Dispute Credit Card Billing
I’ve successfully disputed a handful of credit card charges over the years. What typically starts the dispute is a charge on my monthly statement that differs from the purchase receipt. Or, a couple of times, I didn’t recognize the name of a vendor on my statement as any company from which I’ve purchased something over the past month. That’s particularly alarming because it could indicate fraud, so immediate follow-up is important.
Watch Out for Unscrupulous Vendors That Steal a Dollar or Two from Many Customers
Several times I’ve seen a statement charge that’s a buck or two more than the receipted charge. (Never happens the other way.) I’m the paranoid sort, but my guess on these types of ‘errors’ is that the vendor has a habit of mini-fraud: add a buck or two to many customer charges, and they add up to big money for the merchant. Many customers don’t keep the receipt so will never notice. I think each time this has happened to me it’s been a charge at a restaurant.
I’ve found that credit card issuers don’t want to waste time resolving a $1 dispute. The card issuer will often immediately refund the $1 and be done with it. The crooked merchant keeps the $1 overcharge and the credit card issuer just eats the cost. But surely the credit card company logs such disputes by merchant, and a merchant that accumulates an extraordinary number of small overcharges, disputed by customers, may end up in seriously hot water.
Mysterious Vendor Charges and Large Overcharges
For me, the most common explanation for charges on my statement from vendors I don’t recognize is that the seller’s name that appears on the statement is nothing like the vendor’s public name. If you track your spending and keep receipts, maybe you can figure out what’s happened by matching up the dollar amount of the charge to your other records. If not, fraud could be the answer, so it’s a good idea to call your card issuer right away if you see a charge you don’t recognize on your statement.
If you did make a purchase during the statement cycle from a vendor listed on your monthly statement but the amount charged is much more than you expected, first try to find the receipt. If it shows a charge amount less than the statement, you must dispute the charge. To let it go is giving money away!
Should You Withhold Payment When Disputing a Credit Card Charge?
But now comes the big question. You’re decided officially to dispute a charge on your monthly statement. Can, and should, you withhold payment?
The answers are “yes,” and “I don’t recommend it.”
The Right to Withhold Payment
The U.S. Fair Credit Billing Act grants consumers the right to withhold payment during an investigation of a dispute claim. You do have to pay any and all parts of your credit card charges not in question, as normal. The creditor is not allowed to mess with your credit rating, report you as delinquent, accelerate your debt, or restrict or close your account because your bill is in dispute or you have used your Fair Credit Billing Act rights. And creditors can’t deny you credit just because you have a history of charge disputes.
Keep in mind that, if you have a problem with the quality of whatever you purchased, that problem is not a “billing error,” so the right to withhold payment does not apply. Don’t pay the credit card issuer, and it’s the same as not paying for any other reason. Expect finance charges and possibly late fees and a credit score ding. According to the FTC, billing errors include:
- Unauthorized charges
- Charges that list the wrong date or amount
- Charges for goods and services you didn’t accept or that weren’t delivered as agreed
- Math errors
- Failure to post payments and other credits, like returns
- Failure to send bills to your current address—assuming the creditor has your change of address, in writing, at least 20 days before the billing period ends
- Charges for which you ask for an explanation or written proof of purchase, along with a claimed error or request for clarification.
Before You Withhold Payment
Withholding payment might feel like the right thing to do if you think you’ve been victimized, but doing so can come back to bite you. For example:
- If the dispute investigation concludes that you’re wrong—your dispute has no merit—you’ll owe interest on the amount you withheld (in addition of course to the entirety of the formerly disputed charge).
- Once the dispute is concluded, your creditor has the right to initiate collection procedures.
- The disputed amount reduces your credit limit. This might matter if you routinely come close to reaching your account’s limit—resulting in overlimit charges—or are shopping for additional credit, like a mortgage.
- Rights under the Fair Credit Reporting Act apply to consumers, not businesses.
If you pay a disputed charge, when the dispute is resolved in your favor, the credit card issuer will give you a credit. So you will get your money back. A creditor must resolve a dispute within two billing cycles, but no more than 90 days, after receiving your dispute notice (which you can probably do online—log into your account and look around for a link).
When to Withhold Payment
I would consider withholding payment if a few criteria were met:
- I were absolutely, positively sure I did not owe the disputed charge (and the older I get, the fewer things there are about which I’m absolutely, positively sure).
- The dollar amount were significant—say $250 or more.
- The temporary reduction in my credit limit by the amount disputed wouldn’t hurt me in any way.
Otherwise, I’d pay, file a dispute, and look forward to a future credit!
Have you ever withheld payment on credit card bill? How’d it work out?