Sorry, Wrong Numbers...
John purchased a shirt from an online mass merchant. He wanted to wear it to a friend’s barbeque, and despite paying extra for expedited shipping, it never arrived.
Jill ordered some steaks from a mail-order firm that specializes in farm-raised beef. When she received her credit card bill, she discovered that she was charged twice for the items.
Joe decided to return the bathrobe he bought from an online boutique. His girlfriend hated the color and the feel of the material. Despite following all of the return directions, he was never refunded.
Sound familiar? It’s happened to almost all of us at one time or another. Given that there are billons of transactions using credit and debit cards each year, the odds are fairly good that something will go wrong somewhere.
There are 333 million Visa credit cards circulating in the U.S., generating a total purchase volume of $1.412 trillion in the fiscal year ending June 30, according to Visa Operational Performance Data. For MasterCard, there are 195 million cards in the field, generating $653 billion in purchase volume. American Express has 57.6 million cards generating $721 billion.
If just one percent of that total purchase volume causes a problem, that results in hundreds of millions in mistakes. And that doesn’t even consider debit cards, pre-paid cards or store credit cards, all of which can join the error parade.
The Consumer Financial Protection Bureau (CFPB) is a government agency that was created following the 2008 U.S. financial crisis to provide a single point of accountability for federal consumer financial laws. Prior to its creation, there were several agencies that split duties.
The CFPB fielded more than 13,000 consumer credit card complaints in 2013. The most popular were billing disputes, fraud (including identity theft and embezzlement), account closures and late fees. Based on its data, American Express and Chase bank were ranked as the companies that had the fewest complaints, generating roughly two to four complaints for every billion dollars in purchases.
THE DRAMATIS PERSONAE OF DISPUTES
There are several players that are affected when a dispute arises. There’s you, the consumer; your credit card issuer; the service or merchant that sold you the items in dispute; their credit card processing service; the bank for the merchant or service; and the network processor for the credit cards. All have a stake in resolving the issue to everyone’s satisfaction, but each has a different position to defend and tiny print paperwork that outlines the responsibilities and rights of each player.
The good news is that most of the mistakes (at least the ones you catch) can be corrected. You just have to be aware of your rights for a settlement under the Fair Credit Bill Act (or FCBA, as they call it). That’s a law designed to correct the bills of credit cards and revolving charge cards. It doesn’t cover debits (that’s your bank) and installment contracts like car loans or furniture.
The FCBA protects you in the following ways:
- You are responsible only for unauthorized charges up to $50;
- You are not responsible for charges that list the wrong date or amount:
- You not responsible for services or goods that you didn’t accept or were not delivered as agreed;
- You are not responsible if the bill was sent to the wrong address IF you gave notice of your new location in writing to the company 20 days or more before leaving;
- You are not responsible for charges that you ask for written proof of purchase or during a request for clarification.
To enjoy these protections, you have to follow some strict procedures. You must write to the creditor at their billing inquiries address, which may or may not correspond to the corporate headquarters or where you normally send your bill. In that letter, you must include your name, address, description of the error and the account number.
This must be done within 60 days of receiving the first bill in error. Obviously, send your letter via registered mail with a return receipt and enclose any proof, such as copies of your sales slips.
You must, under FCBA, receive a written response within 30 days after the creditor receives it. Then, the creditor has two billing cycles to make things right.
YOUR RIGHTS DURING THE WAIT
During this investigation, you can withhold any payments or fees related to the disputed charge. You have to pay the rest of the bill as agreed, including any finance charges on the amounts you are contesting (the amount may also count against your established credit limit). While this grace period is in force, you can’t be contacted by any collection agencies and your card cannot be cancelled. You can’t be reported as delinquent or have your credit rating affected by this dispute.
If you win your case, the creditor must send a written account to you on the changes, deduct any fees or finance charges, and otherwise make you whole. However, in the sad event that your claim is denied, you will receive a written explanation of why and any documents they have that prove their claim.
There is one last-ditch effort that you can take. If you don’t like the results, you can send a letter to your creditor within ten days, stating your reasons that you believe they are still in error. At that point, all bets are off, and your credit rating may be dinged and collection efforts initiated.
Keep an accurate eye on the time clock during your disputes. If the creditor does not reply within the acceptable limits for replying, you can only be found liable for $50 of the dispute charges.
Essentially, if you have a valid dispute and can back up your claims, you’re in the driver’s seat. Just follow the rules of engagement – registered mail to prove you sent the letter of complaint, copies of your bills (retaining the originals) and timely responses to any questions or inquires.
There is one other possibility – even though your credit card company may deny payment to the merchant or service, they can still try to collect directly from you. It is rare, but it does happen, and can involve collection agencies and other messy factors.
Ultimately, most credit cards and merchants aim to protect the consumer and keep customers happy and returning, and most do a good job of that. Just be aware of your rights for the rare occasions that things go off the rails and you should be able to march confidently forward in your financial dealings.
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