Cardholder Protections
Many consumers have used or dealt with a credit card at some point in their lives. Along with this, everyone is bound to experience problems and issues in the lifespan of owning a credit card. They may be billed twice for the same item / service, or they may order something that never arrives in the mail. Some people’s credit card information may be stolen and used to purchase big-ticket items, such as TVs and computers. They may even have their identity stolen with credit cards in their name they don’t even know about.
Types of Protections Available
There are three types of protection for a cardholder. This ensures that the lender follows strict procedures when there are issues with a credit card transaction. The liability for a charge is dependent on your state or other federal laws, as well as the specific circumstances of your case.
1.) The first type of protection is for unauthorized use of your credit card. This normally applies to a stolen or borrowed card, or if your card number was recorded for any reason, such as to make purchases while a merchant’s credit card terminal was down.
According to this law, the lender can only charge you at most $50.00 for unauthorized usage of your credit card as this is the limit. For example, if someone stole your card and bought $200.00 worth of merchandise, your credit card issuer can only charge you a maximum of $50 for this transaction. Some card issuers, such as Visa and MasterCard, have a “zero liability” policy where they will waive this $50. If the theft was an internet / telephone purchase, the lender charge you at all.
Call your credit card company immediately after you find any suspicious charges. If you inform your lender before these unauthorized charges are incurred, your lender cannot charge you the $50.00 limit. Instead, they will begin the process of canceling the stolen card and reissuing you a new one.
2.) The second type of protection is for billing disputes. These could include being overcharged by a merchant, or charges for products you’ve never received. If there is a dispute, the lender must follow certain procedures to resolve it under the Fair Credit Billing Act.
To raise a billing error dispute, you must notify the company within 60 days of the first bill which shows the disputed charge. The dispute must be in writing and must include your name, account number, the dollar amount of the dispute, and a statement for the reason for the dispute. The written dispute must be mailed to the specific address provided by the lender for this purpose. This information should also be found on the back of your credit card statement.
There are only certain charges which can be disputed.
Charges which were not authorized
Goods not received
Returned defective goods but not refunded
Wrong items sent from merchant
Merchant did not complete services paid for
Merchant billed incorrect amount
Canceled contract prior to work being performed
Agreed to buy something from merchant, but did not give authorization to be billed
You should receive a notification from the credit card company within 30 days after filing this dispute. Next, the company will investigate and provide you with a written response between 2-3 months or within 90 days. Depending on the nature of the dispute, the merchant may conclude by just canceling the charge instead of risking their good standing with the credit card company, which could refuse them their services.
3.) The third type of protection is the right to stop payment. This is a powerful tool you can use if you are not satisfied with anything you bought with a credit card. You can only do this If there is a legitimate complaint about the quality of goods or services purchased and you have tried to resolve the issue with the merchant directly.
There are a couple of other limitations to the right to stop payment:
The items or services purchased must be over $50 and;
The items or services must have been purchased in your home state or within 100 miles of your mailing address
These two limitations do not apply, though, if the card was issued by a merchant, such as a store card or if the merchant had mailed you advertisements for the goods or services purchased. If you tell the credit card company to stop payment, they cannot inform the three major credit bureaus until the dispute is settled and an investigation has been performed.
