posted on August 20, 2001 06:29:27 PM new
mcherry, thanks for the link. Seems "quality of goods" doesn't equal automatic chargeback. If a seller refuses to refund, the buyer has to sue, unless someone (now who would that be?) knuckles under.
posted on August 20, 2001 08:10:55 PM new
Yes, the FCBA describes card holders rights against the card issuer. It makes no reference to "chargeback" at all. The result is pretty clear, the card issuer refunds the card holder's money, and issues a chargeback against the merchant. The merchant agrees to that as part of the merchant agreement.
The reference to 100 miles or different state is arcane, and not used in practice. In practice, the protection is absolute if pursued in a vigorous and timely fashion, following procedure. FCBA describes the minimum protection required. No credit card issuer can avoid this, and thus no credit card issuer can refuse quality of merchandise disputes.
Lastly, agreed, many state laws do not require return policies. Neither does a credit card merchant agreement. Neither of these facts protect a merchant from a quality of merchandise chargeback should the merchant refuse to make peace with the cardholder, usually by accepting a return and issuing a refund.
[ edited by roofguy on Aug 20, 2001 08:15 PM ]
posted on August 20, 2001 08:36:26 PM new
It seems like it is already been explained to you that quality of merchandise disputes do not have to be accepted, yet you keep repeating it over and over.
posted on August 20, 2001 09:32:15 PM new
The problem is that they do have to be accepted. By federal law.
Perhaps more to the point, they are accpted by credit card issuing companies, perhaps motivated by their responsibilities under such laws.
[ edited by roofguy on Aug 20, 2001 09:33 PM ]
posted on August 21, 2001 06:33:12 AM new
That's BS roofguy
The following is a quote from Broox W. Peterson Senior Vice President and Assistant General Counsel Visa International Service Association, in a 1999 statement to the Federal Trade Commission regarding the need for international protections for consumers in ecommerce transactions (bolding mine):
Laws protecting cardholders in the event of disputes in connection with a payment card transaction are a good example.
Federal and state laws in the United States protect credit cardholders against liability for unauthorized transactions, against failure to receive goods or services, and in certain instances where poor quality or defective goods and services have been delivered by a merchant.
posted on August 21, 2001 08:11:26 AM newThere is plenty of room for discretion.
The defacto "certain instances" resolves to "when the consumer disputes the transaction based on such protection" and "when procedures are followed".
"The industry" (which does not include merchants, they are customers of the industry) wants to avoid two things:
-government attention to any particular transaction or practice
-even more strict consumer protection laws
By law, there may well be room for discretion. The point is, credit card banks have chosen, for easy to understand reasons, an approach which has no discretion when it comes to resolving "he said she said".
This is how it has worked for decades. It does in fact seem unfair to merchants, but "the industry" is not that motivated to make wholesale changes, because by and large it seems to work.
posted on August 21, 2001 08:49:28 AM new
For those people interested in the facts and not just the spin that makes Paypal look like the victim of the credit card industry,
this is what I was told by officers in the fraud and credit card departments at some major banks:
For a long time, the CC industry did give way too much weight to buyer complaints. This was because CCs were not designed to be used for purchases where the CC wasn't physically present and before the Internet caused an explosion in CC use. Then scammers discovered how easy it was to get things free. Use a friend's credit card and then have him charge it back. Let your boyfriend use your card and then claim he had no permission. Even have a wife use her husband's card. Claim the item wasn't as you expected. As this news spread, charge backs soared. Merchants went bankrupt or closed their accounts and left the issuer with the bill.
Some banks that issue their own cards are now also in the payment service business. (First Data, Wells Fargo, Citibank). They are finding out first hand how their generous interpretation of the rules has led to wholesale scamming. And so they are tightening up.
As the consumer attorney in the Newsday article stated, banks are no longer automatically siding with the buyer. Sellers are given the right to a defense. I had three charge backs made against me and won every one. I also had a charge back that I made which was clearly the merchant's fault and yet my CC company turned me down twice before I bucked it up to the highest level. And this was even though the merchant sent me a letter stating that I would get a refund and then never gave it!
I ordered merchandise from Ecost. They charged me sales tax even though I am in New York and they are in CA. I called and emailed several times before they sent me a letter stating I would be credited the sales tax erroneously charged. Then they sent me a letter stating that in order to get the credit, I had to send them a resale certificate showing that I was a reseller. I sent them the certificate and they told me it wasn't good because it was issued in NY and I needed one for CA. I told them this was idiotic. I only needed a resale certificate in NY to avoid NY sales tax on items purchased for resale. Items purchased outside of NY were automatically exempt. Their morons couldn't understand this, so I charged back the sales tax on my credit card. Even with the letter from them stating that I would be getting the credit, my CC company turned me down. They stated that the purchase was more than 100 miles from my address and therefore not covered under the charge back protection. I had to buck it up three levels higher until I spoke to someone with some common sense. Throughout all this, the merchant hadn't even been contacted. In the end, I was told that they would put through the charge back but if the merchant disputed it, I could lose. Ecost decided to credit my account for the tax, though I wonder what would have happened if they refused.
As a CC merchant myself, I was told by my merchant bank that my terms of sale and return policy must appear on my invoices and on my web site. What would be the point of this if any customer can return anything for any reason? It is obvious to anyone with a modicum of common sense that a merchant is allowed to have a return policy and if it is reasonable, the CC bank will tell the customer "these are the terms you agreed to." When I tried to charge things back, I was asked, "What was the vendor's return policy?" When someone tried to charge something back against me, I know he was asked the same question because I was asked to provide a copy of my terms.
So don't let anyone tell you that merchants accepting CC must take anything back for any reason. It simply isn't true. Whether a charge back succeeds or not depends upon the claim, the CC company and the defense. When you go through a third party payment service, there often is no opportunity for defense.
posted on August 21, 2001 09:04:51 AM new
I was a credit card merchant for more than 20 years, doing primarily mailorder sales.
Over those years I did have several [attempted] chargebacks, probably less than 15, of which I only lost 2. The procedures are exactly as Yisgood explains. I would receive a notice from CNET (or Discover or AE) explaining the complaint. I had 10 days in which to explain my position and provide them with any defense. The funds were NOT taken from my account until the matter was settled.
I have also sucessfully initiated a chargeback as a buyer on a house full of defective carpet in which the vendor would not repair. That chargeback was dropped once the vendor received the chargeback, for they remedied the situation mighty quickly after that.
I think what many are saying here is that any CC company will initiate a chargeback for nearly any reason, and that amount will come off your statement immediately. This is TRUE. However, this does not mean the merchant loses. Only until the validity of the chargeback is determined is the consumer is the winner. I contested every chargeback I ever received and only lost 2 cases. In those 2 I could not prove delivery. Merchants can win.
posted on August 21, 2001 09:41:05 AM new
bennybbb, I know it seems like I'm saying something contrary to your experience. However, as I read your story, I find it very consistent with how the industry works.
Note in particular the carpet story, which is common. The merchant "won the chargeback" by means of making the customer happy with the quality of the merchandise. The merchant had the opportunity to do this before the dispute was filed, but declined that opportunity.
This very concisely states the disadvantage a PayPal seller is with respect to an ordinary credit card merchant. The PayPal seller must anticipate this conflict and avoid it ahead of time, since there is no means for the chargeback to be filed, and then the merchant comes to his senses and makes the customer happy, upon which the dispute is resolved.
I guess some would call the carpet story a quality of merchandise chargeback the merchant won, by putting up a good defense. I don't really have any problem with that, but this is why it is hard to discuss such issues in a vague context, without details, and relying on pure memory alone.
posted on August 21, 2001 10:04:20 AM new
There are some folks that seem to believe that since a CC co may initiate a chargeback on their behalf that they have won. I was only trying to explain the procedure. The disputed amount comes off consumers bill immediately, but is NOT deducted from the merchants account until the matter is settled.
Those that claim return policies, etc. are not binding or enforceable may be partially right, as any policies that obfuscate law are nothing more than self-serving inuendo intended to intimidate a naive buyer into keep inferior and/or defective merchandise.
