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I just went through more research than I would ever wish on anyone regarding liabilities for a business owner with a merchant account. I was shocked!
For example, the current federal statute allows up to one year from a credit card statement for a dispute under the "claims and defenses" statute. The rules are written from the perspective of the customer...just imagine if you were a business owner and 364 days after a sale someone disputed it. Would you be ready to defend with copies of all pertinent data?
Here are the rules:
(1) The disputed amount must be over $50.
(2) You cannot dispute a charge under "claims and defenses" if you notify your bank after you have already paid your credit card amount down to zero. However, if you have paid off only a portion of your credit card bill, you can still resist payment on the unpaid balance for the charge you are disputing. For example, if the disputed charge was for $300 and your balance on the credit card was for $400 and your payment to your bank was only $150, you can still seek a chargeback for the remaining $250 under the "claims and defenses" category. Unlike "billing errors," whatever you have paid the credit card issuer after the charge appears on your statement which brings the remaining balance below the cost of the charge you are disputing, is not recoverable.
(3) The transaction cannot be with a merchant who is located more than 100 miles from your home or outside your state of residence. For example, suppose you go to Chicago for a vacation and while there you purchase an expensive vase using your credit card. When you get back to your home in California, you open the box the merchant gave you and find that it only contains confetti, and no vase. If you notify your bank within 60 days you can qualify for a chargeback under your "billing errors" rights. But if you wait for more than 60 days you will not be eligible for a chargeback under your "claims and defenses" rights because the merchant is outside of your state of residence (and more than 100 from your home). In California and in some other states, transactions on the telephone are considered to take place at your home and not at the merchant's place of business, no matter who placed the call. Similarly, in those states, if you fill out an order form which is to be sent to the merchant, and agree to purchase by writing down your credit card account number on the order form, the transaction also occurs in your home.
(4) Unlike "billing errors," you must make a good faith effort to obtain a refund or credit from the merchant before contesting the charge with the bank. Sending a letter to the merchant or signing a notice of cancellation which is sent to the merchant would suffice as a good faith attempt to resolve the matter with the merchant. Be sure retain a copy of your correspondence.
For example, the current federal statute allows up to one year from a credit card statement for a dispute under the "claims and defenses" statute. The rules are written from the perspective of the customer...just imagine if you were a business owner and 364 days after a sale someone disputed it. Would you be ready to defend with copies of all pertinent data?
Here are the rules:
(1) The disputed amount must be over $50.
(2) You cannot dispute a charge under "claims and defenses" if you notify your bank after you have already paid your credit card amount down to zero. However, if you have paid off only a portion of your credit card bill, you can still resist payment on the unpaid balance for the charge you are disputing. For example, if the disputed charge was for $300 and your balance on the credit card was for $400 and your payment to your bank was only $150, you can still seek a chargeback for the remaining $250 under the "claims and defenses" category. Unlike "billing errors," whatever you have paid the credit card issuer after the charge appears on your statement which brings the remaining balance below the cost of the charge you are disputing, is not recoverable.
(3) The transaction cannot be with a merchant who is located more than 100 miles from your home or outside your state of residence. For example, suppose you go to Chicago for a vacation and while there you purchase an expensive vase using your credit card. When you get back to your home in California, you open the box the merchant gave you and find that it only contains confetti, and no vase. If you notify your bank within 60 days you can qualify for a chargeback under your "billing errors" rights. But if you wait for more than 60 days you will not be eligible for a chargeback under your "claims and defenses" rights because the merchant is outside of your state of residence (and more than 100 from your home). In California and in some other states, transactions on the telephone are considered to take place at your home and not at the merchant's place of business, no matter who placed the call. Similarly, in those states, if you fill out an order form which is to be sent to the merchant, and agree to purchase by writing down your credit card account number on the order form, the transaction also occurs in your home.
(4) Unlike "billing errors," you must make a good faith effort to obtain a refund or credit from the merchant before contesting the charge with the bank. Sending a letter to the merchant or signing a notice of cancellation which is sent to the merchant would suffice as a good faith attempt to resolve the matter with the merchant. Be sure retain a copy of your correspondence.
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