15 U.S.C §§1661, 1661i, and 1640 (e)
Under Federal laws 15 U.S.C §§1661, 1661i, and 1640 (e) and in 12 Code of Federal Regulations §§226.12 (c) and 226.12 you have a right to dispute charges on your credit card account. Visa, MasterCard, Discover, American Express are usually issued by a bank. Bank agrees to follow Visa, MasterCard, Discover and American Express regulations, but these regulations cannot take away any of your rights under federal and state laws. Merchant must follow certain guideline, including maintains a reserve account in the merchant bank to cover charge backs by unhappy customers. Under these laws, if you have any issue described below, you may address any inquiries to credit issuer. The address is located on the back of your monthly credit card statement.
In a credit transaction, a merchant takes your credit card, prints a receipt and deposits it with his "merchant bank." The merchant bank pays the merchant and sends the receipt to your issuing bank. Your issuing bank then pays the merchant bank and sends you a "statement" which shows all of your transactions during the period. There are two categories recognized by federal and state law under which you can resist payment, and these are known as "billing errors" and "claims and defenses". Your rights are different under each.
Types of billing errors
The types of "billing errors" include:
- Charges you did not authorize
- Charges for undelivered goods or services
- Charges for goods or services different from what was represented or of the wrong quantity
- Charges for goods that were not timely delivered
If you believe that was a billing error mentioned above, you must, within 60 days following the date of the first statement on which the charge appears to not the date you made the charge; the date of the issuance of the statement appears on the fact of the statement, write a letter to your bank setting forth in specific detail why you believe there was an error in the charge. Restrictions on "claims and defenses" chargeback rights include: Under federal laws, you have up to one year from the date of the statement (far longer than the 60 day limit for asserting "billing errors") to notify your bank in
Writing of claims and defenses
However, unlike billing errors, you must meet four additional conditions:
- The disputed amount must be over $50
- You cannot dispute a charge under "claims and defenses" if you notify your bank after you have already paid your credit card amount down to zero. However, if you have paid off only a portion of your credit card bill, you can still resist payment on the unpaid balance for the charge you are disputing. Unlike "billing errors," whatever you have paid the credit card issuer after the charge appears on your statement which brings the remaining balance below the cost of the charge you are disputing, is not recoverable
- The transaction cannot be with a merchant who is located more than 100 miles from your home or outside your state of residence. For example, suppose you go to New York for a vacation and while there you purchase an expensive vase using your credit card. When you get back to your home in Vermont, you open the box the merchant gave you and find that it not contains what you purchase. If you notify your bank within 60 days you can qualify for a charge back under your "billing errors" rights. But if you wait for more than 60 days you will not be eligible for a charge back under your "claims and defenses" rights because the merchant is outside of your state of residence (and more than 100 from your home)for example In California and in some other states, transactions on the telephone are considered to take place at your home and not at the merchant's place of business, no matter who placed the call. Similarly, in those states, if you fill out an order form which is to be sent to the merchant, and agree to purchase by writing down your credit card account number on the order form, the transaction also occurs in your home.
- Unlike "billing errors," you must make a good faith effort to obtain a refund or credit from the merchant before contesting the charge with the bank. Sending a letter to the merchant or signing a notice of cancellation which is sent to the merchant would suffice as a good faith attempt to resolve the matter with the merchant.