This is How to Dispute a Charge on Your Credit Card

I thought as finance professional I would offer some advice about how to deal with disputing credit card charges. This is not as simple of a process that some people might say it is. There are a lot of variables that do not even really deal with the case. Sometimes you might have a representative who does not know what they are doing or a company that blatantly does not tell the truth in a dispute case. The credit card company that you are dealing with can also have a bearing on things. I have done various things in finance, but have never worked in disputes. I do have various friends who have worked and managed in the billing disputes department of several credit card companies and will share the wealth of their knowledge. Hopefully this information will help the reader.

When you have a credit card or debit card with a Visa or MasterCard logo you have various rights as a consumer. One of these rights is the right to dispute fraudulent charges. You also can dispute charges for products that do not work or are misrepresented by the people you buy them from. You will often have a much easier time with fraudulent charges than if you have any type of problem with a product that you do not want or does not work.

The guidelines that the companies are supposed to use (pun intended) is called The Fair Credit Billing Act. The basics of the law is that you have a right to dispute any charge (valid or not and some people take advantage of it) that you believe is in error. The issuer of the credit card that you used for the purchased is required to complete "a reasonable investigation". The company and individuals that you deal with often determine how reasonable that investigation is. While this is occurring you do not have to make payments on the amount that is in dispute and finance charges will not accrue on those charges even if the investigation takes several months to deal with. The most basic thing the protection encompasses are items that were poor quality, damaged, or incorrectly billed items.

All credit card companies will require the consumer to first try to contact and resolve their issues with the merchant before initiating the dispute process. Many people will tell you that if you don't get your way with the representative that you speak with to ask for a supervisor. It is true that a supervisor can often do more than the person that typically answers you call. The thing you need to keep in mind is the pay people who answer the phone to assist the customers that call. They are not there to hand off every call to a manager when the customer does not get their way.

Some banks will not even transfer you to a supervisor if you are in the wrong, being belligerent, or things of that nature. Some groups of phone representatives can also be pretty creative and will have an associate that does the same job get on the phone and claim to be a supervisor. I have personally seen this in my numerous years in the banking and finance industry. Whether you talk to a manager or not you want to make note of the various calls you make to the companies once you know there will be a problem. This starts with the company that you are disputing the charge from and your credit card company. At a minimum you want to get the name of the person that you speak to. Some credit card company reps will tell you they are not allowed to give their last names. This can be true depending on the company. I know that Bank of America lets its reps give their full name (some may use an alias and they are not required to tell you if they are using one). Departments of Discover card that I have spoken to have told me they are not allowed to give their last names. Some people try to record their conversations with the companies. The company can record your conversation, but you recording them will depend on the state you live in as to whether or not it will hold up. Some people will ask the representative if they can record them. I never saw a problem with it, but when I collected for MBNA I was told to hang up as soon as I hear the record or to tell them I can't authorize my permission. Again each company probably has a different policy.

If talking to the merchant and credit card issuer does nothing you will need to start a formal dispute. Some companies will let you begin the basic process by phone and others will require you to send in writing. This needs to be done within 60 days from the date of the charge. Some card companies will tell you 30 its 60 and you may want to require signature confirmation. You also want to give a detailed reason of why you are disputing the charge and include any relevant documents. You can often fax them in or mail them. I would call the company first in order to insure you are sending or faxing the information to the right place.

The Fair Credit Billing Act does have some technical issues that not all companies follow, but can. First off the charge needs to be for $50. It is supposed to also be in your home state or 100 miles from your home, but I have not heard of that being enforced. I have never heard of this being enforced. In cases of fraud you are legally liable for the first $50, but again I have not heard of any company holding a consumer to that. There are too many companies around for a company to try that with a consumer. Fraud is very different than a dispute, but they often involve each other. I am just going to focus on a dispute here, but it is very possible that you will end up speaking to fraud in your process with various companies.

Like I said there are so many things that someone can dispute a charge over it can be overwhelming. I thought I would focus on some that are very likely to happen as that would be the most beneficial to the reader. Some are much more basic than others. If a credit card company charges you a finance charge twice and it is clearly a computer error on their side it is very unlikely you will need to dispute it. The company will often find that and fix it themselves.

One of the most common things that happen is when you get charged for something you did not intend to. This often happens on the internet. I have had this occur personally. I was ordering ink and somehow or another I got signed up for a trial membership to some club that was like $29.99 a month. I never clicked or agreed to anything so I was confident there would not be an issue. The company credited my account and I did not have to dispute it with the company. This happens more than you think and many times you will have to dispute it. If the consumer just does not pay attention, like with freecreditreport.com, of forgets to cancel a membership during the free period you should be denied your claim. You might get lucky with either the merchant or company, but there is no guarantee.

Another common example is a defective product. This could be a camera that does not work, a toy that did not come with all the pieces or something that was not was it claimed to be or what you ordered ( like a dress in the wrong color). A friend of mine went through an example of this a few months ago when he bought a guitar at a pawn shop that turned out to be a fake. It was a replica Ibanez Jem that was being offered at a very good discount. It did not mention that it was any type of "replica', "tribute", or copy and probably was not aware of it. My friend bought it for $550. This is a pretty low price of a great condition Jem made in Japan that was hardly used. As soon as he got it we believed it to be a fake. Certain things about it were just not right including the color of the hardware. I was not an expert since I am personally play ESP/LTD guitars so we took it to a music store and the guy told us it was a fake. It was a pretty nice one but still and all a fake and was probably worth about $400. In this case my friend did not get a horrible deal as far as what he got, but he bought it believing it to be an Ibanez Jem. He then disputed it since he paid for it by a credit card. The merchant did have a sign in his store that said "all sales are final". I informed my friend that under the Fair Credit Billing Act he had protection because "fraudulent and misrepresented items" are often covered. This again will depend on the merchant, but in the case of a fake being sold a consumer will rarely lose.

Obviously the merchant did not want to be out of the sale or the cash that he paid for the guitar so he kept trying to counter dispute it. He sent in the pictures showing the signs that he clearly has in his store about no refunds. If my friend had changed his mind or received the same guitar as a present the next day he would not have had much recourse, but the fact that the item was a fake is what helped him. He sent in the opinion from the music store owner who offered to speak to someone at the credit card company. He also contacted Ibanez customer service who made the same offer for my friend. He kept the guitar this whole time as the merchant would not take it back. He did get the temporary credit, but the initial dispute was ruled in the merchant's favor because of the "no refunds" policy. The dispute then went to a dispute review area where they take a second look at disputes that are initially declined. This is typically the last step taken before arbitration over the matter between the consumer and the merchant. They actually turned it down a second time and then my friend was able to get a supervisor on the phone and explain the situation to them. I was there and, after receiving permission from my friend to speak on his behalf, I informed the manager of my background and that based on the Fair Credit Billing Act this was not a valid charge since the merchandise was fake. The company, which was Discover, has a horrible reputation with being more on the side of the merchant with disputes basically kept trying to pass the buck and advised my friend to get the authorities involved since it was a fraudulent item and they could get their money back for him. Finally after a couple letters and an intelligent manager this was resolved. It was also stated that it should have been decided in his favor the first time because the guitar was fake. In all fairness to the merchant he did not know it was a fake. He actually called the police next time the same guy came in to sell him a guitar. It appears that the person has sold a number of Gibson, Ibanez, and Fender guitars to pawn shops in the area. He also sold some on eBay and a few through Craigslist. The problem is they are not junk. They were quality guitars, so many people would have been fooled by them. Matter of fact some of them were made in factories were the real guitars were made in China. Cheaper parts were often used with a few good parts.

Another common dispute is with travel companies and timeshare sales. The Better Business Bureau and Fair Trade Commission both have released statements that travel related fraud is on the rise nationwide. Sometimes it is a scam but unreasonable requirements can also be the case. A travel club scam is a very common one. This is you pay money to belong to a club were you will get discounts on airfare, rental cars, cruises, hotel stays and resort stays. Some companies are very legit, but many just charge you for doing what you could do yourself looking around at places like expedia.com. Some of these companies will even have clauses in their contacts that say "this contract cannot be cancelled" and many times that is the angle that will be taken with the credit card issuer. These are really complex and come down to the quality of the goods. If the company is just charging for essentially something you could do on your own, but portraying that they will get you a better deal you have a chance. There are a variety of companies in New Jersey doing business under various names like DreamWorks vacation club, Blue Water Vacation Club Company, Modern Destinations Unlimited, and Bentley Travel that have been sued by the Attorney General of that state because of various consumer violations. The state also said the clause about the agreement not being able to be cancelled was not valid under state consumer law known as a rescission period. They have also claimed to have A+ rating with the BBB when they actually were not rated that high. I have talked to numerous people involved in this because I went on a tour and decided not to buy. I did never get my free gift I was promised and that is how I got to know about it. I have talked to numerous people and found that Discover Card and Bank of America have not been very friendly to the consumer over the dispute. Capital One, Chase, and Citibank have often been more consumer friendly and issued a "chargeback" against the merchant were they company takes money from the merchant's account to credit to the consumer's account. They use the reason of fraud by deception as a reason. I will include some links to the problems with these New Jersey companies at the end of the article. My understanding in general is that Discover Card is the worst company dealing with disputes. Many people are still trying to get their money back. Lucky for me I did not buy nor did I send the "deposit" in for my supposedly free gift. I would caution anyone from signing any agreement with a no rescind clause in it. You might not get any help with the credit card company even if the merchandise is bad or the company is shady.

The Fair Credit Billing Act is there to protect consumers but many call center reps at banks are there for their incentive. Many such people receive their incentive (bonus) based on how fast they either get through calls or make decisions. It is always easier to decline something than do due diligence and help the customer. This is why there are often areas that handle further reviews. The main thing is do your homework and if something seems too good to be true it probably is. Another thing you can do is when you talk to a merchant let them know that you know about the dispute process and that it will cost them more money that it will you to dispute it. It can especially cost them lost time in having to retrieve documents. Most reputable companies would rather just issue a refund than deal with the hassle of a long going dispute. Companies like travel club and timeshare companies often will fight the dispute because they know what they are selling is often not worth it. For example, you can usually buy a timeshare off of eBay for half of what the company would sell it for from someone who was bullied into buying it. Most timeshare companies do at least give a ten day rescission period, but if it is one day past they will fight tooth and nail to keep from giving you a refund even if you prove you were told things that were not true. I know of people making tape recordings of offers they were made that turned out not to be true and Discover Card still declined them. Basically these companies keep moving around and changing their names. With all that information I am shocked that the credit card companies are denying the disputes but they are.

Sources

http://www.frbsf.org/publications/consumer/creditrights.html

www.bbb.org

www.ftc.gov

Some interesting reading on vacation club scams like the one in New Jersey

http://www.nbc40.net/view_story.php?id=13114

http://www.myfoxny.com/dpp/news/shame/090611_Vacation_Club_Lawsuit

http://www.myfoxny.com/dpp/news/shame/090715_Vacation_Club_Lawsuit_2

http://www.myfoxny.com/dpp/news/shame/091209-Vacation-Club-Lawsuit-3