How to win a credit card charge-back dispute
Keep good paper records to improve your odds
To Her Credit
Sally Herigstad is a certified public accountant and the author of "Help! I Can't Pay My Bills: Surviving a Financial Crisis" (St. Martin's Press, 2006). She writes "To Her Credit," a weekly reader Q&A column about issues involving women, credit and debt, for CreditCards.com, and also writes regularly for MSN Money, Interest.com and Bankrate.com, and has guested on Martha Stewart Radio and other programs. See her website SallyHerigstad.com
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Dear To Her Credit,
I made a bed and breakfast reservation, but then I canceled
it because I found another, less-expensive B&B nearby. I canceled by phone
months before the stay. I received only a verbal cancellation, no e-mail or
letter verifying the cancellation.
Now I have a charge for more than $700 on my credit card. I
called the merchant, but I can't prove that I canceled the reservation. Can I
do anything? -- Cyndi
With no written documentation, you're stuck with "you
said, they said" at this point. That doesn't mean you should give up and
pay the $700 for services you never received. It only means that getting your
money back will be harder that it would have been if you had asked them for a
cancellation confirmation by mail or by e-mail.
Consumers must always try to resolve a dispute with the
merchant before they ask the credit card company for help. It sounds like
you've made an effort. You may want to try again, in writing this time. When
you do, don't be afraid to appeal to the bed and breakfast's desire for a good
online reputation. Companies definitely read their own reviews on consumer
feedback sites, and they know that one bad review can turn people to the
competition. "No company wants a bad rap on the Internet," says Deborah
McNaughton, president of Professional Credit Counselors.
If the B&B still won't budge, your next step is to
request a charge-back. A charge-back means that your bank removes the charge,
along with any interest charges, from your credit card bill while the item is
You must act promptly, however. McNaughton says, "The Fair Credit Billing Act
allows consumers to dispute charges within 60 days that
the charge appears on their statement." Once the consumer files the
dispute, the bank is required to look into it. "The credit card company
has 30 days to respond, and it must be resolved within two billing cycles and no
more than 90 days," she says.
Technically, the Fair Credit Billing Act of 1975 only covers
transactions made in your home state or within 100 miles of your home. That
would probably rule out vacation reservations. Fortunately, the large banks
have not been sticking to the geographic rules. They should still be willing to
It should go without saying that it's better to dispute the
charges in writing. Send the letter by registered mail, and keep a copy.
You may be able to bolster your case with notes you made at
the time. Do you remember who you talked to at the B&B? Long-distance phone bill records? McNaughton
suggests, "Maybe she can go back and check phone records on the dates she
called for proof."
After you send the facts to the credit card company, it
reviews them and makes a decision. If the bank decides in your favor, the
merchant loses not only the charge amount, but fees for the charge-back. If a
merchant receives too many charge-backs, it may be penalized further by the
On the other hand, if the bank decides you're liable for the
$700 charge, it will reinstate it on your bill. At that point, you can seek
legal help if you want to pursue it. I'd still write the online review for this
bed and breakfast. If nothing else, it will alert other potential customers
that they'd better get written confirmation for any dealings with them.
It's so easy to think we don't need to document something,
especially when it seems so straightforward. I recently had a moving company
deny that it had scheduled my delivery, after I spent the morning looking down
the driveway expecting my household goods any minute. You'd think I'd learn. I
hope you can clear this up and have the charge permanently removed. If not,
this was a very expensive lesson, as well as a cautionary tale for others. We
could all benefit by putting more things in writing. It may be one of the best
ways we can take better care of our credit.
See related: How to dispute a credit card bill with a merchant
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