How to dispute a credit
just hate it when you buy a product and bring it home, only to discover the product
is damaged or poorly made?
To make matters worse,
the merchant refuses to replace it or give you a refund.
you made the purchase with a credit card, your card company may be able to help.
card purchases are protected under the Fair Credit Billing Act. This law gives
the consumer the right to withhold payment on poor-quality or damaged merchandise
purchased with a credit card.
Under the law, you
do need to make a real effort at resolving the dispute with the merchant before
you can ask your issuer to stop a credit card payment. There are a few other catches
The sale must be for more than $50 and have
taken place in your home state or within 100 miles of your home address. Few issuers
enforce the $50 or 100-mile rule on purchases, but all are free to do so.
there's a chance that you'll be able to dispute credit card charges on shoddy
merchandise purchased outside your home state, over the Internet, by mail order
or phone order.
"Many credit card companies
will let you dispute that," says Jeanne M. Hogarth, senior analyst of consumer
policies at the Federal Reserve Board. "Technically, they don't have to."
card companies are eager to hang on to their customers, especially good ones,
they'll often go above and beyond what's required of them by law when a customer
is unhappy with a card purchase.
Capital One issues a temporary credit to a customer's account when a purchase
is in dispute.
"If a customer sends a dispute
letter, we'll issue a temporary credit so they won't have to pay for it,"
says Diana Don Colby, the director of financial education for Capital One. "We're
giving the benefit of the doubt to the customer."
One then contacts the merchant. If Capital One agrees with the customer, the refund
stands. If Capital One sides with the merchant, the customer must pay for the
item, plus finance charges.
Some card companies may
be less generous when a big-ticket item is in dispute or if you made the purchase
while traveling overseas. It all depends on the card company and how much they
value you as a customer. They can point to the limits spelled out in the Fair
Credit Billing Act whenever they want to.
is goodwill and that's all it is," Hogarth says. "At any time a credit
card company can fall back on what's required by law."
the law work for you
To get the Fair Credit Billing Act to work for
you, here's what you need to do:
First off, try to
resolve the problem with the merchant.
them the chance to fix it. Sometimes they do," says Cary L. Flitter, a consumer
attorney in Narberth, Pa.
"If you use common
sense and courtesy, it usually gets the problem solved before it becomes a Fair
Credit Billing problem."
If possible, take the
defective merchandise back to the store. Otherwise, call the store and ask for
a manager or supervisor. Keep records of each conversation.
always want to have a paper trail," says Deborah McNaughton, author of The
Insider's Guide to Managing Your Credit. "Make notes of dates and times
and who you talked to."
If the merchant won't
budge, put your complaint in writing. Outline the dispute in a short, detailed
letter to the merchant and send it certified mail.
sure to make copies of the complaint letter sent to the merchant. One copy will
be sent to your credit card company as proof that you tried to resolve the dispute
with the merchant and one copy will be kept in your records.
next step is contacting your credit card company and alerting them of the disputed
purchase amount. To be protected under the Fair Credit Billing Act you'll need
to do this in writing and within 60 days after the bill with the disputed charge
was sent to you.
In your letter, be sure to include
your credit card account number, the closing date of the bill on which the disputed
charge appears, a description of the disputed item and why you're withholding
payment. Enclose a copy of your complaint letter to the merchant and any other
documentation you may have supporting your position. Use this form
letter to help get you started.
Send your letter
by certified mail, return receipt requested, to the credit card company at the
address for "billing inquiries" and not the address for payments.
credit card company cannot charge you finance charges on a disputed charge. But
you will still be charged interest on any other purchases you may have made. Be
sure to include a payment for these purchases with your letter.
delay in the mailing of your dispute letter, especially if it includes a payment.
Under the Fair Credit Billing Act, an issuer can take as many as five days to
credit a payment not sent to the payment address.
issuer will then contact the merchant and hear its side of the story. Two things
can happen. If the card company sides with the merchant, you'll have to pay for
the disputed item, plus any finance charges. If the card company sides with you,
you don't have to pay a penny.
To dispute a bill,
it's best to move quickly. You'll want to inform your card issuer of the disputed
charge before it's due for payment. You can't withhold a payment once a bill is