund policy" it doesn't accept any chargebacks. It solicits payment to remove you from the "abuse" database.
"Since there is a clear and explicit refund policy, Comersus does not accept any type of chargeback or chargeback threat. In case of receiving a chargeback threat the same will be reported to chargeback abuser databases, regardless of the fact that the chargeback may be actually made later on.
"In the event that a chargeback is placed on a purchase, Comersus reserves the right to report the incident for inclusion in a chargeback abuser database. The information reported will include name, email address, order date, order amount, IP address, full address, and phone number. Chargeback abusers wishing to be removed from the database shall make the payment for the amount of the chargeback + $50 for processing fees by Wire Transfer."
And here was me thinking bingo a polite, relaxing game for old ladies. Again pops up that odd charge of $50 to be removed from the blacklist, and which looks suspiciously like someone else's boilerplate:
"In the event that a chargeback is placed on a purchase, we reserve the right to report the incident for inclusion in a chargeback abuser database. The information reported will include name, email address, order date, order amount, IP address, full address, and phone number. Chargeback abusers wishing to be removed from the database shall make the payment for the amount of the chargeback + $50 for processing fees by cashier's check or money order."
In the event that a chargeback is placed on a purchase, we reserve the right to report the incident for inclusion in a
chargeback abuser database.The information reported will include name, email address, order date, order amount, IP
address, full address, and phone number. Chargeback abusers wishing to be removed from the database shall make the
payment for the amount of the chargeback + $100 for processing fees by Money Order. ... If you initiated a chargeback there will be a $25.00 service
fee for each chargeback initiated plus money owed
$100! Plus a chargeback fine!
These guys are wild about your customer rights:
"Anything Animals will not sell or distribute, any information regarding our customers. This includes but is not limited to: phone numbers, e-mail address, street address, names. We consider your privacy of the utmost importance, as we know you do."
But scroll down for this legal eagle's small type:
In the event that a chargeback is placed on a purchase and proof of delivery is present, we reserve the right to report the incident for inclusion in a chargeback abuser database.
These folks want to help you raise level-headed kids, but when customers get upset, it's a different picture.
If I suspect you or the cardholder are attempting to rob me, and if I suspect you are attempting to conceal your theft under the cloak of a chargeback or stop payment, I will pursue legal action against you or begin collections proceedings, and will seek damages and recovery costs including legal fees from you.
Fair enough: illicit chargebacks are a pain in the backside. What better avenue of reproach than the courts? But that's not all: these guys will go public!
In the event that you or the cardholder initiate a chargeback for your purchase, I will make public and report specific details of your transaction to a chargeback abuser database, namely, your name, your email address, the order date, the order amount, your IP address, your billing address, your phone number, and other non-identifying information. There will be a $100 processing fee, plus any applicable fines incured by me, plus the original purchase amount payable by cashier's check or money order to have your name removed from the database.
Ever tried scalping junior with a $100 fee + costs to be removed from the naughty list?
These fellows win the prize for the most angrily-named T&C clause: "reach of Contract / Chargeback Abuse / Mis-Use, Scam, Defrauder, Deadbeat, Non-Payer Policy"
$1,000! Whoa! The part about privacy policies being voided is a beautiful touch.
In the event that a credit card chargeback is placed on a purchase from Interstatedeals.com, we reserve the right to report the incident for inclusion in a chargeback abuser database and/or a consumer reporting agency database.
No shakedown, this time. Gadget people are just better sorts, don't you think?
Piama.org has the boilerplate, too.
You understand and agree that the charges for goods / services specified are irrevocable, undisputable and may not be charged back, contested or challenged in the future, doing so breaches your agreement which is a legal contract.
It also aims potentially unlimited penalties at those that issue chargebacks:
You authorize APS Cellular, Inc DBA TheCellPros.com to charge your credit card a minimum of $500.00 per incident plus $375.00 an hour ... If you do a chargeback (non-payment, stop payment, withdraw of funds, retract payment or any dispute of payment, etc) and / or it goes to Arbitration you agree to pay us $1000.00 plus an hourly rate of $375.00 plus all Arbitration fee's are $400.00 plus other charges at $375.00 an hour if you put us in that position forthwith. ... Please do not do a chargeback because you will be in breach of contract and be "charged additional fee's and costs" as in above paragraph.
I have a feeling a lawyer didn't write that one, or, indeed, the part where the customer is ordered not to use PayPal's dispute resolution procedure.
You agree to go through us for any and all problems not go to others such as the bank, PayPal, due a chargeback, stop payment, or dispute with your problems without our prior written authorization from us. Violation of this clause is breach of contract.
Omni Adult Products
It's good to see that the manufacturers of Robocop are still getting work.
"Chargeback abusers wishing to be removed from the database shall make the payment for the amount of the chargeback PLUS $75.00 USD for processing fees by Wire Transfer ONLY."
And, of course, there's the Luxury Car Tuning Store cited by The Consumerist, which has a particularly verbose clause again culminating in the $50 shakedown.
Anyway, here's the point: while unwarranted chargebacks are a pain in the backside, all these merchants knew what they were letting themselves in for when the agreed to the credit card companies' policies. Some of these are openly issuing blanket no-chargeback policies, regardless of their validity, in contravention of accepted consumer practice.
Chargeback Protection's FAQ page has some legal advice for merchants:
Abusers are not customers, but criminals. By hiring a lawyer to claim a payment, you are essentially doing the same thing as reporting certain transaction information to ChargebackProtection.org."
My payment service offers fraud screening. Why would I need your service?
The reason is very simple: chargeback abuse is a fraudulent action carried out by a legitimate customer. That is, no fraud filter will ever block their payments, because they are perfectly legit.
VISA specifically prohibits these "no chargeback" policies" in its rules.
"No Chargeback” Sales Receipts
Independent entrepreneurs have been selling sales-receipt stock bearing a statement
near the signature area that the cardholder waives the right to charge the transaction
back to the merchant. These receipts are being marketed to merchants with the
claim that they can protect businesses against chargebacks; in fact, they do not. “No
chargeback” sales receipts undermine the integrity of the Visa payment system and
I've got questions in with Chargeback Protection. Hopefully, it can clear up some of these issues.
Merchant Tries To Forbid Chargebacks [Consumerist]