This is not a true story because as a merchant you cannot "refuse chargebacks". In fact too many chargebacks will result in a loss of your merchant account. You should really stop making things up.
However, merchants do have an opportunity to respond to a chargeback request. Providing plausible evidence that the request is in bad faith will often result in the bank not performing an actual chargeback.
Refusing chargebacks and not issuing refunds are two very different things with distinct language. And if you don't issue refunds for a case like the GP described, where thousands of customers were incorrectly billed, you certainly would be flooded with chargebacks and likely put your merchant account in jeopardy. (Most of the big processors would close your account if they get evidence you are fraudulently billing customers and actively resisting making it right.)
It's clearly a made up story by someone with no experience actually managing credit card payments for a real business.