FTC Bars Chargebacks911 From Using Deceptive Practices

The Federal Trade Commission (FTC) and “chargeback mitigation” company Chargebacks911 have reached a settlement to prevent the company from engaging in deceptive practices.

The settlement also prohibits the company and its owners from working with certain high-risk clients to stop consumers trying to dispute credit card charges through the chargeback process, the FTC said in a Tuesday (Nov. 7) press release.

In a press release emailed to PYMNTS, Chargebacks911 issued a statement regarding the settlement.

“We want to emphasize that this settlement is not an admission of wrongdoing but rather a resolution that reaffirms our dedication to serving as responsible participants in the industry,” the company said. “Our ongoing efforts aim to achieve the highest standards within chargeback and dispute management, and we will continue to support the ever-evolving wants and needs of stakeholders industrywide.”

The FTC and Florida first filed a complaint in April, alleging that Chargebacks911 used unfair techniques to hinder consumers from successfully disputing credit card charges through the chargeback process.

Chargebacks are a crucial protection for consumers who encounter unauthorized, fraudulent or incorrect credit card charges. According to the FTC, Chargebacks911 knowingly sent misleading or inaccurate materials to credit card companies on behalf of their clients, including screenshots of websites that differed from those visited by consumers. Additionally, the company allegedly utilized its “Value-Added Promotions” service to manipulate fraud detection systems employed by credit card companies on their payment networks.

To address these concerns and protect consumers, the proposed court order, subject to approval by a federal judge, would impose several restrictions on Chargebacks911 and its owners, Gary Cardone and CEO Monica Eaton.

The order would prohibit the company from providing chargeback mitigation services to high-risk clients who employ affiliate marketing and negative option plans to sell certain product types associated with fraudulent marketing practices. Furthermore, the order would prevent Chargebacks911 from using deceptive or misleading information on behalf of its clients and employing techniques like the Value-Added Promotions service to help clients evade fraud-monitoring.

In addition to these restrictions, the settlement requires Chargebacks911 and its owners to pay $100,000 in civil penalties and $50,000 in legal costs to the state of Florida.

“The settlement order will provide important protections for consumers who shop online,” Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said in the release. “It sends a clear message that chargeback mitigation companies must not undermine consumers’ ability to exercise their rights.”

In May, PYMNTS reported that 50% of merchants said dealing with the costs of chargebacks is their biggest problem.

“Dispute-Prevention Solutions: Protecting Profits and Customer Relationships With Third-Party Tools,” a PYMNTS Intelligence and Verifi collaboration, surveyed more than 300 merchants about chargebacks.

“Merchants also ranked false positives as problematic,” the study found, with 20% of survey respondents saying false positives are their biggest problem, while 18% said they are their second biggest problem.