I Got Duped! Dealing With Credit Card and Merchant Disputes

By Nora Dunn. Last updated 22 June 2009. 14 comments

So you bought an awesome thing-a-ma-jiggy or service with your credit card. But when you got it home you discovered the item doesn't work, the service was a heist, or the mail-order loot never arrived or it was the wrong item entirely. And now the merchant is not co-operating. Are you still required to pay off the item charged to your credit card?

The simple answer to this question is "no". However there are some hoops to jump through before you can ignore paying off that item and expect not to deal with ensuing interest charges, fees, and ultimately credit score problems.

Federal law actually gives you the right to withhold credit card payment for defective products and services. Here are the rules:

  • You must have a legitimate complaint about the item or service.
  • You must make a good-faith effort to resolve the problem with the merchant directly. They must have refused to replace, repair, or otherwise resolve your problem (and keeping documented records of these attempts is highly recommended).
  • You must explain to the credit card company in writing what the situation is and your intentions of withholding payment on the item. Keep copies of all correspondence.
  • You can only withhold payment on the cost of the item (you can't get off the entire month's charges scott-free).
  • The item or service must be worth more than $50.
  • You must have purchased the loot in your home state or within 100 miles of your mailing address. (This gets sticky for mail ordered-goods, since the warehouse address may be within your state or 100-mile limit, but the merchant's processing office may not be).


Word to the Wise: Double Check Your Credit File

Although you are federally given the right to withhold payment under the above circumstances, the credit card issuer may still (negligently) file a report to the credit bureau regarding the outstanding balance, or fail to report that you disputed the charge or that the dispute was eventually resolved.

So check your credit report to ensure this information is correct and up to date once you have resolved a dispute.

Despite the red tape to sift through, this is yet another reason why using credit cards for purchases can actually be a good thing when done responsibly and diligently. Hopefully you will never have to endure the process above, but at least it is good to have options.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.

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Guest's picture
djb

"You must have purchased the loot in your home state or within 100 miles of your mailing address. (This gets sticky for mail ordered-goods, since the warehouse address may be within your state or 100-mile limit, but the merchant's processing office may not be)."

Absolutely not the case, at least here in Canada. I live in Saskatoon and have successfully disputed charges in Vancouver, BC and Monterey, California.

Nora Dunn's picture

Awesome! I'm glad to hear that not all disputes are a battle tooth and nail!

Just another reason why Canada rocks (from one Canadian to another)...

(smiles) 

Philip Brewer's picture

The mile limit is in the law, but most credit card companies will charge a merchant back on a dispute regardless of the distance--they just aren't required to by law.

After all, the card-holder is the customer, and it's generally worth trying to keep the customer happy--especially when it doesn't cost the company anything. (The merchant is the one who's out-of-pocket.)

Guest's picture
Phil Baker-Alton, IL

1-2-08

Hi Nora and Happy New Year,

I got a tri-fold flier in the mail boasting of 0% APR for 12 months, then 9.9%. I have exactly two existing cards, a MC and Discover, and figured I'd bal tfr the Disc Card's $4xx balance (at 11.9%) to this new card thingie.

I went to the '60SecondPremier.com', put in my 'confirmation code' and was instantly 1)'approved' and 2)made aware of an incredible array of fees, including one I've never heard of:
something like 'Process' or 'Program' (?) Fee of $90-something!

My question, as there doesn't seem to be a live-attended line for me to try a dissent--what do I do? Do I write them? Do I write L. Madigan, IL Attny General? Am I protected by simply not pulling back the sticker on card to activate it? First Premier Bank is in S.D., CST, and they're 'not up yet' at 8am.

You got a cool blog, the baby's pic is cool, and I hope you can share wisdom as I feel a bit outmatched.

Thank you,
phil baker

Nora Dunn's picture

Hi Phil,

I'm not entirely sure what your rights are around this one, but it is my feeling that if you don't activate the card, you won't be liable for the fees. 

However, they may have something on you if you clicked the ominous "I read & understand the Terms & Conditions" box when you applied online, in which the fee disclosure information may have been buried.

Does anybody else have some advice? 

Guest's picture
Screwed

I feel your pain 110%, thats why I have put together a site/blog, where we all can come together and find a way to get our just due,rather than just wining about it...come by and say a few words and repost what you have here and we can get a dialog started..

Screwed

Guest's picture
Veronica

Resently my husband and I placed and order to have carpet installed and right away the carpet company charged the credit card. After over a month still no carpet installation and talking with the carpet company I was told that they did not order the carpet because they needed to order in bulk. Every week I keep calling asking then was finaly told that the carpet was in but they had no installers and anothe week passed and still no appointment to install. The charge was disputed and now the credit card company credited the account back $1,431.16 of the original bill of $1,758.72 minus the restocking fee of 35% that the carpet company charges. What can we do this is so very unfair that we have to be stuck with paying something that we never received. Veronica

Guest's picture
Guest

This is just a follow up question concerning this credit card company and the blog from above. Was there any follow up on your part, and have you had any more complaints about this card, I too got a letter, but now; am very afraid to pursue the issue on obtaining a new card, any suggestions on someone with less than perfect credit. Thanks, and I love the info.

Guest's picture
Guest

Do you know if there is a time limit in which to disupute a charge?

Thank you

Guest's picture
Andrew Casler

Hi,
I'm writing an article about the pitfalls of consumer credit for a journalism course at Ithaca College. Undoubtedly, my story would benefit from an interview with a family or individual who has had interest rates rise on their credit cards without missing payments and/or have found themselves in an car loan or mortgage with unreasonable terms such as high interest rates and other poor terms. This is going to be a very and long detailed article, so I'll appreciate any sources or information that people can provide.

Thanks for your time, I would greatly appreciate a reply,
Andrew Casler

Acasler1@ithaca.edu
Home:(607)375-4686

Guest's picture
Ali

I bought a tablet in Jan 08 that arrived defective. After three rounds of servicing during which repairs were a) not attempted b) one of two completed and c) system was returned BROKEN and several attempts at arranging some sort of compensation or replacement, I filed a dispute with my cc company. After a fourth round of servicing and unacceptable condition upon return (now SIX MONTHS after purchase), I was finally offered and provided a replacement systems under the assurrance that any decision by my cc company was private and NOT a condition on Gateway's obligation to provide a replacement system. Only after that did my cc company decide to award me a credit for the service not provided.

Six months later the Replacement is in for a minor repair and Gateway calls demanding a Proof of Purchase (not provided for replacement systems). They accused me of fraud, called me a liar, bullied me, and then had my tablet torn down for parts without giving me adequate time to defend myself.

Gateway claims the credit for service was a refund for the original defective product, which is not true. The dispute was over service, not the product. How can you sell a product but not be expected to provide, or be liable for, the service included in the limited warranty which was included with the purchase of the product?

Gateway claims the service was never bought, therefore I could not have received credit for it. However, the 90day limited warranty included in the product price clearly states that technical support and any service provided by Gateway is governed under the warranty.

The warranty was not only breached multiple times, but Gateway stole and destroyed my property, and my 'credit' is unusable because the cc company is no longer Gateway's preferred lender.

I'm so confused, because my cc company says that the credit for service did not void Gateway's obligation to replace the defective product, no matter the amount, but Gateway insists they provided me a refund, even though I never had an obligation to pay Gateway in the first place.

I now have no tablet and a 'credit' I can't use.

I suppose my question is: if service is included with the purchase of a product, and the service is not provided so you file a dispute, does that mean that you have to return the product if you win the dispute? Does a credit for service mean the company is not obligated to repair or replace the product?

My cc company says absolutely not, but the computer company refused to return my tablet and destroyed it.

Guest's picture
Guest

You are right they are a complete rip off. this is not credit it's fraud on the part of this rip off bank. they should be shut down.

Guest's picture
Guest

i too just got a 60sec premier card-real small it says if approved of 250-credit limit-you will have a credit limit of 70 bux!!!!!! so its 180-to accept a credit card?????