Cash-in On a Customer Blacklist: Protect Your Store
As an online merchant, you want to do everything you can to safeguard your business and your customers. One tool that can help you achieve this is a customer blacklist, which is a list of customers who are barred from making purchases after they show signs of sticky behavior. While customer blacklists can be controversial, they can also be a useful way to reduce risk and ensure the safety and security of your store.
Here’s what’s in store:
- What is a Customer Blacklist?
- Types of Customer Blacklists
- How to Make and Manage a Customer Blacklist
- How to Tell a Customer They’re Blacklisted (Without Being a Dick)
- Final Thoughts
Now, let’s get cracking!
What is a Customer Blacklist?
A customer blacklist is a record of buyers or shoppers who have caused trouble through fraud or suspicious activity, including chargebacks. It’s meant to prevent individuals from purchasing from a business in the future, as a way to mitigate risks.
So, if you blacklist a customer, they simply can’t order from you again, and you save yourself the hassle of dealing with the problems they might bring to the table. It’s like blocking a problematic ex.
Why Would You Need One?
Online buyer fraud is a significant issue that affects many online stores. According to the 2021 LexisNexis True Cost of Fraud Study, the average rate of fraud for e-commerce businesses in the United States was 3.2% in 2020, up from 2.8% in 2019 (That’s an 87% spike!). This means that for every $100 in online sales, $3.20 was lost to fraud. The study also found that the average dollar amount of fraud loss per e-commerce transaction was $235 in 2020, up from $202 in 2019.
These statistics highlight the importance of effective fraud prevention for online stores, such as customer blacklists and other risk-mitigation strategies. By taking steps to reduce the risk of fraud, online merchants can protect their businesses and their customers and ensure a more secure and successful online marketplace.
We know that online sellers might create and maintain customer blacklists in order to protect their businesses and their customers from high-risk or problematic behavior. But, what does that behavior entail? Here are some specific reasons why online merchants might use blacklists:
- To prevent fraud – Online merchants may blacklist customers who have attempted to commit fraud, such as using stolen credit card information or making false returns. This can help to protect the merchant’s financial interests and reduce the risk of financial loss.
- To prevent harassment: Some retailers may blacklist customers who have harassed or threatened employees or other customers. This can help to create a safe and welcoming environment for both employees and customers.
- To enforce policies – Customers may be placed on a blacklist if they repeatedly violate a store’s terms of service or return policy. This can help merchants to ensure that their policies are being followed and maintain a fair and orderly marketplace.
- To prevent spamming – Some online stores may blacklist customers who send excessive emails or spam messages. This can help to protect the merchant’s reputation and reduce the risk of spam complaints.
The problems above can have a dramatic, negative impact on any business’s bottom line.
Overall, customer blacklists can be a useful tool for online merchants to reduce risk and protect their businesses and customers. However, they can also raise concerns about fairness and consumer rights. So, it’s important for merchants to use them responsibly and with consideration for their customers.
Types of Customer Blacklists
Online stores may have several types of blacklists to help them protect their businesses and their customers. Some common types of blacklists that online stores may use include:
- Fraud blacklists – These blacklists may include customers who have attempted to commit fraud, such as using stolen credit card information or making false returns.
- Harassment blacklists – Some stores may blacklist customers who have harassed or threatened employees or other customers.
- Policy violation blacklists – Customers may be placed on a blacklist if they repeatedly violate a store’s terms of service or return policy.
- Spamming blacklists – Some online stores may blacklist customers who send excessive emails or spam messages.
- IP address blacklists – Some stores may use blacklists to block certain IP addresses from accessing their website or making purchases. This can be used to prevent spam or malicious activity.
- Domain blacklists – Some stores may use blacklists to block certain domains or email addresses from making purchases or interacting with their website. This can be used to prevent spam or malicious activity.
Online stores may use one or more of these types of blacklists to protect their businesses and their customers from high-risk or problematic behavior. It’s important for stores to use blacklists responsibly and to consider the potential impact on customers and their rights.
How to Make and Manage a Customer Blacklist
Here are a few tips on how you can establish and manage a customer blacklist for your online store.
1. Identify High-Risk Behavior
It’s important to be proactive in identifying customers who may pose a risk to your business. This could include fraudsters who use stolen credit card information or make false returns, customers who harass or threaten employees or other customers, or individuals who repeatedly violate your store’s terms of service or return policy.
You need to have clear criteria for what constitutes high-risk behavior and document any instances of this behavior in order to justify a blacklisting.
Recommended: 12 Signs of PayPal Scams That Every Online Merchant Needs to Watch for
2. Set Clear Policies
Make sure you have clear policies in place that outline the types of behavior that will result in a customer being placed on the blacklist. This could include a policy on fraud or policy violations, for example. Having clear policies will help you to be consistent in your decision-making and to avoid any disputes or misunderstandings. It’s also important to communicate these policies to your customers so that they are aware of what is expected of them.
3. Communicate With Your Customers
If you need to place a customer on the blacklist, it’s important to communicate clearly with them about the reasons for your decision. This can help to avoid misunderstandings and to ensure that the customer is aware of their behavior and the consequences of it. You may want to consider sending a letter or email explaining the blacklisting and outlining any steps the customer can take to have their name removed from the list.
4. Keep Accurate Records
It’s important to keep accurate and up-to-date records of all customer interactions, including any instances of high-risk behavior. This will help you to justify your decisions and to avoid any disputes or legal challenges. It’s also a good idea to document any communication you have with customers about blacklisting, as this can help to establish a clear paper trail.
5. Review Your Blacklist Regularly
Periodically review the customers on your blacklist to ensure that they are still a risk to your business. If a customer has changed their behavior and is no longer a threat, you may want to consider removing them from the list. This will help to ensure that your blacklist is current and accurate… and that you are not unnecessarily restricting access to your store.
Note: Every time you open your business to new geolocations, make sure you haven’t blocked shoppers in those regions from placing orders.
6. Take Advantage of Blacklist Apps
There are a number of apps available for Shopify that can help merchants create and manage customer blacklists. Here are a few of the most popular options.
FraudFilter
FraudFilter is an app that allows you to block orders from high-risk customers and countries, and to set up custom rules for identifying and blocking fraudulent orders. The app uses advanced algorithms to score the risk level of each order, helping you identify potentially fraudulent orders and take appropriate action. With this tool, you can create custom rules for identifying and blocking fraudulent orders, based on a variety of factors such as shipping address, billing address, and IP address.
Blacklist IP & Country Blocker
Blacklist IP & Country Blocker is an app for Shopify that allows you to create and manage a blacklist of customers who are banned from making purchases. You can add or remove customers from the blacklist as needed, and the app will automatically block orders from blacklisted customers. You can also create custom messages that will be displayed to blacklisted customers when they attempt to make a purchase, and you can opt to include any steps the customer can take to have their name removed from the list.
Blockify
Blockify allows you to block orders from specific countries or regions. The app helps to reduce the risk of fraud and chargebacks from high-risk areas. Merchants can create custom messages that will be displayed to customers who attempt to make a purchase from a blocked region.
Above are just a few examples of the blacklist-enabling apps that are available for Shopify. You should carefully research and compare the features and pricing of different apps before choosing one that is right for your needs.
How to Tell a Customer They’re Blacklisted (Without Being a Dick)
If you need to inform a customer that they have been blacklisted from your online store, it’s important to approach the situation with care and professionalism. Here are a few steps you can follow:
- Prepare a clear and concise message – Before contacting the customer, draft a message that explains why they have been blacklisted and what behavior led to this decision. Make sure to include any relevant information, such as specific policies that the customer violated or instances of fraud or harassment.
- Choose the right communication channel – Consider the most appropriate way to communicate with the customer, based on the nature of the issue and their preferences. Options could include email, phone, or snail mail.
- Be respectful and professional – When communicating with the customer, it’s important to be respectful and professional, even if you are upset or frustrated. Use language that is clear and concise, and avoid using inflammatory or accusatory language.
- Offer an opportunity to appeal – If appropriate, consider offering the customer the opportunity to appeal the blacklisting or to take steps to have their name removed from the list. This could include offering to resolve any issues that led to the blacklisting, or to provide evidence that they have changed their behavior.
- Document the communication – Make sure to keep records of any communication you have with the customer about the blacklisting. This can help to establish a clear paper trail and to avoid any disputes or misunderstandings.
By following these steps, you can inform a customer that they have been blacklisted from your online store in a way that is respectful and professional, while also protecting your business and your interests (and giving anyone who accidentally wronged you a chance to make amends).
Frequently Asked Questions
How long does a person get blacklisted?
The duration of a blacklisting penalty is determined at the discretion of the business. You might want individuals blacklisted for 2-10 years. Or, you could want them blacklisted indefinitely.
Is blacklisting legal in the U.S.?
No. Companies can blacklist customers from purchasing from their business if they disrupt the business and its operations. However, some state laws prevent employers from blacklisting ex-employees from employment opportunities and from publishing HR blacklists. Check with your state legislature for more information about the laws that concern blacklisting.
Final Thoughts
By following these tips, you can create and maintain a customer blacklist that helps to protect your business and your customers. While customer blacklists can be controversial, they can also be a valuable tool for reducing risk and ensuring the safety and security of your online store.
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If you find that you need more help than a template can provide, we recommend checking out: Kount and Midigator: The Ultimate Team in Fraud Prevention and Chargeback Management.
Ashley is a freelance copywriter and the founder of Aurajinn. She's been working in eCommerce and technology for over a decade. Here, she shares her best cyst-like gems of wisdom to help new and intermediate online sellers level up their operations.
