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Credit Card Debt Disputes

The number of credit cards and other credit instruments in use has never been greater. With the increase in use of credit there is also the potential for errors, misunderstandings, and outright fraud. There are certain rights that have been legislated to protect you, the consumer, as well as the merchant and the banks that finance the credit cards. In this article we will explore how these laws protect the consumer in the areas of product and service disputes, and billing errors.

Each company makes an investment to acquire customers. The cost to acquire a customer is different for each type of businesses, but the thing that is the same is that the companies want to retain the customers they have attracted. The fact that you have a dispute with them means that you have actually made some kind of purchase, which means there is a higher probability of your making future purchases than if you had never made a purchase before. They would prefer to keep you as a happy customer.

Product and Service Disputes
The law provides a remedy if you used your credit card to purchase a product or service you felt was unsatisfactory. The rules are:

• The product must be purchased in your home state or within 100 miles of the billing address.

• The charge must exceed $50.00

• An effort must be made to resolve the dispute with the merchant. 

As mentioned previously, merchants want happy customers. If you are unhappy you should contact the seller as soon as possible. A preliminary phone call may clear up any problem. Be sure to keep a record of contact with the company. Note the date and time of your call as well as the name of the person you spoke with. Jot down a short summary of the conversation for future reference.

If the initial phone call takes care of the problem then all the better, but if it doesn’t, or if it seemed the call settled the matter but subsequently you find the issue is not resolved to your satisfaction the next step is to write a letter to the merchant. The letter does two specific things: it lets the company know you are serious and puts a complaint on record. 

• Include your name, address, account number, and amount of the purchase

• Explain the exact nature of the problem

• Insist on a complete refund

• Sign the letter

• Make three copies of the letter – one for your records, one to send to the merchant and one to send to the credit card company.

In the meantime, contact the credit card company. They can clearly explain your rights and what the options are. Usually, when a purchase is in dispute the payment for that charge can be withheld. The rest of the credit card bill must be paid, but the portion representing the disputed items may be withheld pending resolution. 

To be sure the protection extended by the law will cover your complaint, follow all of the rules. Putting your complaint into written form is always helpful. Along with a copy of the letter sent to the merchant, an additional letter should be sent to the credit company as soon as possible. There should be a special mailing address listed on the monthly statement. Be sure you include your name, address, account number, transaction number, and the amount and date of the purchase, and a concise explanation of the problem. There are several points to cover in the letter.

• Include your name, address, and account number

• Explain the nature of the problem and include the name of the merchant, date of purchase, transaction number, and amount of purchase.

• Tell them you are unsatisfied and why – the merchandise did not work as promised, or that there is a money back guarantee and you wish to exercise that right.

• Tell them you have tried to resolve the problem with the merchant to no avail. 

• Include a copy of the letter you wrote to the merchant.

• Sign the letter and make three copies, one for the credit card company, one for the merchant, and one for yourself

Often the credit card companies can garner cooperation even from recalcitrant merchants. They accomplish this by going through a process that sets a 30 day limit for a company to give a refund on its own. If there has been no satisfactory resolution by this time, and you have maintained a record of phone calls and letters, the credit card company will issue a provisional credit to your account for the amount in question. Once this provisional credit has been issued, the merchant has 60 days to respond in one of two ways; they can do nothing and let the refund stand or dispute the refund.

If 60 days goes by and you haven’t heard from the merchant then the dispute is resolved in your favor and the refund is complete. If however, they do dispute the transaction you have to go to the next level where there are several options. Often times getting another entity involved is appropriate at this point. Consider contacting:

• Local consumer protection offices

• Local Better Business Bureau (BBB)

• Local consumer action reporters on radio, television and in the newspapers.

• The Federal Trade Commission

Merchants usually wish to maintain a good record with these organizations and will go out of their way to ensure a satisfactory resolution to your complaint.

There are also other ways to deal with the dispute once it has reached this point – going to court, or using a mediation or arbitration process.

Reference: Fair Credit Billing Act