Fraud Friday — Sham Credit Card Transactions Lowered Charge-Back Rates, Earns Fraudster 28 Months in Prison

April 17, 2026

Bob Coleman
Founder & Publisher

Fraud Friday — Sham Credit Card Transactions Lowered Charge-Back Rates, Earns Fraudster 28 Months in Prison

Michael Brian Cotter did not solve the problem when the banks started asking questions. He worked around it.

A federal court sentenced the 64-year-old Greenville, Rhode Island, white-collar criminal to 28 months in prison for conspiracy to commit bank fraud. At the center of the case is a metric every banker knows well: chargebacks.

Cotter was the CEO of a tech support company operating through a call center in India. By 2016, the company’s chargeback levels had triggered concern across the banking system. Payment processors and banks began restricting their ability to process debit and credit card transactions, the standard response when fraud indicators rise.

Cotter did not reduce the chargebacks. He changed the math.

Prosecutors showed that Cotter and his co-conspirators purchased virtual debit cards and pushed thousands of transactions through their own merchant accounts. These were not customer sales. The company was paying itself.

The objective was straightforward. Chargeback ratios drive fraud monitoring. By adding a large volume of artificial “good” transactions, Cotter diluted the percentage of disputed transactions. The denominator increased. The ratio improved. On a bank’s dashboard, the business appeared stable.

It was not.

To support the scheme, the operation used real customers’ personal identifying information without their knowledge or consent. That layer made the transactions appear legitimate and masked the circular flow of funds.

The result was a false picture of performance. The company maintained access to the payment system under conditions that would otherwise have restricted or shut it down.