Chargebacks911 'Helped Scammers Stay in Business,' Allege FTC, Fla. AG

Chargebacks911 unfairly thwarted consumers trying to dispute credit card charges, violating the FTC Act and the Florida Unfair and Deceptive Trade Practices Act, alleges a lawsuit (docket 8:23-cv-00796) filed by the FTC and Florida Wednesday in U.S. District Court for Middle Florida in Tampa.

Chargebacks911 “helped scammers stay in business and defeat chargeback attempts by consumers hit with fraudulent charges,” said Samuel Levine, director of the FTC Bureau of Consumer Protection in a Wednesday news release. Gary Cardone and Monica Eaton, owners of Global E-Trading, doing business as Chargebacks911, used “multiple unfair techniques” to prevent consumers from winning chargeback disputes over unwanted, fraudulent or incorrect credit card charges, said the complaint.

Chargebacks911 regularly sent screenshots on behalf of clients to credit card companies showing consumers agreed to the disputed charges, which often were recurring monthly subscription charges, the complaint alleged. In many instances, the screenshots weren't from the website where consumers made the disputed purchases, and the company ignored clear warning signs the website screenshots were misleading, it said.

The complaint alleges Chargebacks911 allowed its clients to run “microtransactions” via prepaid debit cards that artificially lower a merchant’s overall chargeback rate by inflating the total number of transactions running through the merchant’s account, thus lowering the percentage of their charges that were disputed by consumers. Excessive chargebacks are a primary indicator a merchant is engaged in fraudulent, illegal, or unauthorized practices; a higher percentage could lead to more scrutiny, it said.

Chargebacks911 served several companies the FTC has sued for deceiving consumers, including Apex Capital, F9 Advertising and AH Media, said the complaint. In many instances, Chargebacks911 submitted “representment” screenshots to show the consumer filing the chargeback “saw or should have seen disclosures about key offer terms, such as the free trial and subscription terms,” on the merchant’s website, and agreed to those terms when making a purchase. In one example, instead of taking screenshots of the actual webpages that a consumer used to make a disputed purchase in a chargeback dispute for AH Media, Chargebacks911 used a representment screenshot depicting a webpage that requires a consumer to check a box acknowledging disclosure of a subscription offer before continuing the transaction. “AH Media processed their actual sales, however, from consumer-facing websites that lacked clear and conspicuous disclosures about the trial offers,” it said.

In “thousands” of instances, the branding of the product at issue in the chargeback conflicted with the branding depicted in the representment screenshots, said the complaint. “Such conflicts indicate that the merchant may be engaged in a misleading or prohibited practice, such as conducting sales on a different website from the website registered to the merchant account,” it said. Those screenshots “may not depict the website that the consumer saw when purchasing the product.”

Plaintiffs seek a permanent injunction against defendants, restitution to consumers, disgorgement of “ill-gotten gains” and awards of civil penalties, attorneys’ fees and legal costs.