Dispute a credit card purchase
How do I dispute a credit
Don't you just hate it when you buy a product
and bring it home, only to discover the product is damaged or poorly
To make matters worse, the merchant refuses to replace it or give
you a refund.
If you made the purchase with a credit card, your card company
may be able to help.
Credit 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 "charge
back" the merchant and credit your account. There are a few
other catches as well.
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.
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, a program manager in consumer policies at
the Federal Reserve Board. "Technically, they don't have to."
Because 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.
For example, 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, a
spokeswoman for Capital One. "We're giving the benefit of the
doubt to the customer."
Capital 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.
"This 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."
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.
"Give 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.
"You 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.
Be 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.
The 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.
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.
A 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.
Don't 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
Your 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