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Dispute charges at your peril
San Francisco Chronicle


June 22, 2006

If you've ever reversed the charge for a dubious credit card transaction or online purchase, your name could be on a secretive overseas database that consumer advocates say may violate protections guaranteed under U.S. law.

The database is maintained by a Panama company named Goldwell Corp., which runs an online service called ChargeBack Bureau (




Chargebacks are a right provided to U.S. consumers under the Fair Credit Billing Act. The system allows people to reverse credit card payments for goods or services that were unauthorized or end up being different than advertised.

Most chargebacks involve a consumer bringing a disputed transaction to his or her credit card issuer. The issuer, in turn, takes up the matter with the merchant, often requiring repayment of any funds involved.

"You order a red couch, you get a blue couch; you order a working dishwasher, you get a broken dishwasher," said Gail Hillebrand, staff attorney at Consumers Union in San Francisco. "Those are common reasons for chargebacks."

"The chargeback is a very important consumer right," she said. "It makes the Internet safer. If you don't get what you ordered, you can undo it."

ChargeBack Bureau takes a different approach in its marketing pitch to online retailers.

"As an internet business owner, you know that the customer is not always right," the site says. "They have learned that they aren't responsible for reversed charges. Unfortunately as an online merchant you don't have enough proof to stop the chargebacks against your merchant account."

The service claims to have more than 7,500 online merchants enrolled as members and more than 40,000 listings in its database.

Whenever a customer's charges are reversed, ChargeBack Bureau members submit details of the transaction to the database, which can be subsequently accessed by other members. The idea is that participating merchants will be able to spot risky customers before completing a transaction.

Data submitted - without the consumer's prior knowledge or consent - include your name, address, phone number, e-mail address, transaction details and a summary of the dispute (from the merchant's perspective only, of course).

The database is also for "sales that ended up in a refund due to disagreement with the customer." This would normally suggest, because a refund has been granted, that the customer was in the right.

ChargeBack Bureau describes such people as "bad customers."

"Thousands of other businesses like yours share their bad customers' data in our database," the site says. "When our members receive a chargeback, they enter the customer's information into our database along with a short description of the chargeback case. The database is searchable by all our members."

Moreover, ChargeBack Bureau says it sends an e-mail to any consumer whose info has been listed on the database. The e-mail warns that the consumer is "going to have trouble purchasing goods or services on the Internet in the future."

According to the site, only the merchant who lists a particular consumer has the ability to remove that person from the ChargeBack Bureau database. "In most cases," the site assures merchants, "you will get your money back."

Travis Plunkett, legislative director for the Consumer Federation of America, said ChargeBack Bureau's e-mails to consumers seem like a deliberate attempt to deter people from exercising their legal rights.

"They are threatening and penalizing people who are using their rights under federal law to challenge improper credit card purchases," he said. "Blacklisting consumers with no due process is completely illegitimate. It's outrageous."

ChargeBack Bureau did not respond to e-mails sent to the address provided on its site or to an address on the company's press releases.

The site's terms of service identify ChargeBack Bureau as being owned by Goldwell, which gives its mailing address as a post office box in Panama City.

Panama prides itself on strict corporate secrecy laws that prevent outsiders from gaining access to a company's records. The country also offers a variety of tax benefits to U.S. companies doing business there.

A press release issued by ChargeBack Bureau in July 2005 named Adam Balogh as the service's contact person at Goldwell and included a toll-free number where he could be reached.

Since January, that number has connected callers with a company named Jackson Fencing in Houston. An employee of Jackson Fencing said she'd never heard of Adam Balogh or Goldwell Corp.

Adam Balogh is listed as administrator of ChargeBack Bureau's Web site, but the registrant for the site's domain name is listed as Istvan Balogh. The listings were last updated in May, according to Internet registry records. Goldwell's Panama post office box is given as the address for both names.

Press releases issued shortly after ChargeBack Bureau began operating in 2002 named Adam Balogh as ChargeBack Bureau's chief executive and provided a Seattle-area contact number. Calls to that number are now automatically disconnected.

The Washington secretary of state's office said a Goldwell Corp. had registered to do business in the state in 1995, but its registration was ended in 1998.

Hillebrand at Consumers Union concluded that ChargeBack Bureau's shadowy nature should be a red flag for consumers as well as for merchants who enroll in the service.

"It signals an entity that won't even come through for its customers," she said.

ChargeBack Bureau costs merchants $29.99 per quarter or $99.99 per year for full access to its database.


E-mail David Lazarus at dlazarus(at)
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Scripps Howard News Service,

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