FTC Sues Chargebacks911 for Sabotaging Consumer Fund Recovery

By Michael B. Cohen

Vice President of Global Operations

We all know that the fund recovery process isn’t simple. However, what makes it even harder is merchants using underhanded tactics to try to block customers from getting chargebacks. However, the Federal Trade Commission (FTC) is taking steps to prevent companies from assisting scam brokers and merchants. 

Although the name of the company, Chargebacks911, may lead us to believe that it is a fund recovery company, it actually assists merchants and brokers by providing strategies to reduce the chances that their customers will recover their funds through the chargeback process. 

Of course, merchants can get cheated too, and (contrary to the popular expression) the customer is not always right. But underhanded and dishonest tactics to prevent customers from legitimate fund recovery should not be allowed, which is what the FTC suspects in this case. 

How Chargebacks911 Allegedly Thwarted Customer Fund Recovery

Chargebacks911 calls itself a “chargeback mitigation” company that advises merchants on how to avoid chargebacks. This in and of itself isn’t necessarily problematic. However, according to the FTC, Chargebacks911 went beyond the law and ethical standards to protect its clients. Its website features a significant amount of content on chargebacks – from the point of view of merchants trying to avoid them.  

So the FTC filed a complaint in Federal Court in Florida against Chargebacks911 owners Gary Cardone and Monica Eaton Cardone for unfair practices. These are said to involve, in many cases, ignoring tampered evidence from questionable merchants and overlooking signs that they were scams that were defrauding their customers. 

For example, when Chargebacks911 clients supposedly provided doctored screenshots trying to prove that customers authorized their transactions, the company may not have done its due diligence. Many of these images were clearly from sites other than the merchant’s. 

In addition, Chargebacks911 is said to have advised its clients to use VAP, or Value Added Promotions. That would allow them to make massive small transactions on their own site using pre-paid anonymous cards to bring down the proportion of site transactions that were lost to chargebacks. 

VAP can be deceptive for banks, which penalize merchants with a high rate of chargebacks because they would otherwise be considered less trustworthy. Chargebacks911’s alleged encouragement of brokers to artificially prop up their total transaction numbers is, therefore, considered problematic by the FTC. 

In addition, many of Chargebacks911’s clients were known to be fraudulent, including  Apex Capital, F9 Advertising and AH Media. The implication is that the company aided and abetted these fraudulent merchants and brokers. 

How ChargeBacks911 Responded

Chargebacks911 rejected the FTC’s allegations, calling them “factually and legally wrong.” They emphasized that they do not make the decisions about whether transactions are reversed and, therefore, they cannot be accused of unfairness. 

However, that is not what the FTC is alleging. They are not claiming that Chargebacks911 is analogous to an issuing bank that has made unfair decisions. Instead, the case is about Chargebacks911 using what the FTC sees as manipulative tactics in aiding and abetting questionable merchants in the chargeback process. 

Although Chargebacks911 admittedly has raised awareness of the problem of friendly fraud or chargeback fraud – a digital form of shoplifting in which the customer actually scams the merchant with a fake chargeback claim – using allegedly dishonest means to assist its clients could be held to be illegal. 

What This Case Means for Chargebacks and Fund Recovery Efforts

The FTC’s case against Chargebacks911 is good news for consumers. If the FTC scores a victory, Chargebacks911 and other chargeback mitigation companies will be prevented from using illegal tactics to thwart chargebacks. 

For customers who need chargebacks and fund recovery, it is important to enlist the aid of experts. If merchants are hiring people to prevent chargebacks, customers need professionals in their corner to bolster their chargeback claims and improve their chances of success. 

Do You Need a Chargeback? Talk to MyChargeBack Professionals Today

If you have lost money to financial fraud, talk to the MyChargeBack team. Our investigations will provide evidence to bolster your claim. We work closely with banks and other financial institutions and give our customers strategies to succeed in fund recovery efforts.