Credit Card Rights

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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