There are lots of businesses with this model. The correct way to deal with them is to exclusively use real credit cards, and to either threaten or immediately reverse charges from the financial institution's side as soon as anywhere near this level of shit is pulled.

This wreaks fear into most merchants, not only because fraud policies at banks greatly favor the buyer, but also because too many reversals within a certain period can cause a payment processor to charge higher rates on all transactions indefinitely, sometimes even if the merchant always cooperates.

Edit: Also usually works with most check cards, but I've come close to losing with them a couple times, whereas real credit cards are practically bulletproof in my experience unless you're just attempting some kind of egregious fraud.