Disputed credit card charges

Dear Dr. Don,
I had a bad experience with my credit card company related to a disputed vendor charge. The vendor did not deliver what he charged my card for, and the credit card company refuses to temporarily credit my account while the dispute is resolved.

How do I find a credit card that is going to stand by me in a dispute with unethical vendors? Is charge dispute policy different between banks, or do Visa and MasterCard handle it uniformly? Thanks. -- Nick Knocks

Dear Nick,
MasterCard and Visa both have to follow the provisions of the Fair Credit Billing Act. Keep in mind that the law distinguishes between billing errors and disputes over the quality of goods delivered or level of services provided. The Federal Trade Commission's guide to the Fair Credit Billing Act states:

The FCBA settlement procedures apply only to disputes about "billing errors." For example:

• Unauthorized charges. Federal law limits your responsibility for unauthorized charges to $50;
  
  
• Charges that list the wrong date or amount;
  
  
• Charges for goods and services you didn't accept or weren't delivered as agreed;
  
  
• Math errors;
  
  
• Failure to post payments and other credits, such as returns;
  
  
• Failure to send bills to your current address -- provided the creditor receives your change of address, in writing, at least 20 days before the billing period ends; and
  
  
• Charges for which you ask for an explanation or written proof of purchase along with a claimed error or request for clarification.

To take advantage of the law's consumer protections, you must:

• Write to the creditor at the address given for "billing inquiries," not the address for sending your payments, and include your name, address, account number and a description of the billing error.
  
  
• Send your letter so that it reaches the creditor within 60 days after the first bill containing the error was mailed to you.

Both Visa and MasterCard have gone to zero-liability policies, which protect the consumer against unauthorized credit card use, thereby waiving the card holder's responsibility for $50 of unauthorized charges.

Under the Act's provisions you can withhold payment on the disputed amount until the matter is settled, but the credit card company is not obligated to credit your account for the amount in dispute.

Your legal remedies against the creditor when dissatisfied with something purchased on your credit card mirrors the actions you can take under state law against the seller. Again from the FTC guide to Fair Credit Billing:

To take advantage of this protection regarding the quality of goods or services, you must:

• Have made the purchase (it must be for more than $50) in your home state or within 100 miles of your current billing address;
  
  
• Make a good-faith effort to resolve the dispute with the seller first.

The dollar and distance limitations don't apply if the seller also is the card issuer -- or if a special business relationship exists between the seller and the card issuer.