W
hat
do you know about consumer credit card rights—or, for that matter, a
retailer’s obligations in accepting credit cards? Well, for those of us
working in the Payment Services Industry, we should be sure we know at
least as much
as the general public does.
Rules/Obligations
for Lost or Stolen Cards
Many
consumers are suckered by someone offering insurance designed to protect
them against big bills should their credit cards be lost or stolen. Even
though the premium may sound cheap—about $30 to $60 a year—the
cardholder already has some rights that provide free protection, and those
rights can mean chargebacks to merchants.
Lost
or Stolen Cards
If
a consumer’s card is lost or stolen, they have a responsibility to call
the bank or issuing company as soon as possible.
According to the
Federal Fair Credit Reporting Act, the most a consumer can be held liable
for is $50 of purchases. Even if the consumer’s card is stolen and the
thief has a field day, the consumer is free of responsibility for anything
over $50 if they have reported the loss or theft within 60 days.
Who
pays then, you ask? Well, if Mr. Merchant didn’t check the I.D. or run
the card, he may. But much of this fraud is born by the card-issuing bank.
Disputed
Charges
If
a consumer has a dispute with a merchant over a bill or the quality of the
product or service, they don’t have to pay immediately. They may contest
the charge to the credit card issuer and let that bank or organization
pursue the complaint.
According to the
Federal Truth in Lending Act, the consumer may dispute a bill up to 60
days after they bought the item. However, they must make their complaint
in writing.
The
items in dispute should have cost more than $50, and the consumer should
have bought the item either in their home state, or within 100 miles of
their address. Many card issuers also will intercede in disputes of less
than $50.
Required
Minimums
Merchants
do not have the right to deny a consumer the use of their credit card, no
matter how small the purchase. Some merchants post signs warning that
credit card purchases must be over $10 or $25. Retailers must pay a
handling fee (discount rate) for each credit card transaction, and they do
not like small purchases because transaction fees drive up the discount
rate, and can cancel out profits.
The
merchant’s agreement with the credit card depositor bank, however,
stipulates that they must accept all
purchases.
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1995-2000
The Green Sheet, Inc.
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