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1992-12-25
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CREDIT CARD BILLING ERRORS
What is a billing error? Federal law says that it's just
about anything the consumer says it is. It's that simple.
The following are plain language examples of billing errors:
A CHARGE FOR A PURCHASE YOU DID NOT MAKE.
EXAMPLE: There's a charge for $54.93 from the Westside
Seafood Restaurant. You're allergic to seafood and
you've never eaten there. This is a billing error.
A CHARGE THAT YOU CANNOT IDENTIFY OR ONE THAT YOU DO
NOT RECALL MAKING.
EXAMPLE: There's a charge for $19.95 listed as
"TRANS#01LACA." You bought a "Home for the Holidays"
compact disk last month for $19.95, but, is this the
charge? You don't know, so, this is a billing error.
AN INCORRECT CHARGE AMOUNT, THAT IS AN OVERCHARGE OR
AN UNDERCHARGE.
EXAMPLE: You bought a book for $9.95. Your statement
shows up and lists the purchase as "Bob's Bookstore,
BOOK, $99.95." This is a billing error.
A POSTING ERROR.
EXAMPLE: You mail in a payment of $100. When your next
statement arrives it shows a credit of $10 instead of
$100. This is a billing error.
A CHARGE FOR AN ITEM NOT DELIVERED AS PROMISED. SUCH
A DELIVERY CAN BE PROMISED EITHER TO YOU OR TO A
PERSON ACTING ON YOUR BEHALF.
EXAMPLE: You purchase a spa from Bubbles Are Us Spas.
You put a $500 deposit on your credit card. They
promise to deliver the spa in two weeks. Three weeks
pass and no spa. Your statement shows up and there's a
$500 charge from Bubbles Are Us Spas. This is a
billing error.
A CHARGE FOR AN ITEM NOT ACCEPTED BY YOU OR BY A
PERSON ACTING ON YOUR BEHALF.
EXAMPLE: Four weeks after purchasing a spa from
Bubbles Are Us Spas, they call and say they will
deliver your spa a week from Friday. Since you'll be
gone on vacation, you arrange to have your brother
there to accept delivery. Friday comes and the spa
arrives as scheduled. Your brother finds a large
scratch in the spa and refuses delivery. Your next
statement shows up and there's a $1500 charge from
Bubbles Are Us Spas. This is a billing error.
IF YOUR STATEMENT HAS ARITHMETIC ERRORS, INCLUDING
PRICES AND COMPUTATION OF FINANCE CHARGES, LATE FEES,
OVER LIMIT FEES, DEBITS, CREDITS, ETC., THIS IS A
BILLING ERROR.
IF YOUR STATEMENT IS NOT MAILED TO YOUR CURRENT
ADDRESS, AND, YOU NOTIFIED THE CREDIT CARD ISSUER, IN
WRITING, WITHIN 20 DAYS OF THE CLOSING DATE OF YOUR
STATEMENT, THIS IS A BILLING ERROR. THIS IS IMPORTANT,
ESPECIALLY IF THEIR ERROR RESULTS IN ADDITIONAL
INTEREST AND LATE FEES.
The procedure for disputing a billing error is fairly easy.
First, you must file your complaint, within 60 days of the
statement closing date that is on the statement on which the
billing error in question occurred. Please note, this 60
days is from the close of your statement date, not, 60 days
after you receive your bill. You must send your complaint,
in writing, to the address given on your monthly statement
for this purpose. This address is usually listed on the
front of your statement. Many credit card companies will
label this address with small, hard-to-read print because
they don't want you to complain.
When you file your written inquiry, you must give the
following information:
Your name and account number.
The exact dollar amount of the suspected error.
Describe the suspected error and explain, if
you can, why you believe an error exists.
If you are unsure about a statement entry,
describe that entry and state that you need
information to clarify the item.
This information is usually listed on the back of your
monthly statement under the section entitled "Billing Rights
Summary."
When you file a complaint, do not write it on the statement
or payment stub; this is not a legally acceptable method and
the credit card company can ignore the complaint. You must
draft a letter, which can be brief.
EXAMPLE: "On my April 15, 1992 statement, the amount
billed for the item listed under reference number 05679375
is incorrect. The amount, which is listed as $539.90 should
be $53.99. Please investigate."
You should always, repeat always, mail your letter via
Certified Mail ($1 as of 9/92) and request a Return Receipt
($1 as of 9/92). Also, NEVER send original documents, always
keep your originals and send photocopies.
After the credit card company receives your inquiry, they
have 30 days in which to investigate and answer your
complaint. If they cannot do so within the 30 day time
limit, they must notify you in writing acknowledging receipt
of your complaint.
After such notification, the credit card company then must
investigate and answer your complaint before two complete
billing cycles lapse. Federal law imposes a 90-day limit on
the complaint process. So, the entire complaint process
should never take more than 90 days. When the credit card
company completes their investigation, they are required to
take one of the following two actions:
#1. If the statement is in error, they must make
the appropriate correction(s), including
crediting of finance charges and late fees
involved, if any. Also, they must send the
credit card holder notification of such
corrections, including an explanation of any
adjustments to amounts in dispute.
#2. If the statement is correct, they must send you
an explanation or clarification of the item(s)
in question. If the credit card holder so
requests, documentation substantiating the
credit card company's claim must be provided to
the consumer.
In disputes involving items that were not
delivered as agreed between the credit card
holder and the merchant account holder, the
credit card issuer, must prove, as part of
their investigation that the goods in fact were
delivered as agreed. Also, the credit card
issuer must provide the credit card holder with
a statement of such determination. Failure on
the part of the credit card issuer to do
either, is substantiation of the credit card
holder's billing error claim.
Suppose that after complaining, your billing error is not
resolved. "Not resolved" means the credit card company says
they are right and you are wrong, but, you still feel you
are right. Well, you can continue to complain, but, if the
credit card company has followed the letter of the law, it's
a closed matter where the law is concerned. Except, if you
respond to the credit card issuer within 10 days stating
that the amount is still in dispute, they cannot report your
account as delinquent to a credit reporting agency. But,
they can come after you for payment of the amount. Again, if
they complied with the letter of the law, it's a done deal!
But, what if they don't comply with the letter of the law?
What if they fail to resolve the issue within 30 days after
failing to send an acknowledgement of your written
complaint? What if after 120 days of receiving and
acknowledging your written complaint, the credit card issuer
fails to respond?
You win, that's what! Federal law provides that if a credit
card issuer fails to respond to a properly filed complaint
in the manner set forth by law, you win the dispute. The law
does, however, set a $50 limit on the penalty that may be
imposed on the credit card issuer for failing to investigate
a claim in a timely fashion.
This means that if the disputed amount is $42.93, you owe
nothing. If the disputed amount is $64, you are only liable
for $14 ($64 - $50). So, as you can see, it pays to
complain.
If it was, in fact, a valid charge, you're ahead $50. If the
charge was in error, when the credit card issuer finally
gets around to fixing it, you'll receive a credit for the
entire amount, which is in this example, $64.
Who has the burden of proof in a billing error dispute? The
credit card issuer does, not you! If you the consumer
believes there is a billing error on your statement, the
credit card issuer must prove that they are right and that
you are wrong. The law, in essence, places no burden of
proof on the consumer.
How does the credit card issuer prove that they are right?
They do this by conducting what's called a "reasonable
investigation." A reasonable investigation is commonly
regarded as a review of the consumer's complaint and all
pertinent documents, written or verbal contact with the
merchant who is the subject of the complaint, and, written
or verbal contact with the consumer.
One important point to remember: If the credit card company
properly investigates your claim and decides that they are
right and you are wrong, they will take the necessary steps
to collect the disputed amount. This can consist of
including the disputed amounts in the account balance and
posting any payments made to that balance.
A credit card issuer also may report the delinquent payment
to a credit reporting agency, such as TRW, Equifax, or
TransUnion. They must, however, report that the delinquent
amount is "in dispute" when doing so. At the same time, the
credit card issuer must inform the credit card holder of the
name and address of each credit reporting agency to whom the
delinquent information was given.
A credit card issuer may not restrict or close a credit card
holder's account before issuing a written answer to a credit
card holder's complaint. However, if the credit card issuer
properly investigates the complaint and sends a written
response, the consumer should be prepared to have their
account restricted or closed if they choose not to pay up.
If the credit card company follows the letter of the law and
the consumer still refuses to pay their bill, the credit
card company is under no legal or moral obligation to
continue to do business with the consumer.
The next section called "stopping payments" will explain how
to stop or "undue" a charge from being posted to your credit
card. It's important to mention that at this point because a
knowledge of both "billing disputes" and "stop payment"
procedures are two of the most powerful means of protection
available to consumers. There are, however, two major
differences between the two with which you should be
familiar.
In the case of billing disputes, there is a 60-day time
limit in which to file complaints. On the other hand, stop
payments have a geographical and dollar amount limitation.
To stop payment on a purchase, it must have been made within
100 miles of your credit card statement mailing address,
and, the charge must be for more than $50.
These two provisions of the law ensure that you will always
prevail if you have a valid complaint. In situations where
filing a billing dispute may not help, ordering a ■good
faith■ stop payment may, and vice versa.
THE "60-DAY" STOP PAYMENT (Disguised as a billing
error dispute): You have 60 days from the mailing date
of your statement to file a complaint. There is a $50
limit of liability for the credit card issuer. But,
there are no geographical limitations. The credit card
issuer cannot charge the credit card holder for making
a 60 day stop payment.
* * * End of CREDIT CARD BILLING ERRORS * * *