Responding to allegations by the Federal Trade Commission and Florida’s attorney general that it used multiple techniques to prevent consumers from winning chargeback disputes, chargeback-management company Chargebacks911 on Friday released a statement saying the charges are unfounded.
The FTC and Florida attorney general Ashley Moody sued Chargebacks911 on Wednesday alleging that Clearwater, Fla.-based Chargebacks911 regularly sent misleading screenshots on behalf of its merchant clients to card issuers showing that consumers had agreed to the disputed charges. In many cases, the transactions in dispute were for recurring monthly subscription charges.
The complaint also names as defendants Chargebacks911 co-founders Gary Cardone and Monica Eaton Cardone, who serve as chief executive and chief operating officer, respectively.
As a post-transaction fraud-prevention platform, Chargebacks911 submits documentation to card issuers to dispute the validity of chargebacks consumers have filed against its merchant clients.
In response to the allegations, Chargebacks911 issued this statement: “Since 2012, Chargebacks911 has been dedicated to supporting the growing needs of businesses facing the high volume of chargebacks and disputes. We have always followed all rules, laws, and processes, and will aggressively defend the purpose of our business, the privacy of our clients, and our own corporate ethics and reputation against overreach by the government and its various policing bodies.”
The company goes on to state that, as a provider of software to merchants and banks, it does not interact with consumers, take money from them, or have access to their credit card information.
“We provide workflow-automation software for merchants and banks. Our solutions are designed to support claim-management actions, including those made in error or fraudulently filed, following the processes that are regulated and managed by the payments industry,” the statement says. “At no time does a firm like ours have any say in whether a dispute is reversed or not; only the regulated financial institutions and the consumers themselves may decide to surrender the chargeback claim. The company takes these allegations seriously and will continue to stand up for the rights of merchants and the industry.”
As part of the complaint against Chargebacks911, the FTC and Florida allege that Chargebacks911 sent screenshots to card issuers that were not from the Web site where a consumer made a disputed purchase, and that the company ignored unmistakable warning signs the Web site screenshots were misleading. In addition, the complaint alleges that Chargebacks911 overlooked other suspicious behaviors from its clients, including when clients used a large number of different merchant accounts to process charges.
The lawsuit also charges that Chargebacks911 offered a service called Value Added Promotions (VAP), which enabled its clients to run small-value transactions, or microtransactions, that artificially lower a merchant’s overall chargeback rate by inflating the total number of transactions run through the merchant’s account.
“Chargebacks911’s VAP service enabled fraudulent merchants to evade or delay chargeback-monitoring programs, fines, and account terminations designed to protect consumers from fraud,” the complaint says.
Chargebacks911 argues the allegations are inaccurate and that “the FTC and Florida’s Attorney General are looking to set a precedent that will have adverse and industrywide consequences for any software-as-a-service provider.”