A federal judge signed off on a $12.5 million settlement awarded to a class of customers allegedly scammed into buying ineffective diet pills with fake celebrity endorsements and misrepresentations of the product’s price. The chargeback management company that reportedly aided those running the “Keto Racket” is on the hook for the bill. U.S. District Judge Virginia M. Hernandez Covington approved the settlement Tuesday, paving the way for more than 300,000 class members to get back the money they spent buying “Ultra Fast Keto Boost” and “Instant Keto” pills, and then some. Plaintiffs alleged they were duped into buying the drugs based on fake endorsements from the stars of “Shark Tank” and phony “before and after” pictures featuring celebrities like Drew Carey and Jennifer Hudson. Not only were the pills ineffective, plaintiffs said, but they were overcharged for the product purchased. Class members thought they were getting a promotional deal where they could buy three bottles and get another two for free, but say they were charged full price for all five bottles. The plaintiffs already have a $200,000 settlement with the company running the purported scheme, The Fulfillment Lab, after filing suit in California federal court in 2020. Alexander Cyclone Covey, partner at Kneupper & Covey and attorney for the class, said after realizing it wasn’t “economically feasible” to chase that company down, they turned their sights on the business that allowed the scam to persist: Global E-Trading LLC, more commonly known as Chargebacks911. Covey said Chargebacks911 advised the purveyor of the pills on how to evade scrutiny from banks so they could continue running the racket. “They were simply a vendor, but our allegations were that they knew what was going on, at least at a high level, and were also advising the scammers on ways that they could skirt the bank regulations to allow their scam to run longer than they otherwise would have been able to,” Covey said. Banks assess a merchant's risk levels by monitoring their chargeback rates. If it rises above a certain percentage, that merchant can face fines and account termination. Covey said as many of The Fulfillment Lab customers filed chargebacks, the company enlisted Chargebacks911 to help artificially inflate the number of their sales so that financial institutions wouldn’t flag them as fraudulent. “They would buy digital gift cards and then charge themselves over and over and over again,” Covey said. “In doing that, they dramatically increased their total transaction count so the ratio did not look so bad.” Chargebacks911 denies all allegations of wrongdoing and liability. Corey W. Roush, partner at Sidley Austin and attorney for the Chargebacks911, shared a written statement from his client that said though it was prepared to defend itself at trial, the company chose to settle “based on a desire to put this matter behind us and to focus on continuing to provide our clients with the exceptional award-winning services for which we are known.” The $12.5 million settlement includes over $4 million in attorneys fees and will be paid in installments over the next three years. Covey said he expects class members, who can still make claims, to receive roughly three times what they initially paid. As for their successful strategy, Covey said it came down to focusing on the simplest claim they could prove, that customers were overcharged for the pills; going after the company that would reap the biggest rewards for his clients; and a meticulous discovery process that produced “smoking gun after smoking gun.”