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HomeeCOMMERCEAnti Fraud TechnologyFTC, Florida Lawsuit Leads To Restrictions on Chargebacks911, Prohibits Deceptive Efforts to...

FTC, Florida Lawsuit Leads To Restrictions on Chargebacks911, Prohibits Deceptive Efforts to Stop Consumers From Reversing Disputed Charges

As a result of a law enforcement action by the Federal Trade Commission and the State of Florida, Chargebacks911 and its owners have agreed to a settlement that will prohibit them from working with certain high-risk clients and using deceptive tactics to stop consumers trying to dispute credit card charges through the chargeback process.

In a complaint filed in April 2023, the FTC and Florida charged that, since at least 2016, the “chargeback mitigation” company and its owners, Gary Cardone and Monica Eaton, have used multiple unfair techniques to prevent consumers from winning chargeback disputes.

“The settlement order will provide important protections for consumers who shop online,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “It sends a clear message that chargeback mitigation companies must not 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 authorize, or for which the promised goods or services didn’t arrive, they can dispute the charge with their credit card company. The consumer’s credit card company then contacts the merchant’s credit card company for information and determines whether to reverse the charge.

The FTC and Florida charged that Chargebacks911 sent materials that it knew or should have known were misleading or inaccurate to credit card companies on behalf of their clients, including screenshots of websites that were different than the ones visited by consumers. The complaint also alleged that Chargebacks911 used its “Value-Added Promotions” service to game the systems that credit card companies use to detect fraud on their payment networks.

The proposed court order, which was agreed to by the defendants and must be approved by a federal judge before it can go into effect, would prohibit them from providing chargeback mitigation services to high-risk clients who use affiliate marketing and negative option plans to sell certain product types that are often fraudulently marketed.  The order would also prohibit them from knowingly using deceptive or misleading information on behalf of their clients and would prevent them from using techniques like their Value-Added Promotions service to help clients evade fraud-monitoring programs.

The order will also require the defendants to pay $100,000 in civil penalties and $50,000 in legal costs to the State of Florida.

The Commission vote approving the stipulated final order was 3-0. The FTC filed the proposed orderin the U.S. District Court for the Middle District of Florida.

NOTE: Stipulated final orders have the force of law when approved and signed by the District Court judge.

The FTC staff attorneys on this matter are Evan Rose, Bobbi Tonelli, and Denise Oki of the FTC’s Western Region San Francisco.


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