January 6, 2004
Alberto G. Rojas (914) 378-2434 or
Lauren Hackett (914) 378-2561
About Your Credit-Card Billing Rights
A Consumer Reports investigation finds that billing protection law falls short;
February issue also contains warnings about jewelry appraisals
YONKERS, NY — Since 1975, when shoppers won the right to dispute charges on their credit-card bills, “Pay by credit card”has been a mantra of consumer-finance advice. It’s still wise advice. But the article “Credit Cards: What’s Wrong with this Bill?” in the February 2004 issue of Consumer Reports has found that credit-card issuers sometimes erroneously deny billing errors, leaving consumers to pay hundreds or thousands of dollars in bogus charges.
Consumer Reports’ examination of billing regulations and interviews with Federal Reserve attorneys, regulators, card issuers, and consumers found that dispute rules are confusing, card issuers sometimes skirt them, and many consumers misunderstand the rights that they do and don’t have. Credit-card issuers say they comply with or exceed the regulations to keep cardholders happy so that they’ll use their cards. Merchants complain that card issuers do so to a fault, granting chargebacks too easily because they can dump the cost on retailers.
The good news is that it’s in the credit-card company’s interest to fix most problems fast. It costs at least $25 to process a dispute, so it’s cheaper simply to credit the consumer for small amounts without an investigation. For larger disputes, credit-card issuers also probably weigh whether the consumer will take the matter to court or cut up the card (it can cost up to $200 to replace one consumer). The higher the dispute amount, the more incentive the issuer has to dig in its heels.
Credit-card Billing Myths
Paying by credit card provides greater protection than using a debit card, check, or cash because of the federal Fair Credit Billing Act and Federal Reserve System Regulation Z. These 1970s safeguards established deadlines for investigating, responding to, and resolving complaints about billing errors. But their protections are far from comprehensive. Here are some myths about disputed charges:
(1) You can get a refund for a poor-quality product. In fact, the regulations don’t require a refund for poor-quality or defective products bought with a credit card. The rules don’t define such problems as a “billing error”if the consumer has accepted the goods.
(2) Unauthorized charges must be thoroughly investigated. The regulations require “reasonable” investigation, not an exhaustive one, so don’t expect the card issuer to rely on store-camera photos to prove your claim.
(3) You don’t have to pay disputed charges. Only half true. If the card issuer investigates and decides no error occurred, you must pay–even if you continue to dispute the charge. Your right to withhold payment lasts only as long as it takes to investigate your dispute.
(4) You can’t be charged a fee for disputing an error. You can, if the card issuer decides that your claimed error is not an error at all. Issuers almost never impose a fee, however.
Some billing errors can be addressed with a phone call to the credit-card company’s customer-service department. They can include: unfamiliar charges, clerical errors, and fraud. For other problems you’ll need to write a dispute letter to your credit-card issuer. The letter preserves your right to dispute errors; a phone call may not. The card issuer should acknowledge your letter within 30 days of receipt. Write a dispute letter if you have one of the following problems: unauthorized charges, cramming, goods not delivered, failure to credit returned items, and poor-quality merchandise.
This report can be found free at ConsumerReports.org.
Appraising Jewelry Appraisals
An inaccurate appraisal can cost you money. You wind up either spending too much on insurance or getting too little when you sell the item. But who can you really trust? It’s hard to know since appraisals of the same piece of jewelry can vary widely. To see how much, Consumer Reports solicited several for a vintage art-deco diamond wristwatch. First, a Master Gemologist Appraiser certified by the American Society of Appraisers judged the watch at $1,550. Then, CR anonymously tried five others–an independent appraiser, and four retail jewelers. The values ranged from a lavish $3,500 to a measly $500. Only two would give the estimate in writing. Most erred, including the independent appraiser. He miscalculated carats and mistook platinum for less expensive white gold. The February issue of Consumer Reports gives these tips for getting the right appraisal:
(1) Decide whether an appraisal is necessary. Unless your gems have sentimental value for which you want an identical replacement or are worth more than $3,000, an appraisal isn’t necessary.
(2) Look for an appraiser with the proper credentials. You want someone well-trained and who is a member of an association to which you can complain if he or she errs.
(3) Choose the right appraisal. Always specify how you will use the appraisal because valuations differ by appraisal type.
(4) Get it in writing. Most “free”verbal appraisals are really bids to buy. A written appraisal is more likely to be the real thing.
The February 2004 issue of CR is on sale now wherever magazines are sold. To subscribe, call 1-800-765-1845.
The material above is intended for legitimate news entities only; it may not be used for commercial or promotional purposes. Consumer Reports® is published by Consumers Union, an independent, nonprofit testing and information-gathering organization, serving only the consumer. We are a comprehensive source of unbiased advice about products and services, personal finance, health, nutrition, and other consumer concerns. Since 1936, our mission has been to test products, inform the public, and protect consumers.