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Key Briefings:

1. Plaintiffs allege Gary Cardone’s Chargebacks911 participated in a form of fraud and cybercrime, including fraudulent manipulation of merchant chargeback ratios to conceal consumer complaints.
2. The class action lawsuit involves accusations from consumers alleging unauthorized charges and misleading marketing related to Keto diet supplements.
3. Defendants Gary Cardone, Monica Eaton, and Chargebacks911 deny all allegations, asserting legitimate business operations.

By Samuel Lopez – USA Herald
[TAMPA, FLORIDA] - A major class action lawsuit is currently underway in the United States District Court for the Middle District of Florida, regarding allegations of widespread consumer fraud involving chargeback manipulation. Central to this legal dispute is Global e-Trading LLC, doing business as Chargebacks911, a prominent Florida-based firm that specializes in chargeback prevention services. Equally notable is the involvement of founder Gary Cardone, twin brother of celebrity entrepreneur Grant Cardone, alongside Monica Eaton, the company's CEO.

Plaintiffs Janet Sihler and Charlene Bavencoff represent a nationwide class of consumers who allege they were victimized through deceptive pricing and marketing practices associated with popular Keto diet products, including Ultra-Fast Keto Boost, InstaKeto, and Instant Keto.

According to the Third Amended Complaint filed on April 19, 2024, the plaintiffs assert they were charged substantially more than the advertised prices. For instance, Ms. Sihler claims she agreed to purchase InstaKeto under a "Buy 3 Bottles, Get 2 Free" promotion, expecting to pay $119.22. Instead, she was billed $198.70 without her authorization. Similarly, Ms. Bavencoff reports experiencing identical unauthorized charges after purchasing Ultra Fast Keto Boost, drawn in by promotions falsely claiming endorsements by celebrities from the television show "Shark Tank."

The complaint alleges, “This action involves a form of fraud and cybercrime that has become increasingly common — and lucrative — across the Internet. This particular scam (the “Keto Racket”) was designed to lure consumers into purchasing worthless weight-loss pills branded “Ultra Fast Keto Boost” and “Instant Keto” (collectively, the “Keto Products”) by using fake celebrity endorsements and misrepresentations about the amount consumers will be charged if they buy the pills. The operators of this scam deceived consumers like Plaintiffs Sihler and Bavencoff by advertising that the Keto Products were endorsed by celebrities (they weren’t) and that the purchase prices of the Keto Products were significantly lower than the amounts actually charged to the victims’ debit or credit cards.”

The complaint specifically alleges that the defendants' primary role in the scheme was to help Keto marketers evade financial scrutiny and potential repercussions from credit card processors by artificially manipulating merchant chargeback ratios. Chargebacks, consumer-initiated requests to reverse credit card charges, typically alert banks and credit card companies to potential fraud or dissatisfaction. A high chargeback ratio can trigger audits, penalties, or even suspension of payment processing capabilities, severely impacting a business's operations.

The plaintiffs claim that Chargebacks911 used manipulative practices to hide the real extent of chargebacks, which are disputed customer payments. According to the lawsuit, the company allegedly created a large number of small, meaningless transactions, like selling $0.99 e-books. These transactions were often fake or arranged through other companies. By increasing the total number of transactions, the high number of actual chargebacks—caused by things like unauthorized charges or misleading marketing—was made to seem less significant in comparison.

In stark contrast, the defendants' formal response, filed on June 17, 2024, denies all allegations. Chargebacks911 acknowledges providing chargeback prevention services but emphasizes its operations are strictly legal, standard within the industry, and void of any fraudulent intent. They argue that any associations or services rendered to other companies mentioned in the complaint, represent standard commercial interactions consistent with legitimate business practices. Moreover, the defendants categorically deny manipulating merchant accounts or chargeback data to conceal consumer disputes.

However, this is not Cardone’s or Chargebacks911's first encounter with regulatory scrutiny. Earlier in April 2023, the Federal Trade Commission (FTC) and the Florida Attorney General brought action against Chargebacks911, Gary Cardone, and Monica Eaton, alleging they engaged in unfair business practices. The federal complaint accused the company of submitting misleading documentation to dispute consumer chargebacks, ignoring red flags, and artificially lowering merchant chargeback rates through microtransactions.

In that previous action, documented under case number 8:23-cv-00796-MSS-CPT, Chargebacks911 agreed to a stipulated order for permanent injunction and monetary penalties totaling $150,000 without admitting wrongdoing. The FTC and Florida Attorney General's allegations closely mirrored the current plaintiffs' claims, particularly regarding microtransactions and deceptive management of merchant accounts.

In the present case, Plaintiffs have clearly defined the affected consumer class, which encompasses anyone in the United States who purchased three or five bottles of Ultra Fast Keto Boost, InstaKeto, or Instant Keto from June 28, 2019, through October 4, 2024. Thousands of consumers could potentially be impacted by the court's eventual decision.
The outcome of the lawsuit remains uncertain as the court has not yet ruled on the liability of Chargebacks911, Gary Cardone, or Monica Eaton. No financial restitution or settlements have currently been offered or finalized, leaving the potential for significant consumer implications open-ended and contingent on future legal developments.

The official case citation is JANET SIHLER, et al. v. GLOBAL E-TRADING, LLC DBA CHARGEBACKS911, et al., in the United States District Court, Middle District of Florida, Tampa Division; Case No.: 8:23-cv-1450-VMC-JSS.

Plaintiff’s Counsel: Cyclone Covey, Esq. and Jordan Wagner, Esq. of KIBBEY WAGNER PLLC in Stuart, FL 34994-2140

Defendant’s Counsel: Neal Ross Marder, Esq. (pro hac vice) and Joshua A. Rubin, Esq. (pro hac vice) of AKIN GUMP STRAUSS HAUER & FELD LLP in Los Angeles, California 90067

For expanded coverage on issues like this, join my Patreon community at Legal Insights and Strategies by Samuel Lopez.