I'm not a lawyer, but here is the way I see it. When you authorize a credit card transaction its just like writing a check. If your bank doesn't honor your payment you are able to collect the original amount plus a fee. Each state has a maximum fee which can be charged. We put it in the terms of service that a $30 fee + original amount will be charged. Now thats $30 fee per transaction. So lets assume a customer signed up at $19.95 a month for 3 months, then charged back all 3 months. $19.95 x 3 = 59.85 $30.00 x 3 = $90. Total collection is $149.85.

What I mean by an invalid chargeback is we look at the offical complaint that was sent to the customers bank. We then compair it to our database. If the customer name and mailing address match our records we check the IP and if it comes back to the same region and the customers chargeback reason was "unauthorized transaction" we proceed with a collection.

I have found that many chargebacks are a result of the customer subscribing to too much porn and waiting a few months, then contacting the bank and requesting a refund. Often times I will see chargebacks with complaints against Ibill, CCbill, Paycom, Neova, Verotel, etc all on the same statement. The company that tries to collect usually wins. When CCBill and others just accept the chargeback the customer gets back $100's of dollars. Then if they get the collection from your company there more likely to pay to avoid a porn bill appearing on there credit report.

On the other side, there are valid chargebacks. Chargebacks that are a result of a stolen credit card, customers that made a valid attempt to cancel and couldn't, etc. We do not send these customers to collections.