As you probably know, taking your credit cards with you on your dive vacation can make traveling easier. You don’t have to carry as much cash or get foreign currency you may not use, you’ll often enjoy better exchange rates than you would get on your own, and you’ll have a record of all your purchases. And credit cards protect you against merchant billing errors, poor quality merchandise and fraud. Or do they?
• You purchase a fancy new dive watch with your credit card while on your trip to the Caribbean and ask for it to be shipped to your home but it never arrives. Are you covered?
• You accidentally leave your credit card at that cute beachside restaurant, but you get it back later the same day. A month later when your credit card bill arrives you notice several charges you don’t remember making. Are you liable?
• Your hotel room is not what you were led to expect when you arrive and you change hotels. But you secured the first room with a credit card. Will you have to pay that deposit?
Credit card companies will often refund these disputed charges, but there are steps you should take to get the results you want.
Know Your Rights
Credit card purchases are protected under the Fair Credit Billing Act. This law gives the consumer the right to dispute a charge and withhold payment when they find an error on their credit card statement and, in some instances, when they are unhappy with the service or merchandise received. But what you can and cannot dispute under the law may surprise you.
First, the Fair Credit Billing Act applies only to credit cards. Your debit card is not protected. This is often confusing to consumers whose debit cards have a Visa or MasterCard logo on them.
Second, the Fair Credit Billing Act primarily protects you against billing errors. The law defines a wide range of card problems as billing errors, including a charge for something you didn’t buy, a charge with the wrong date or amount, and a charge for goods and services that you didn’t receive.
Additionally, any charge that you don’t recognize can be treated as a billing error. Be aware, though, that the most common reason for this type of inquiry is caused when a merchant uses its corporate name rather than its local storefront name for billing purposes. This is not a disputable error. Other billing errors, though, are fair game, such as mathematical errors, credits that aren’t posted and debits that are posted twice.
Beyond billing errors, disputes can be initiated because the merchant did not deliver the goods or services that were bargained for, they were delivered in the wrong quantity, or they were delivered unreasonably late and the merchant refuses to issue a refund.
But there is a catch. If the merchant is anyone other than your credit card issuer, for you to be protected under the Fair Credit Billing Act, the sale must be for more than $50 and have taken place in your home state or within 100 miles of your home address. So technically, anyway, merchandise and services purchased while traveling abroad are not covered. The good news, though, is that most credit card companies ignore that little caveat in the interests of keeping you happy and using your card.
The law does not cover cases in which you change your mind about a purchase and the merchant has a “no refund” policy or where local law does not require giving a refund, or the merchandise you buy turns out to be worth less than you paid. If this happens, you should try to make the case that the item was not delivered as agreed and not accepted by you.
Dealing With Dubious Charges
Probably the most common worry for travelers is the unauthorized use of their card from either the card or the card’s information being stolen. Under the law, your obligation for unauthorized use of your credit card is limited to $50. This means that if someone steals your card, your lender can only charge you up to $50 no matter how much the thief has charged. However, that’s per card. So if you have multiple cards taken, it can really add up.
As soon as you know of the unauthorized use of your credit card, you should call the lender to make a report. If you call before any unauthorized charges are made, you won’t even be liable for the $50, since the lender can take steps to cancel your card.
Of course, this will not protect you if you voluntarily and knowingly allowed another person, say a teenager, to use your card and that person goes on a shopping spree topside while you’re taking in some underwater sights.
Start by Contacting the Merchant
OK, now that you know what’s covered, how do you go about disputing a charge? Under the law, you first need to try resolving the dispute with the merchant before you can ask your issuer to stop a credit card payment. In most cases, a simple phone call and the (polite) threat of a dispute will solve the problem before it escalates to an actual dispute.
If possible, take or send the defective merchandise back to the store. Otherwise, call the store and ask for a manager. Keep a paper trail. Take notes of each conversation and be sure to jot down dates, times and the name of the person you talked to.
If the merchant won’t budge, put your complaint in writing. Outline the dispute in a detailed letter to the merchant and send it certified mail. Make copies of the complaint letter. If the matter continues to be unresolved you’ll need that as proof that you tried to resolve the dispute with the merchant.
Navigating the Dispute Process
The next step is to contact your credit card company. 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 (see sidebar). But be warned; the clock starts ticking from the postmark date, not the date you actually received your bill.
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 such as receipts that you may have supporting your position. For goods not delivered, request that the card issuer request proof from the merchant that the item was delivered something with your signature.
Make sure it gets there. Send your letter by certified mail, return receipt requested. Don’t assume it goes to the same address your payment goes to or include it with your payment. Typically there is a separate address for billing inquiries. You’ll find it on the back of your statement.
Once you have raised a dispute, the credit card company is required to investigate and report its findings within 90 days. During this time, your issuer will contact the merchant and get their side of the story.
In many cases, the charge will be canceled. Often a merchant whose billing is challenged will back off rather than risk losing the privilege of accepting business by credit card. If the card company sides with the merchant, you’ll have to pay for the disputed item, plus any finance charges.
Any creditor who fails to follow the settlement procedure may not collect the amount in dispute, or any related finance charges, even if the bill turns out to be correct.
Protection During the Dispute
Some people worry about disputing charges. They think it may affect their credit or they will be unable to use their cards while a dispute is being investigated. The Equal Credit Opportunity Act prohibits creditors from discriminating against credit applicants who exercise their rights under the FCBA. Simply put, you cannot be denied credit because you’ve disputed a charge. In addition, the creditor cannot restrict or close your account, threaten your credit rating or report you as delinquent while your bill is in dispute.
Plus, you can continue to use your card, although the amount in dispute will be counted against your credit line. Be aware that a dispute does not free you from the obligations of paying the remainder of the charges on your card. To keep your account in good standing, you must make a payment to cover any undisputed amount.
So, while the Fair Credit Billing Act does not guarantee you a refund every time you have a problem, and it doesn’t necessarily protect you overseas, it does add a level of safety to your credit card transactions that other forms of currency just can’t offer. And while, hopefully, you’ll never have to file a dispute, if you do, be sure to follow these simple guidelines to preserve your rights under law.
How to Complain Effectively
For a copy of a sample credit card dispute letter, visit
Under the law, you first need to try to resolve the dispute with the merchant before you can ask your issuer to stop a credit card payment. In most cases, a simple phone call and the (polite) threat of a dispute will solve the problem before it escalates to an actual dispute.
Tips for Avoiding and Dealing With Disputes
Avoid problems. Keep your credit cards in a safe place and make sure your card is returned to you after each use. Keep copies of your credit cards and cancellation numbers separate from your wallet.
Keep an eye on your spending. Save receipts and keep track of the places you used your card. When you return from your trip, check your credit card statement against your receipts to ensure unauthorized charges have not been made.
Get a receipt whenever you return something. If you return merchandise by mail or shipper, get a receipt or tracking number. Always require a signature confirming the delivery.
To dispute a bill, move quickly. 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.
Keep your cardholder agreement. This document usually explains the card issuer’s procedure about inquiries and disputes. You’ll also find information on the back of each statement.