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How to dispute fraudulent charges on a business gas card

By

Your Business Credit
Your
Elaine Pofeldt is a journalist whose articles on entrepreneurship and careers have appeared in Fortune, Working Mother, Money and many other publications. She is a former senior editor at Fortune Small Business magazine and an entrepreneur herself, as co-founder of 200kfreelancer.com, a website for independent professionals. She writes "Your Business Credit," a weekly column about small business and credit, for CreditCards.com.

Ask Elaine a question or read her prior answers in the 'Your Business Credit' archive.

Question for the CreditCards.com expert Dear Your Business Credit,
I own a service company in Northern California. My technicians use WEX Inc. (Wright Express) gas cards for fuel purchases. One of our technicians was hit with fraudulent charges in excess of $2,000 (purchased in increments of $200 and $75) in transactions at Southern California gas stations. We are being told by the card issuer that we are responsible for the purchases, that we will need to make the full payments (fraudulent or not) and that they will investigate and rule on our case.

They did not notify us of the fraudulent charges. We noticed the charges on the billing statement. All drivers are required to state current van mileage and then enter a PIN number before the gas pump will allow them to pump gas. The charges stuck out on the billing statement because there was no mileage entered next to the transactions.

We were told by the card issuer that it is impossible to obtain the card information and charge to it without someone physically possessing the card. We filed a police report locally for each fraudulent transaction and completed the card issuer's questionnaire.

Can you tell me if we are legally required to pay for all fraudulent charges now and wait for the card issuer's internal ruling? If we pay now, I am concerned about the issuer's motivation to see this through.  -- Chris

Answer for the CreditCards.com expert Dear Chris,
Handling fraudulent charges can be confusing and, in some cases, mistakes can be costly to the cardholder. It's always smart for business owners to thoroughly check their card statements, as you have.

When I contacted WEX, I was told that you have now resolved this matter with the company, and a spokesman declined to comment on details of your individual account. However, your question is relevant to many users of business credit cards and charge cards.

According to a spokesman at the Federal Trade Commission, both business credit cards and charge cards have some of the same liability protections as consumer cards. Under the regulations that implemented the Truth in Lending Act you can't be held liable for more than $50 in unauthorized charges on a card that has been lost or stolen. (It's best to report any lost or stolen cards or unauthorized use as soon as possible, he added).

However, when it comes to disputing billing errors, you don't necessarily have the same rights with business cards as you do with consumer cards. With a consumer card, if you see a suspect charge on your statement and dispute it within 60 days of the mailing date, the creditor must investigate -- and you can withhold payment for the disputed charge and related charges, such as interest, in the meantime. Your card issuer must share the results of the investigation within two full billing cycles or 90 days after receipt of your notice.

That's not so for business cards, whether they are charge cards or credit cards. While some card issuers may provide these rights voluntarily, it's not mandatory for them to do this under the law, according to the FTC spokesman. You will have to follow the policies under your card agreement in those cases.

That said, you are still not liable for more than $50 in charges resulting from the unauthorized use of your business credit card or business charge card, according to the spokesman.

As a first step in dealing with suspect charges on the statement for a business card, Barbara Meltzer, manager of merchant advisory firm Chargeback Experts, recommends determining what the issuer's policies are. Check your card agreement for information on how disputes must be managed. Typically, card issuers establish black-and-white rules governing disputed charges, including how payments must be handled and policies for investigating them. 

You may also want to call the phone number on your card and speak with the issuer directly. Ask if you will void the right to dispute the charges if you pay the bill, and whether the issuer will report the disputed charges as delinquent to credit bureaus if you don't pay them. "They need to tell him if, by not paying it, his record is going to be affected," Meltzer says.

Bear in mind that if a card issuer says it will report unpaid charges as delinquent (even if they're disputed), your credit rating could suffer. You may also be subject to interest and penalties that could offset any advantage you gain by withholding payment in hopes of motivating the card issuer to investigate. 

Chris, I'm glad your situation got resolved this time. Here's hoping you don't have to worry about disputing charges in the future.

See related: In case of default, business credit cards get personal, 10 ways business credit cards are different, 5 key federal laws help protect credit cardholders

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Published: January 7, 2013


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