The Federal Trade Commission has filed a suit against Chargebacks911 for unfairly thwarting consumers who were trying to dispute credit card charges through the chargeback process.
In a complaint filed in federal court, the FTC and Florida charged that, since at least 2016, the “chargeback mitigation” company and its owners, Gary Cardone and Monica Eaton Cardone, have used multiple unfair techniques to prevent consumers from successfully winning chargeback disputes.
“Chargebacks911 helped scammers stay in business and defeat chargeback attempts by consumers hit with fraudulent charges,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection.
“The FTC will continue to take aggressive action against those who undermine consumers’ ability to exercise their rights.”
The chargeback process is a key protection for consumers who wish to contest unwanted, fraudulent, or incorrect credit card charges.
When a consumer sees a charge they did not authorise, or for which the promised goods of services didn’t arrive, they can dispute the charge with their credit card company.
According to the complaint, Chargebacks911 has regularly sent screenshots on behalf of their clients to credit card companies that supposedly show that consumers had agreed to the disputed charges—often recurring monthly subscription charges.
The complaint notes that, in many instances, these screenshots have not actually been from the website where consumers made the disputed purchases and that the company ignored clear warning signs the website screenshots were misleading.
The complaint also charges that Chargebacks911 used a system called Value Added Promotions (VAP), which allowed the company’s clients to run numerous small-dollar transactions via prepaid debit cards.
By doing so, clients could raise their total number of transactions, lowering the percentage of their charges that were disputed by consumers.
The percentage of chargebacks a company faces plays a role in the level of scrutiny a company receives from credit card companies; a higher percentage will likely lead to more scrutiny.
The complaint notes that Chargebacks911 disputed tens of thousands of chargebacks on behalf of each of those companies.
There were many instances, according to the complaint, where Chargebacks911 submitted screenshots of websites on behalf of Apex Capital and AH Media where the name of the product on the sites in the screenshots did not even match the brand name of the product for the disputed purchase.
According to the complaint, Chargebacks911 regularly overlooked other suspicious behaviours from their clients, including when clients used a large number of different merchant accounts to process charges.
The FTC and Florida allege that Chargebacks911, Gary Cardone, and Monica Eaton Cardone are violating both the FTC Act and the Florida Unfair and Deceptive Trade Practices Act, and are asking the court to stop the defendants’ illegal activities and order monetary relief, including compensation for consumers and civil penalties.
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