John Roska: How to dispute a credit card bill

Q: Can I cancel a credit card payment, like I could stop payment on a check? I had a bad experience at a hotel, and didn't get a satisfactory response to my complaints about my room. How do I avoid paying for that bill?

A: Disputing a credit card charge isn't like stopping payment on a check. Legally, they're different transactions, involving different parties. But, disputing a credit card charge might get it deleted from your bill.

A check is a promise to pay. If you stop payment, your check bounces back to whoever you wrote it to. They can then come after you, collect on your breached promise to pay.

As the name suggests, credit cards are a credit transaction. You borrow money from your card issuer, and that loan pays for your purchase. Having gotten paid, the merchant drops out of the picture, leaving you and your credit card company to deal with each other.

As an extension of credit, credit cards are governed by the federal Truth-in-Lending Act. The credit card part of that law says card issuers "shall be subject to all claims ...  and defenses arising out of any transaction in which the credit card is used as a method of payment."

That means the card company steps into the merchant's shoes. Whatever beef you had with the merchant can now be pursued with the credit card. If you didn't like the hotel's service, you can fight that out with whoever sends you your monthly credit card bill.

As usual, there some hurdles to get past to properly dispute a credit card charge. First, to be able to dispute a charge, and withhold payment, the disputed amount must be at least $50. Second, the purchase must occur in your home state, or within 100 miles. (Telephone, mail, and internet sales count as home-state purchases.) That geographic limitation doesn't apply to store or gas cards.

So, you could only dispute in-state hotel stays, or out-of-state ones within 100 miles of home. (Or if you booked online.)

Even though the merchant drops out of the picture, you must make "a good faith attempt" to resolve your beef with them, before taking it up with your credit card company. A complaint letter should be enough.

When possible, defective goods must be returned. Not paying for what you never received, or didn't keep, should be easier than not paying for something you've already consumed.

Only unpaid charges can be disputed. Therefore, to pursue things with your credit card company, you must withhold payment on your credit card bill.

You must also notify your credit card company of the dispute, and explain why you're not paying.

Disputed charges are often "charged back" to the merchant, by the credit card taking the money back from the merchant. If not, and your credit card pursues you for collection, you can raise any defenses against them you could against the merchant.

Finally: the above does not apply to a debit card, unless it's used as a credit card.

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