Business ProfileforChargebacks911

The following describes a government action that has been resolved by either a settlement or a decision by a court or administrative agency. If the matter is being appealed, it will be noted below.

The Federal Trade Commission and the Florida Office General have filed suit against Global E-Trading, LLC dba Chargebacks911; Gary Cardone; and Monica Eaton (Case No. 8:23-cv-00795, filed in the US District Court, Middle District of Florida, Tampa Division) related to their marketplace actions.

The Federal Trade Commission filed action for alleged violations of the FTC Act, and the Florida Attorney General filed action for alleged violations of the Florida Deceptive and Unfair Trade Practices Act.

The FTC and Florida Attorney General allege that:

Since at least 2016, Chargebacks911 has, for numerous clients, used misleading information to contest chargebacks. It has routinely submitted screenshots of webpages to support the claim that consumers were informed of terms and conditions that appeared on those pages, even in situations where consumers made the disputed purchase on a different webpage.

In particular, Defendant Gary Cardone marketed the company’s services to new clients, negotiated pricing, and directed the company’s “VAP” service. Monica Eaton headed the operational side of the company’s chargeback dispute service, set company policies and procedures, trained employees, managed compliance, and was involved in the company’s VAP service.

Since at least 2011, Chargebacks911 has offered chargeback mitigation services to merchants. A significant portion of Chargebacks911’s client base has been composed of online merchants that engage in negative-option free trial marketing—whereby a consumer receives goods or services for free, or for a nominal fee, for a trial period, after which the merchant can automatically begin charging a fee unless the consumer affirmatively cancels—in particular, for nutritional supplements and skin care products. Chargebacks911 has offered merchants a variety of services, including disputing consumer chargebacks, monitoring and analyzing the merchant’s chargeback statistics, providing preventative chargebacks alerts, and conducting an ostensible marketing service called Value-Added Promotions (or “VAP”).

Since its inception, Chargebacks911 has assisted merchants in disputing chargebacks. Three of the company’s major clients, Apex Capital, LLC, F9 Advertising, LLC, and AH Media Group, LLC, have been sued by the FTC for engaging in deceptive negative-option marketing practices. Customers of these merchants reported that they had signed up for a free trial offer and were charged for an ongoing subscription without their knowledge or consent. Chargebacks911 disputed more than forty-seven thousand chargebacks for Apex Capital from January 2016 to November 2018, more than seventy-seven thousand chargebacks for AH Media and the related entity Zanelo, LLC, from January 2017 to July 2019, and more than forty-one thousand chargebacks for F9 Advertising from September 2016 to January 2018.

To dispute consumer chargebacks, Chargebacks911 has drafted and submitted representments on behalf of its clients. The representment documents have included information that Chargebacks911 collects from the merchant and third-party information sources, as well as material generated by Chargebacks911. Chargebacks911’s representments have typically included a set of screenshots purporting to represent key webpages from the merchant’s website, including, for example, the product information page, the checkout page, and the terms and conditions page.

Chargebacks911 has included the Representment Screenshots in its representments to show that 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 in making a purchase. Instead of taking screenshots of the actual webpages that a consumer used to make the specific disputed purchase at issue in a chargeback, Chargebacks911 has typically used what it refers to as the merchant’s “bank page,” as described below.

Chargebacks911 has been aware that the bank page is not necessarily the actual webpage from which a consumer made the disputed purchase. To apply for credit card processing, merchants must provide their acquiring bank with a variety of information. In the case of online merchants, they must provide the URL of the website that they intend to use to sell their products. Merchants typically submit the website’s homepage. When communicating with clients, Chargebacks911 has referred to this webpage as the “bank page,” or “the URL you tell the bank you sell on.”

After capturing the Representment Screenshots from the merchant’s bank page, Chargebacks911 has added markup and callout boxes highlighting, among other things, where disclosures purportedly are located on the webpage. For an example of Chargebacks911’s use of markup and callout boxes. Chargebacks911’s representments have also typically included statements by Chargebacks911 that the consumer saw or should have seen disclosures about key offer terms, and agreed to those terms, including, for example:

a. “The customer was provided with proper disclosures of a cancellation/refund/renewal policy”;

b. “Terms & Conditions are clearly displayed on our Check-out page”; and

c. “The customer agreed to the terms and conditions prior to being charged.”

Chargebacks911 has ignored numerous red flags that have put the company on notice that its representments are inaccurate and misleading. For example, as described below, Chargebacks911 overlooked obvious mismatches in the branding of AH Media and Apex Capital products, facial inconsistencies in AH Media’s website disclosures, conflicting website screenshots made public in lawsuits against Apex Capital and F9 Advertising, and suspicious behavior (Case 8:23-cv-00796) involving the merchant accounts registered to Apex Capital, F9 Advertising, and AH Media. As a result, Chargebacks911 has submitted numerous representments that include Representment Screenshots that show disclosures that did not appear on the actual sales webpages that the consumer visited. Numerous such representments have also falsely claimed that consumers saw or should have seen disclosures about key offer terms, and agreed to those terms.  These misleading representments have made it more likely that an issuing bank would reject a consumer’s chargeback request, despite the merchant failing to properly disclose material terms of a transaction to the consumer. 

For example, in numerous chargeback disputes for AH Media, Chargebacks911 used webpage screenshots from AH Media’s “bank pages,” which included disclosures about the offer’s material terms. The Representment Screenshot excerpted depicts a webpage that requires consumers to check a box acknowledging disclosure text concerning the subscription offer before proceeding with the transaction. AH Media processed their actual sales, however, from consumer facing websites that lacked clear and conspicuous disclosures about the trial offers.

Despite the red flags indicating that Chargebacks911’s representments were misleading, the company continued with its same chargeback dispute practices, and chose not to investigate the accuracy of information provided by its negative-option clients, terminate negative-option clients providing misleading information, or notify banks that the representments it had previously submitted may have included misleading material. Indeed, Chargebacks911 has taken direct steps to prevent banks from assessing whether its clients are engaged in prohibited practices.

For example, Chargebacks911’s policy has been to omit URL information from its Representment Screenshots. In January 2016, Defendant Monica Eaton reminded Chargebacks911 employees with responsibilities for representments: “It is a policy that we never show any website address or URL on a screenshot. The reason for this is that if we show the bank a [URL] that is not registered to the [merchant account] related to a chargeback, the merchant will be liable for a fine of up to $250K and must prove that he is not making sales on this URL. I understand that sometimes merchants will give us incorrect URLs, but the only information we need to supply for the banks is an illustration to represent how the site operated (it is never our place to provide the [URL]).”

When preparing a chargeback dispute, Chargebacks911 has gathered data from the merchant concerning the product at issue in the chargeback, including the product’s brand name. In thousands of instances, the branding of the product at issue in the chargeback has conflicted with the branding depicted in the Representment Screenshots. 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, and, accordingly, that the Representment Screenshots may not depict the website that the consumer saw when purchasing the product. For example, when onboarding AH Media as a client, Chargebacks911 ignored conspicuous mismatches in branding between the chargeback data and the Representment Screenshots. Chargebacks911’s typical practice has been to create an initial “test” representment as a template when onboarding a new client. Chargebacks911 has scrutinized the test representment for accuracy.

The test representment that Chargebacks911 created for AH Media around December 2016 involved a skin care product branded as “Lucienne,” based on order information data that Chargebacks911 received from AH Media and included in the test representment. The Representment Screenshots included with the test representment, however, depicted a product branded as “Aehart.” Despite the conspicuous evidence that the Representment Screenshots included in the AH Media test chargeback were from an entirely different website than the one the consumer visited when purchasing the Lucienne skin care product, Chargebacks911 failed to address the discrepancy.

In  Novermber 2023 FTC and Chargeback 911 entered into a settlement agreement. Business neither admit nor deny any of the allegations in the Complaint. Settlement ordered civil penalties in the amount of One Hundred and Fifty Thousand Dollars (150,000.00) 

For updates on the case please visit https://www.ftc.gov