Credit Cards:  Billing Disputes:  How to Handle a Billing Dispute with a Credit Card Company

Sooner or later while reviewing your credit card statement (or any other type of bill) you will notice a billing error.  This error usually consists of the credit card company (1) not crediting your account with a payment or (2) putting an erroneous charge on your account.  In order to protect your rights, you must take certain steps as quickly as possible.

Creditors are required under the Fair Credit Billing Act to tell you on every statement that send how you can report a billing error (see back of your credit card statement).  Of course, most people will just telephone. Most people don't want to write a letter because it's time consuming. 

The credit card companies love for you to telephone instead of write.  This gives them the opportunity to easily ignore you.  In addition, if you telephone, you have no real proof that you notified them of the error as you are required to do under the Fair Credit Billing Act.  

Credit card companies train their service representatives to give you canned answers to your complaints.  The most common canned answer is a negative one:  "No, we will not remove the late fee unless you send us proof from the post office that you mailed your payment in on time."  How are you going to get the post office to acknowledge this?  You can't, so unless the creditor actually cashed your check before the due date, you have no proof that they received it on time.

Even if you notify them in writing, they will phone you in response to your letter, or they will send a letter telling you to phone them so "you can work out the problem."  Creditors don't want to put anything in writing so that they have the opportunity to easily deny it later on.  They know that you have only 60 days to dispute billing errors under the Fair Credit Billing Act, otherwise, you forfeit your right to have them resolved in your favor or collect damages.

The typical interaction with a credit card company over a disputed late fee goes something like this:

1.  Consumer phones credit card company requesting they remove $29 late fee because she is a good customer with an excellent payment history and has never mailed a payment in late.  She blames the late delivery on the post office.

2.  Creditor tells her that she must offer documented proof that she mailed the payment in on time in order for the late fee to be reversed.

3.  Consumer gives up and is angry, thinking there is nothing she can do.  She considers closing out her account or transferring her balance to another company.  But eventually, her anger diminishes, she doesn't continue to dispute the $29, and gets on with her life.

4. The credit card company gets away with it again.  They rake in billions each year using this "didn't receive payment on time" excuse to collect $29 from millions of their customers.  They know that most people will not put forth much of a fight.

If you want to win against a credit card company, the interaction should go something like this:

1.  Consumer writes a letter demanding $29 late charge be reversed based on the fact that she is a good customer with an excellent payment history and this is the first time her payment was received late.  Obviously, the post office screwed up in delivering the mail on time.

2.  Credit card company will respond to the letter with a telephone call or perhaps a letter.  The telephone call will ask her to provide documented proof that she mailed her payment in on time.  They will ask her to get proof from the post office that the letter was mailed on X date, but this is an impossibility. 

If they send a letter in response, it will ask her to telephone them so that "this issue can be resolved to the mutual satisfaction of both parties."  Note that the letter will not provide any real information or deny the claim -- it will simply ask her to phone.  If she does phone, they will give her the song and dance in the paragraph above. 

3.  Consumer will not telephone them, but will instead, send a certified letter demanding the $29.00 be removed.   She will threaten to take her business elsewhere if the charge is not removed.  She will also threaten to file a complaint with the FTC and her state's attorney general's office if they do not remove the charge.

4.  Creditor sends consumer a letter stating the $29 charge has been reversed and that they highly value her as a customer.

Late fees are not the only disputes consumers have with credit card companies.  Too many companies are also in the habit of ignoring simple billing disputes, even when clear written proof is offered to them that they made a legitimate mistake.   This occurs so often, and with so many different companies, that it's hard to believe it isn't done intentionally.  What would they have to gain by ignoring your dispute?  They get to keep the late fee, of course, but they also can justify raising your interest rate because you're considered a bad risk if you make a few payments late.  If this happens, they will raise your rate dramatically -- from 8% to 28%!.

Summary of the Fair Credit Billing Act
Sample billing dispute letters
Credit Credit Cards >  Billing Disputes
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