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By Lucy Lazarony, Bankrate.com
Don't you just hate it when you buy a product and
bring it home, only to discover the product is damaged or poorly
made?
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.
Just a few catches
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
stop a credit card payment. 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.Check out your options.
Shop for rates
before you borrow.
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."
Eager to please
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."
Make the law work for you
To get the Fair Credit Billing Act to work for you, here's what
you need to do:
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.
Fully document your case. 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.
Make sure it gets there. 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 payment address.
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 paid.
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