When you placed your online order for your niece’s birthday present, the seller took your credit card information and informed you that you would be receiving your order within ten days. Three weeks later and the birthday now past, still no order—but your credit card statement has arrived, and you have been charged for the missing item.
Fortunately, the federal Fair Credit Billing Act (FCBA) comes to the rescue, so that you don’t have to pay for this merchandise. The credit card company may also have a policy prohibiting the merchant from charging your account before shipment. Further, whether you ordered by mail, phone, computer or fax, you would be protected by the Federal Trade Commission (FTC)’s Mail or Telephone Order Merchandise Rule.
Here’s what the FCBA requires you to do if you are disputing a billing error on your credit card:
- Write to the credit-card issuer at the address for billing inquiries. See the sample letter below. Your letter must reach the card issuer within 60 days after the first bill containing the error was mailed to you.
- Send your letter by certified mail, return receipt requested, with copies of sales slips or other supporting documents. Keep a copy of the letter.
- Make sure you send the letter to the correct company (in the case of Visa or MasterCard, to the bank that issued the card).
The credit-card issuer must acknowledge your unresolved complaint in writing within 30 days after receipt and must resolve the dispute within two billing cycles (not more than 90 days from receipt of your complaint). You may withhold payment on the disputed charges while they are under investigation, but you must pay any unquestioned parts of the bill and all finance charges. The credit-card company may not attempt to collect the disputed amount or related charges and may not close or restrict your account during the investigation, although your credit limit may be affected.
Now, let’s say you place an order through a catalog. They charge your credit card right away, then call you in two weeks to inform you your shipment will be delayed 60 days. Although you agree to this delay, your merchandise doesn’t arrive by the agreed-upon later date. What should you do?
In your dispute letter, tell the credit-card issuer if the premature charge was unexpected and when you expected delivery. Did the merchant fail to tell you about the company’s billing practice at the time of the sale? And since some credit-card companies start counting from the expected date of delivery (rather than the charge date) when computing the time limit for you to dispute the charges, your dispute is likely to be honored if you submit your complaint within a reasonable time after the expected delivery date. Just keep good documentation of the promised and actual shipping dates in your records.
If you used a debit card to pay for the merchandise, contact the card-issuer to find out about company policies and your rights under the Electronic Fund Transfer Act. With some credit-card companies, you may not be able to dispute a debit or get a refund for non-delivery or late delivery.
If you financed your purchase directly through the merchant, check your credit contract for this sentence, which may allow your claim of non-delivery: Notice: Any holder of this consumer credit contract is subject to all claims and defenses which the debtor could assert against the seller of goods or services obtained with the proceeds hereof.
The Mail or Telephone Order Merchandise Rule requires that merchants have a reasonable basis for claiming they can ship an order within a certain time. The law requires that your order be shipped within the time stated in company advertising or by phone. If no specific time is promised, you should expect your order to be shipped within 30 days from the merchant’s receiving a "properly completed order" with your name, address and payment by check, money order or authorization to charge an existing credit account. If you are simultaneously applying for credit and no ship time is promised, a total of 50 days is allowed.
A merchant who is unable to ship within the promised time must notify you by mail, telephone or e-mail of the revised shipping date. You must be given the option either to cancel for a full refund (incurring no charges for postage or a phone call) or to accept the new shipping date. If you don’t respond and the delay is not more than 30 days, you are assumed to have agreed to wait for your order.
If the shipper cannot comply by the revised date, another delay notice is required. Your order will be canceled and a refund issued unless you respond promptly to the second notice. If you authorized a charge to your credit card, the merchant must credit the account within one billing cycle and not offer a merchandise credit. If you paid by cash, check or money order, your refund must be mailed within seven business days.
Complaints about this process that you have not been able to resolve with the seller should be directed to the Federal Trade Commission for their information. You may use the FTC’s online complaint form.
Sample Letter to Your Credit Card Company
We’re happy to pass along this sample letter, based on the FTC’s recommended language, for your use should you have a billing dispute over undelivered merchandise:
Your City, State, Zip Code
Your Account Number
Name of Credit Card Issuer
City, State, Zip Code
Dear Sir or Madam:
I am writing to dispute a billing error in the amount of $______ on my account. The amount is inaccurate, because the merchandise I ordered on (date) was not delivered. The merchant promised to deliver the merchandise to me on (date), but it has not been delivered. (In addition, when I ordered the merchandise, the merchant did not tell me that I would be charged before shipping.)
I am requesting that the error be corrected, that any finance and other charges related to the disputed amount be credited to my account, and that I receive an accurate statement.
Enclosed are copies of (use this sentence to describe any enclosed information, such as sales slips, payment records, documentation of shipment or delivery dates) supporting my position and experience. Please correct the billing error promptly.
Enclosures: (List what you are enclosing)
Tips from the FTC for Shopping by Phone, Mail or Online
Consider your experience with the company or its general reputation before you order. If you've never heard of the seller, check on its physical location and reputation with the local Better Business Bureau.
Ask about the company's refund and return policies, the product's availability and the total cost of your order before you place your order.
Get a shipment date.
Keep records of your order, such as the ad or catalog from which you ordered; the company's name, address and phone number; any shipment representation the company made to you and when it made it; the date of your order; a copy of the order form you sent to the company or, if you're ordering by phone, a list of the items and their stock codes and the order confirmation code; your canceled check or the charge or debit statement showing the charge for your order; and any communications to or from the company.
Track your purchases. When you order online, keep printouts of the web pages with the details of the transaction, including the merchant's return policies, in case you're not satisfied.
Try to resolve any problems with your purchase with the company before seeking help from other sources, such as the FTC, the U.S. Postal Service, magistrate court or a private attorney.