Thursday, August 6, 2020

Jeremy Johnson Case Exposes Massive Merchant Fraud Operations

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Frank Orange
Frank Orange is a long time marketer with extensive expertise in creating products that sell on the internet. He knows everything about the entire process, from moving product to merchant accounts and is here to share his information.

Direct Marketing Kingpin Jeremy Johnson is currently representing him in a very heated criminal trial in Salt Lake City, Utah.    Before I go into details around the massive fraud that Johnson is exposing in the performance marketing industry, here’s some interesting facts and updates around the case:

 

What’s very interesting about this case is that Johnson is exposing the massive credit card fraud in the US free trial marketing space.   During testimony it has come out that the banks that process free trial credit card offers are deeply involved and fully aware of what their clients are doing to stay below Visa/MC chargeback regulations:

  1. Create multiple shell corporations with different “signers” to acquire Visa/MC merchant accounts.
  2. Load balance transactions across each of these shell corporations so that each company never breaches Visa/MC fraud alerts.
  3. Pump through fake transactions or small dollar amount transactions to keep transaction rates higher and chargeback rates lower, flying below the Visa/MC fraud radar screens.

While it seems as if the banks never lost any money and were deeply involved in the “scheme”, it is still unlawful to process transactions like this.

There are a number of merchants here in the US that defraud consumers under this type of billing model, and in the future we will look to review their business models and how it works in greater detail.

Should be interesting to see the outcome of the case.   My guess is that Johnson will beat some of the charges levied against him but will be found guilty of some of the other charges.   What are your thoughts?

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