Not mine but this is actually what I did too.
I said I plan to charge back on my credit card. They threatened that if I did that, they can’t promise my account wouldnt be flagged.
I said “bet” and they removed the cancellation fee and cancelled the service.
I would imagine that it’s exactly because of the word you used. Fraud.
If someone is going on a chargback spree it’s going to look fraudulent from the customers end. So their would likely need to be some kind of evidence or back and forth with the credit card company. Since they are now the middle man taking money from companies and putting it back in a lowly plebs pocket.