Credit Card Disputes: How to handle it and what to expect from an Industry Insider
Mar 16 '01
The Bottom Line When things go wrong, learn what you need to know to preserve your rights by properly disputing a charge on your credit card.
I've worked for two of the five largest credit card issuers in the world for the past 9 years. I'm familiar with the way they handle disputes. From the other side, I've initiated disputes on 3 of my own credit card accounts, all with different issuers. This is an overview of what you need to know about disputes: how to stay within the law and how to get the results you want. Plus some personal experience thrown in for good measure.
What is a Dispute?
The Federal Regulations that govern disputes are Reg Z, also known as the Truth in Lending Act and the Fair Credit Billing Act. These regulations provide certain rights and responsibilities regarding disputes. In credit terms, a "dispute" is not an argument, it's a legal term signifying your official disagreement with an item on, or missing from, your credit card bill.
What are some common reasons for a Dispute?
The most common is that a cardholder sees a charge on their monthly statement that they do not remember making. Other billing errors are fair game as well, such as mathematical errors, misposted debits or credits, nonposted debits or credits, double posted debits or credits, and the failure of the creditor to send statements to your correct address. Disputes can also be initiated (under certain circumstances) because the merchant did not deliver the goods or services that were bargained for and will not give a refund.
Your Responsibilities
Must be Within the Time Frame
To take advantage of the protection offered by these regulations, you MUST be sure your letter is received by the Creditor not more than 60 days after they mailed the bill on which the disputed item appears. Make sure you mail your letter well in advance of this deadline. Be sure to send your letter certified return receipt requested so that you have proof of this fact.
Must be in Writing
You also need to fully describe the situation and why you are disputing the charge. You are not obligated to wait for an official dispute form from your credit card company. Go ahead and write the letter yourself to get the ball rolling. Keep in mind that phone calls, emails, and faxes will not preserve your rights, only snail mail will do the trick. Once the creditor receives your letter, the dispute investigation will begin.
An important point to mention here is that the billing address is not the address to which you should send this letter. Look on your statement. The creditor must tell you the address to which you should send any billing inquiries. It is imperative that you use the billing inquiry address.
Your Rights
Once the Creditor receives your letter, they must respond within 30 days.
The creditor may not negatively impact your credit due to the disputed item. Once an item is in dispute, you do not have to pay that amount, or any finance charges that are accruing on that amount, until the dispute is settled.
Although the amount in dispute will be counted against your credit line, you do not have to pay it while it's in dispute.
The Creditor may not take adverse action against you because of the dispute by restricting or closing your account.
The Creditor must report their findings to you not more than 90 days after receiving your notice of a dispute. The three main outcomes are:
- You lose: the Creditor will prove why the bill is correct. You will owe the original amount plus any accrued finance charges.
- You win: the Creditor will remove the disputed item from your account. You will not owe any finance charges and any late fees relating to the amount in dispute must be removed. The amount in dispute becomes a "chargeback" on the merchant's account.
- A Compromise: the Creditor has found some merit in the dispute, but for a lesser amount. You will owe the partial amount, along with any accrued finance charges allocated to that amount.
What is a Chargeback?
A chargeback is when the credit card company charges back an amount to a merchant's account. Chargebacks are not good, and if a merchant has too many of them, there is a possibility that Visa/MasterCard may not want to do business with them any longer. So, merchants do not like chargebacks, and will try to avoid them.
Some tips
Be sure to include any and all documentation with your dispute.
If you returned merchandise, show a receipt or tracking number and info from the shipper.
Document any verbal and/or written correspondence you may have had with the merchant. Showing that you tried to work it out is a big plus.
Keep copies of everything and send your letters certified return receipt requested.
Simple, huh?
-- Some real life experiences --
Dispute #1: Learn from the mistakes
My son, who is an authorized user on my credit card, bought a new motherboard and processor from a company in Oregon. The company made claims as to the overclocking ability of the processor. They shipped the processor, but were out of stock on the "special part" that would allow the super overclocking. By the time the "special part" came, and it was obvious that it was not going to work, we were near the end of the allowable time to dispute.
We returned the special part, along with the processor, and asked the merchant for a refund. The motherboard was fine, so we kept that.
I called the credit card issuer and explained the problem. They said they would put a note on my account and I should fill out the dispute form conveniently located on the back of the statement. I did, and they also sent me another form with more detailed questions, which I promptly mailed back. Did I send these forms certified? No.
After waiting a while, I called the credit card company to find out what was going on with this dispute. They claimed that they never received either form and unfortunately, the window of opportunity on filing a dispute was gone (I was past my 60 days).
To make a long story short, I was fuming, and it was at my own laziness for not covering myself properly, more than at the bank's incompetence. I ended up speaking (very heatedly) to a supervisor in the disputes area and she had a good idea. She called the merchant and inferred that a chargeback would be processed unless they would like to send a refund themselves. It worked. The merchant sent me a check within the week. I was lucky.
Card Issuer: MBNA
Moral: Use certified return receipt requested snail mail when filing a dispute!
Dispute #2: They got my back
I received a call from one of my credit card issuers asking me if I knew where my card was. Sure, I said, it's in my purse. I looked for it. It was not there! Apparently, someone had stolen my card and used it at a gas station and then went to the mall and was attempting to charge some big-ticket items.
The card issuer proceeded to ask me a bunch of questions and we tried to figure out which was last charge on the card that was actually made by me. It was at a gas station that I frequent on my way to work in Delaware. I must have dropped my card there. The next charge was a gas station in Pennsylvania, a state that I had not been to for several months. After that, the thief purchased a CD player at a mall, and was trying to buy a bunch more stuff when the card was deactivated by the early warning fraud area of the bank for suspicious activity. (Testing a card at a gas station and then heading for electronic or jewelry stores if it works is a common fraud scenario).
The card issuer then sent out an affidavit for me to sign stating that I did not make those fraudulent purchases. I signed it and sent it back (yes, I learned my lesson) certified return receipt requested. :)
The charges were immediately removed from my account and I was issued a new card.
Card Issuer: Chase
Moral: Make sure your card is actually safely back in your wallet!
Dispute #3: Check your bill
As I was looking over my bill and noticed that there were some charges that were exact duplicates, both in amounts and dates. I called the credit issuer to question them. The representative also thought it looked strange and said she would look into it.
Did I depend on that call? NO! I started drafting a simple letter to dispute the double postings anyway. Within a few hours, the rep called me back and said it was an internal bank error and that the charges had been removed.
Card Issuer: Citibank
Moral: look at your bill closely every month and cover yourself by taking the proper action on errors.
In Conclusion
Hopefully, you'll never have to file a dispute. But if you do, be sure to follow the guidelines to preserve your rights under law. The extra bit of time and work you do up front will save you a lot of hassle, and probably money, in the long run. :)
You may be interested in these other related reviews:
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http://creditexpert.epinions.com/finc-review-6FE-73F2D35-38EE9644-prod6
An Insiders Comprehensive Guide to Avoiding Credit Card Fees
http://creditexpert.epinions.com/finc-review-7D30-14D8F7F-3894936A-prod2
What YOU need to know about Fraud, from an industry insider
http://creditexpert.epinions.com/finc-review-78D6-D46160-3887762C-bd1
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http://creditexpert.epinions.com/finc-review-1B4A-2998D2F-395017FB-prod1
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netKat
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Member: Kat
Location: Maryland
Reviews written: 166
Trusted by: 885 members
About Me:
Analytically inclined mom, bank officer, freelance writer, and internet addict.
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