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According to Vee Daniel of the Better Business Bureau, South Carolina businessman John Monarch’s companies and a number of his clients have received complaints from consumers.

In a strikingly similar pattern, consumers allege they were scammed by a wide variety of diet, skin care, e-Cig, and sleeping aid "free trial" negative options that billed their credit cards for charges up to $500 without their consent.

Consumer complaint examples that link back to John Monarch's Direct Outbound Services:

"This has to be one of the biggest internet scams I have ever personally seen even if it is for relatively small amounts of money.  Why they continue to get away with this is mind boggling."

"They are a bait and switch, they offer the 30-day "risk-free" and 14-day trial, however the fine print is how they take advantage of you and charge you extra, including doubling shipping charges."

The FTC considers the phrase “negative option” or “free trial” to broadly refer to a category of commercial transactions in which sellers interpret a customer's failure to take an affirmative action, either to reject an offer or cancel an agreement, as assent to be charged for goods or services.  For a glossary of terms used by free trial merchants, read this article.

While “free trial” marketing is legal, there are a number of free trials that link back to John Monarch's business, Direct Outbound Services, that regulators have taken action on.

One such enterprise is Healthy New Beginnings, hereinafter HNB, an alleged scam that was shut down by the Florida Attorney General's office.   Consumers across the country have claimed that HNB billed their credit cards without their authorization for weight loss pills, laxatives, skin creams, and more.

John Monarch, through his company Direct Outbound Services, appears to have operated nearly every facet of HNB, including but not limited to assisting in the procurement of merchant processing, chargeback/AG/BBB complaint responses, USPS shipping, customer service, contract manufacturing, and possibly even its advertising.

Yet the only person that appears to have had any liability when the Florida Attorney General took action against HNB was a man named "Jon Dorko."

What exactly did HNB owner Jon Dorko actually do?

According to Dorko's LinkedIn profile, it was Dorko that handled customer service, fulfillment, and merchant billing services.

Yet the invoices to HNB from Direct Outbound Services appear to tell a different story.  In essence, it appears that  Direct Outbound Services made money from responding to consumer complaints to State AGs, the BBB, Visa/Mastercard, customer service, contract manufacturing, and more.

It's curious to note that John Monarch's business partner and attorney, Aaron Kelly, is currently facing action by the Arizona Bar for his alleged role in manufacturing fake defendants for his clients to sue.   The Arizona Bar has also accused Monarch's business partner of creating fake notaries, as noted in this Washington Post article published by UCLA Law Professor Eugene Volokh.

That's not to say that Jon Dorko isn't a real person, instead it appears that Direct Outbound Services operated and billed for the very things that "Jon Dorko" claims to have managed.   In other words, notwithstanding Dorko's role as a "signer" on the merchant accounts and contracted operational services at Direct Outbound, it's hard to tell exactly what Dorko's actual role was in the alleged HNB scam.

After Jon Dorko stopped operating the sophisticated HNB free trial program, he parlayed all of his operational skills into becoming a lawn specialist for Trugreen.   A lawn specialist?

How does Jon Dorko go from making millions one day as a free trial merchant to a lawn specialist the next?

It's not as-if Jon Dorko was indicted or had all of his assets seized.  With millions of dollars generated it seems that Dorko could have easily moved onto a new venture that utilized his operational know-how in fulfillment, merchant processing, call centers, and direct marketing, just like Jesse Willms did after his weight loss free trial scams were shut down by regulators.

In Willms case, unlike Dorko, all of his assets were seized.  Yet the deftness that has characterized his entire business career,  Willms was back at it just weeks later selling free trial programs to consumers seeking driving records, criminal records, and vehicle-history reports (just as Carfax does).

Was Jon Dorko just a front man signer in the HNB operation or was he indeed the mastermind behind the alleged scam that thousands of consumers reported to their credit card providers as fraud?

The credit card infrastructures that organizations such as HNB use to keep their billing operations going may have crossed the line from civil forfeiture risk to criminal bank fraud, a precedent that was recently set in the Jeremy Johnson case.

Jeremy Johnson used "signers", or dummy stooges that are nothing more than people used to open up Visa/Mastercard merchant accounts, to sustain a negative option billing scheme that defrauded consumers across the country.   Jeremy Johnson was eventually prosecutued and sent to prison for over 10 years.The HNB operation, much like Johnson's iWorks, utilized The United States Postal Service to ship unauthorized purchases to consumers, possibly placing HNB and its operators in violation of 940.18 U.S.C. Section 1341, also known as mail fraud.

There are two elements in mail fraud: (1) having devised or intending to devise a scheme to defraud (or to perform specified fraudulent acts), and (2) use of the mail for the purpose of executing or attempting to execute, the scheme (or specified fraudulent acts).

The statute of limitations for mail fraud and wire fraud prosecutions is five years (18 U.S.C. § 3282), except for mail and wire fraud schemes that affect a financial institution, in which case the statute is ten years (18 U.S.C. § 3293).

The below depositions of John Monarch indicate that Monarch created tools at Direct Outbound Services that appear to have helped keep the HNB negative option program operating. While thousands of consumers complained to their banks, the BBB, and State AGs that they were defrauded, Monarch's company billed HNB heavily to respond on its behalf.

Additionally Direct Outbound Services handled HNB's customer service, fulfillment, USPS shipping, contract manufacturing, and possibly assisted in its merchant processing procurement along with affiliate marketing advertising via Monarch's affiliate marketing company, Stealth Media.

Why would thousands of consumers claim their credit cards were billed without their authorization?   Did the HNB operators design separate websites that purposely obscured the terms and conditions so consumers would unwittingly enroll in a recurring billing program for something that they thought was free?

Did John Monarch's Stealth Media affiliate network advertise the alleged HNB Garcinia Diet scam and other products from HNB?

Stealth Media, which is owned and operated by John Monarch along with his partner Shaun Groomes, solicits affiliate marketers to promote free trials like HNB for a "bounty."    The bounty is often referred to as the CPA, or cost per acquisition.

For example, Stealth Media offered affiliates $39 for every initial credit card acquired from a consumer for Advanced Pure Garcinia and $36 for an additional negative option enrollment in the Advanced Pure Cleanse program.

Many of the free trials above make claims that consumers will “burn more fat” or “prevent fat storage.”  Are these claims false and purposely made to deceive consumers into enrolling in an autobill program, or are these legitimate weight loss programs?

Vee Daniel of the BBB confirmed that FTC Investigator Cynthia Lebowitz interviewed Monarch along with several of his employees and has requested information on a number of these free trial programs that many consumers claim are scams.    Ms. Daniel noted that Monarch was not forthcoming about the ownership structure of many these companies, including Monarch’s own free trial Getting Sleepy.

Ms. Daniel also confirmed that Monarch provided her with the ownership information on a few of his clients.   When Ms. Daniel contacted those clients to investigate the complaints stemming from their businesses, she reported that they were uncooperative and unhappy that their information had been released to her.

HNB is just 1 of dozens of free trials that link back to Monarch's company, Direct Outbound Services, as listed later in this article

How Some Free. Trial Operators Avoid Detection

The USA Herald has found that there are 4 primary methods that some free trial operators use to avoid detection from authorities, including Visa/Mastercard fraud monitors:

3rd Party Signer Banking Infrastructure

In order to process credit cards of consumers without getting shut down by Visa/Mastercard, some free trial operators engage in what is called “load balancing.”

Load balancing is the process of taking multiple Visa/Mastercard merchant accounts (AKA MID), registered to different companies, and spreading transactions across each MID while directing consumers to just 1 product offer, i.e. HNB Garcinia Wow Trial.  The primary purpose of load balancing is to avoid exceeding 100 chargebacks per month on any single MID, which if breached flags fraud monitors at Visa/Mastercard.

Once 100 chargebacks are exceeded on a MID in any given month, Visa/Mastercard starts to monitor the company.  If the operator is unable to reduce the chargebacks quickly the free trials MIDs get shut down, preventing the operator from harming more consumers…or so you would think.   (The reality is that civil penalties or FTC action is like whack-a-mole with these operators, they just rebrand and keep doing it over and over again.  Only criminal actions shut these operations down permanently, like we saw in the Jeremy Johnson case.)

Load balancing is made possible by acquiring and using multiple MIDs, which are then used to spread transactions across to stay below chargeback thresholds.   In the HNB case, it appears that HNB utilized dozens of MIDs to load balance its transactions.   These MIDs were possibly linked to different URLs via subsidiary companies, yet may have been used to operate 1 single product, i.e. Garcinia Wow.   With transactions spread across dozens of these businesses, and chargebacks below the 100 count on each business, it is likely that HNB stayed off the radars of Visa/Mastercard.

To acquire these multiple MIDs, some free trial operators, i.e. Jeremy Johnson of iWorks, are known to utilize desperate people that are struggling financially to form corporations where the ultimate beneficiary is the free trial operator, but on paper the owner is the person that signed on the account, aka "the signer."  In exchange for opening the Visa/Mastercard merchant account, the signer may get paid a nominal monthly fee and is often led to believe that they own a legitimate business.

Often unbeknownst to the signer, their new "business" has only one true purpose:  enrich the UBO (the ultimate beneficiary, aka operator) by submitting false information to banks to acquire MIDs to load balance transaction on.   Once the UBO obtains the MID from each signer, the UBO uses it to load balance transactions for ostensibly 1 product.  Again, this may have been how HNB's Garcinia Wow processed transactions.

With dozens of signers, sometimes hundreds depending on the amount of revenue the free trial is producing, transactions are spread across the separate merchant accounts.  Therefore when a consumer charges back, it looks like each company that is receiving the chargeback is separate, when in reality it is likely just 1 product receiving the orders across multiple MIDs registered to multiple businesses.  By design this buys the UBO time to keep the rebills from the free trial going as long as possible, raking in millions of dollars from consumers.

In many instances, chargebacks eventually surpass the 100 per month limit and the signers find their MIDs shut down by Visa/Mastercard.  The ramifications are significant as the signers’ credit is harmed and possibly left with unintended tax consequences.   Furthermore, depending on the circumstances of the MID shutdown, the signers' might find themselves listed on MATCH, a blacklist created by Visa.

"The practice of acquiring and load balancing merchant accounts via 'signers' to avoid detection from regulators is 'outright bank fraud,'" opines a white-collar criminal defense attorney who asked not to be named in this article.

Jeremy Johnson, a notorious free trial scammer, was recently prosecuted for submitting false information to banks to acquire MIDs to load balance transactions at iWorks.  In Johnson’s case, he was forced to forfeit all of his assets, including hundreds of millions of dollars, his home, car collection, and business.   Johnson is now serving an 11+ year prison sentence.

The only crime Johnson was convicted of was providing false information to banks.   Legal experts believe that had Johnson been convicted of the rest of the charges in his indictment that he would have received over 30 years in prison.

The Jeremy Johnson case created case law for criminal prosecutions of free trial operators that utilize “signers” to load balance transactions in their negative options schemes.

Rebrand & Do It All Over Again

In many cases, free trials pushing products like HNB's Garcinia Wow either lose their ability to process credit cards or receive civil fines from the FTC/State AGs.

With assets captured and injunctions preventing future operations, you would think that the operation would stop, right?   Wrong.

“Regulators have been completely ineffective in their civil fines and forfeitures for these scams.   It’s like whack-a-mole, by the time you shut one down another is popping up.  The only way to stop it is to criminally charge the operators for mail and wire fraud, force a prosecution, and send them to prison for a very long time” says a former employee of the FTC whom asked to remain anonymous.

The simple rebranding and acquisitions of new merchant accounts provides a continuous lifeline to free trial operators.   John Monarch’s competitor, Hashtag Fulfillment (now rebranded as iShip), recently found itself in hot water for their free trial clients continuous rebranding and relaunch of free trials that were losing their MIDs due to consumer complaints:

Consumer Justice Investigative Reporter Cristin Severance uncovered that trial scams use non-descript names in order to make it hard to trace complaints online.

At the end of this article we have provided links to a long list of free trials that link back to Monarch’s Direct Outbound Services headquarters in Greenville, South Carolina.

According to sources, some free trials use general names that appear to make it hard for consumers to log complaints online and even more difficult for regulators to connect the dots.  With no “brand” name to trace, some trial operators are able to relabel and rebrand to keep the money from rebills churning.

Bottom line is that shutting down free trial scams with civil forfeiture claims may put a temporary dent in the wallets of the UBOs, but it doesn’t stop them from rebranding and doing it all over again.   It appears that the only way to permanently stop free trials that utilize bank fraud schemes is to file criminal charges against the primary operators, just like U.S. Attorney John Huber did in the Johnson case.

Claim You Don’t Own The Trial Offer Because Your Name Isn’t On it

Many of the true operators behind free trials are difficult to identify because their names are not listed on the companies processing the credit card transactions.   As the ultimate beneficiary officers, or UBOs, there are often many layers between the "signers" and the true operators.

Often when regulators attempt to "follow the money" they end up having to navigate through a web of international banks and signers, making it very difficult for authorities to identify the UBO.

Claim You’re Just a 3^rd Party Vendor with "clean hands"

Vee Daniel of the BBB described to the USA Herald that when she interviewed John Monarch he claimed that he had no culpability in the alleged scams because he is just a “3^rd party vendor” that runs a call center provides USPS fulfillment services.

Is Direct Outbound Services just a 3^rd party operator that handled the USPS fulfillment, contract manufacturing, chargebacks responses, AG complaint processing, and call center related services HNB?   Should Monarch get absolved of all liability in connection to the consumer complaints and government action HNB received because Monarch is just a "3rd party vendor"?    Maybe.   Maybe not.

According to Ms. Daniel, Monarch was not forthcoming with her.   For instance, Ms. Daniel claimed that Monarch denied ownership in the Getting Sleepy free trial, which earned a D- rating with the BBB due to consumer complaints.   While under oath in a deposition, Monarch admitted to owning the Getting Sleepy free trial offer and went into more details about his role in providing managed services for other free trials.

The USA Herald was able to trace dozens of free trial offers that link back to Direct Outbound Services where consumers claim they were scammed.

John Monarch admitted under oath to providing call center support, sales, USPS shipping, contract manufacturing, warehousing, fulfillment, chargeback representments, merchant processing referrals, and affiliate marketing via Stealth Media for many free trials.

Yet in Monarch's deposition he seemed oblivious as to what was happening at HNB.   He didn't seem to know if his company retained records on HNB and seemed to not really know anything about HNBs inner workings, not committing to whether to call it a scam or not.

Was John Monarch purposely equivocating in his deposition when questioned about HNB?   Or did he truly not know what was going on in the HNB operation?

A Closer Look at John Monarch of Direct Outbound Services

To get started, let's have a closer look at the complaints that are linked backed to John Monarch's Direct Outbound Services company in Greenville, South Carolina.

In this charming South Carolina town Direct Outbound Services is located at 120 Smith Hines Road & 122 Smith Hines Road.

HNB, the company that was sanctioned by the Florida Attorney General, is just 1 of possibly dozens of free trial companies that have complaints linking back to Direct Outbound Services.

According to John Monarch's deposition, he owned some free trials himself, including but not limited to the Getting Sleepy.

 

John Monarch lists himself as the CEO and owner of Direct Outbound Services on his LinkedIn Profile.

On or about September 2013 Direct Outbound Services opened its offices at 120 Smith Hines Road, Greenville, South Carolina.  The company also leases 122 Smith Hines Road and has held leases at other locations in Greenville including but not limited to 1120 West Butler Road,Suite J, and 700 Ridge Rd.

 

List of Free Trials with that link back to John Monarch's Direct Outbound Services

1. Beautemer merbeaute.com (HNB)
   "I got scammed just like most of your stories."
2. Stemologica  stemagenta.com (HNB)
   "They are the biggest scam!!!"
   
3. Dermanique (HNB)
   "This is scam. The agreed price for a trial product was $5,95 and $5.90 for the two products. Those charges appeared on my CC. They also charged my credit card $87.00 and $89.41 because they claim that I did not cancel the order within 15 days that was required in their Terms of Service."
   
4. Lumera Total (HNB)

   "Lumera Total and Dermanique Serum Really RIPPED OFF! Offered samples for postage and you really are ordering monthly products billed to credit card."

5. Dermactiv (Dermaktive) (HNB)
   "On 3/14/15 I ordered on-line a sample from BuyDermactiv and Cellux and payed the shippingOn 3/28/15 they sent a full bottle of Dermactive and Cellux without my permission.On May 21, 2015 my **** accound was charged with $174.32."
   
6. Cellagenta (HNB)
   "Conned by Cellagenta company.   Any site that tells you its a free gift and then charges you 149.95 per product without telling you is a SCAM!"
   
7. Celluxe (HNB)
   "They are thieves. I returned the products by the RMA numbers, they gave me and have proof they received them and a year later they haven't returned my money."
   
8. Rejuvius (HNB)
   "The fact that they would not work with me, escalate me to a supervisor or manager screams scam!!I had to call my bank to report fraud and that the wouldn't honor the 14 day trial and refund my money, and I'm also reporting them to the BBB."
   
9. Garcinia Wow (HNB)
   "This company took out two unauthorized payments out of my account. When I called the first time they issued the refund and told me i would receive it within 5 to 7 business days. I called back after that time period and was told it would be 30 days this time. It has now been over two months and i... have yet to receive any refund."
   
10. 24K Beaute (HNB)
    "I was scammed also.. it was not FREE and only pay for shipping, but I was charged!"
11. Stemoderma (HNB)
    "Ordered trial sample for $5.95 shipping. As agreed. Next i noticed my next month statement that I was billed $149.95, I immediately called my credit card to dispute this charge. I not agreed to receive any other products from this company nor had I received any."
12. Getting Sleepy

Reviews From BBB:

According to the BBB website, GettingSleepy's alternative names are as follows:

Healthy New Beginnings - BBB Alternate Name for GettingSleepy + Additional Negative Options

Consumer complaints taken from the web for Healthy New Beginnings:

 

 

11.   Fake Verizon Survey Scam
"Two charges appeared on our bank account, each for $150. $300 was charged for these lotions, and they were supposed to be free."

12.   Militac Flashlights

"I did research and found Ripoff Report and that the address they use has been used for many other scams

I purchased three army torches $29.99 each free shipping.I did not receive and invoice so I checked with my bank to check transaction and what had been charged. A $192.47 was taken from my account."

13.   Retinolla

"Retinolla.com is a complete scam"

14.   Tru Belleza

"Do not do this they charge my credit card $5.16, $6.47 $149.92 , And $ 134.92 This is a scam!!!!"

15.   AlphatForMen

"14 day trial scam with not working product"

16.   Youthful Radiance

"youthful radiance looking to lose wrinkes, instead they're looking to have me lose money!!"

17.  Premium Garcinia Extract

"Pretty much the same complaint as Susan had, but mine gets better. Garcinia WOW and Garcinia Elite Natural Cleanse was the ad I saw for free trial, only pay shipping and handling.

I called to cancel...past the 14 days.They had already charged me,a day after I called to cancel.I insisted on a refund. They refunded $43, because I called late to cancel they charged me $43.

On 3/12 another bottle of Garcinia Natural Cleanse, yes...charged again, $87. I called again the representative told me that the Natural Cleanse was a different company and gave me their number."

18.   TruBellezaSite

"SCAM !! Never order this !! WILL Cost u $100's”

 

19.   Advanced Garcinia Cambogia

"received product garcinia cambogia for weight loss it soes not work I tried calling them but could get anyone to speak to me."

 

20.   Power Testro

"I feel so dumb and awful for people in the same situation. I was victimized by a lie with bait, a garbage product, and no strings."

 

21.  Infinite Allure

"I have ordered free trail of DermaLift agedefying cream and DermaLift eye serum. The product said cancel with in 14 days, I have called and cancelled with in 14 days. After a couple of days my credit card was charged with two amounts $88.63 and $88.13. As the merchant name was not very clear I have called the credit card service and asked them what were the charges for they have referred me to Infinite Allure 120 Smith Hines Rd, Greenville, SC 29607"

 

22.  Garcinia Trial

"I am furious that they jerked their money out of my account in 2 days and then I am still waiting for mine to be returned 20 days later than the day they emailed with transaction numbers for those 2 refunds that I STILL have not received.  Oh, they returned my 4.95 twice but not the $88.96 twice."

 

23.   Abella Mayfair

"The add said I could cancel the automatic order any time.

When I cancelled my automatic order I was advised that I would need to pay for the return postage of the remaining products or if I decided to keep the products after two weeks I would be charged for the full amount of the products.

Non of these details were advertised so it was not possible to make an informed decision.
There was nothing free about it which was how it was advertised and relevant information regarding costs was never mentioned.
It was completely deceptive."

 

24.   Lumera

"This company reminds me of the Enzyte company. It's a scam!

It is a mail fraud They place their ads on Facebook as a legitimate company. You ask for a trial order of face serum, then it tries to sell you eye serum and lip serum, all at a very reasonable price ($28). Then 14 days, they start debiting ($189) your account for the products you did not order nor received. When I called to question the charges, they say that I failed to cancel my membership within 14 days. Do not fall for it. If you look at the website, it is not even a US address."

25.   DermaC (look deep for connection to little john)

"DermaC. Don't know All i know is I think they are a con there phone no is not known and so is there E mail"

26.   Natural Cleanse Pro

"This is terriable for these companies to scam like this. I believe there should be a law that show return all products to: Pure Garcinia Natural 120 Smith Hines Rd, South Carolina, 29607-5707"

 

27.   Garcinia HCAA

https://www.garciniacambogiazone.com/garcinia-hcaa-review/

 

28.   PrecisionLab Addium

"These people made a special offer for $4.95. Then, unbeknownst to me, I get a bag full of bottles and a charge to my account of $144. I called them and told them I never authorized additional purchase and/or debit to my account. These people are dishonest and crooked taking advantage of people trying to improve their memory."

 

29.   LuxergySkin https://www.ripoffreport.com/reports/luxurious-skin/-/luxurious-skin-this-is-a-scam-offering-only-595-shipping-charge-for-their-cream-the-1361291

30.   Rejuva Derma/Luxury Skin Now/Rejuva Skin
“From Facebook I tried to order one skin care product from Rejuva Derma-it kept adding more products instead of paying 4.95 I paid over $50 dollars-deucted from my debit card. It was not clear that if I did not cancel this “membership” in 14 days I would be charged full price-2 weeks later a charge of 184 $ from my account plus 140 charges in overdraft because I was not aware of the charge. I tried calling the the company several and told there was nothing I could do and hung up on.”

31.   https://thebodyup.com/contact.html / Healthier Living LLC

“This company has taken money off my debit card. When you go to their website, it looks generic. The original site that I purchased from just said that you could try two bottles and pay the shipping.  I checked my email records to see if I received any bill or record from them, and I saw none whatsoever. I need help. These companies seem very fishy!”

32.   https://www.swedishcleanse.net/contact.php

33.   https://skinpuretone.com/contact

34.   https://getskinhealth.com/contact.php

35.   https://apxskin.com/contact.html

36.   https://www.powerbodyup.com/contact.html

37.   https://tryskinbeauty.com/contact.html

38.   Limitless Brain Pill https://limitlessbrainpill.com/terms-of-use-and-condition-of-sale/

39.  https://puretotalcleanse.com/customer-service

40.   https://www.getpowerbodyup.com/contact.html

And more....

What Is John Monarch Up To These Days?

Monarch has launched a cryptocurrency company with his lawyer/business partner Aaron Kelly.  They've collectively sold more than $30,000,000 in their ICO cryptocurrency offering in January and are actively trading the Cryptocurrency on https://coinmarketcap.com/currencies/shipchain/.

Kelly is facing possible disbarment later this year due to an action taken against him by The Arizona Bar.   Kelly is accused of serious legal fraud and was originally exposed by   Washington Post Reporter Eugene Volokh.

Monarch is set to stand trial in an alleged cryptocurrency blackmail scheme later this year.  Monarch's co-defendant, Karl Steinborn, was held liable for his role in the blackmail and subsequently committed suicide.

Shipchain lists Direct Outbound Services as a "Select Shipchain Partner"

Stay tuned for coverage on the forthcoming lawsuit on Shipchain, naming John Monarch individually and his business partner & former attorney Aaron Kelly along with other alleged co-conspirators.

*5-28-18 Update*

According to sources several of the free trials that are operated from Direct Outbound Services were created via John Monarch's company Connexus Inc.

Accordingly to the LinkedIn profile for Connexus Inc., John Monarch and his co-owners at Direct Outbound Services operate every component of free trials, including but not limited  "design, develop, merchant processing, legal, corporate infrastructure, USPS shipping, and more."

Did Jon Dorko hire Connexus Inc. to setup his free trials at HNB and then use Direct Outbound Services to keep them going?

Have a tip on John Monarch or anyone listed in this article?   Contact us here.