Dive Brief:

  • The Federal Trade Commission and Florida reached a $150,000 settlement on Tuesday with chargeback mitigation company Chargebacks911, according to a press release from the federal agency. The settlement comes after the FTC and Florida attorney general sued the company and its owners, Gary Cardone and Monica Eaton, in U.S. District Court for the Middle District of Florida in April.
  • Chargebacks911 was alleged to have used deceptive practices to lower its business client’s chargeback rate since at least 2016, according to the release. The terms of the settlement prohibit the company “from working with certain high-risk clients and using deceptive tactics to stop consumers trying to dispute credit card charges through the chargeback process,” the release said.
  • “There’s always something that we can do better,” Eaton said in a Tuesday interview. “I definitely want to underscore that this is not any type of admission to guilt.”

Dive Insight:

Eaton and Cardone founded Chargebacks911 in 2011. The Clearwater, Florida-based company caters to business clients seeking to lower their rate of chargebacks, which refers to the number of times their customers dispute credit card charges. Eaton, who had previously served as chief operating officer, took over as CEO in April when Cardone retired from the position.

The April lawsuit by the FTC and the Florida attorney general alleged that Chargebacks911 “regularly sent screenshots on behalf of their clients to credit card companies that supposedly show that consumers had agreed to the disputed charges,” according to an April press release from the government entities. It also alleged that the company used prepaid debit cards to help its clients lower their chargeback rate.

That FTC release also cited the lawsuit as noting that Chargebacks911’s clients included companies that the commission had previously “sued for deceiving consumers, including Apex CapitalF9 Advertising, and AH Media,” For each of those businesses, Chargebacks911 “disputed tens of thousands of chargebacks,” it said.

Eaton contended that the company simply facilitates sending documentation for chargebacks, and that the FTC holding them accountable for screenshots sent via their platform, “would be the same as going to TurboTax and telling them that they’re now going to be responsible for every tax return.” She also maintained that the company’s use of prepaid debit cards “was not an illegal business” and was a short-lived attempt to bring in more revenue.

Chargebacks911, Eaton and Cardone have all agreed to the settlement order, which must be approved by a federal judge in order to go into effect, the FTC release this week said. If the settlement is approved, they will pay $100,000 in civil penalties and $50,000 in legal costs to Florida.

“I don’t believe that we’ve ever had an unethical business or a business that hasn’t been compliant,” Eaton said. “We look forward to moving forward and continuing to focus on what we do best.”

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