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Reasons to Withhold Payment in a Credit Card Dispute

by John B. King

Overview

When you find a problem on your credit card statement, you may not know how best to handle it or worry that you'll get into trouble if you withhold payment. Federal law provides protections to card holders in these situations. The key is knowing how to address problems with your credit card statement and when it is appropriate to withhold payment.
Typical Dispute Situations

Typical situations in which you may decide to dispute a charge include finding an unrecognized charge or billing error on your statement. Others include billing for goods which were not delivered, damaged or defective, or for a reservation that was canceled. You may also be expecting a credit that does not appear on your statement. To protect yourself in these cases, it's important to notify your credit card company in writing within 60 days of receiving your statement.

Unauthorized Charges

Unauthorized charges may appear on your statement if your card is lost or stolen, or if your card number has been fraudulently obtained. When this occurs, it's important to notify the card issuer immediately by phone, but also to send the information in writing to the card issuer. In these situations, the card issuer must immediately credit your account and refund any related finance charges or fees when it receives your written request.
Billing Errors

You may find that you have been billed more than once for the same charge. In this case, you should notify your card issuer immediately. It is proper to withhold payment for the double billed amount in these cases. You may also notice that you are billed for more than the charge you signed for. In these situations, notify the card issuer and send them a copy of your receipt. You can withhold any billed amount greater than the amount shown on your receipt.
Non-Delivered Goods

If you make a credit card purchase by phone, the Internet or mail and don't receive the goods you ordered, you may withhold payment for these goods. In the event that the goods are subsequently received, however, you will be liable for the charge.
Damaged or Defective Goods

If you purchase damaged or defective goods on a card, you should make a good faith effort with the merchant to resolve the problem. If this is unsuccessful, you have the right to withhold payment for the amount of the purchase. This right is limited, however. If the card was issued by a bank or travel-and-entertainment company, or was not issued by the store where you made your purchase, the sale must have been for greater than $50 and must also have taken place in your home state or within 100 miles of your home address.
Canceled Reservations

If you make a hotel reservation that requires a credit card and you later decide to cancel your reservation, be sure to get a cancellation number. If you are billed by the hotel, you may withhold the amount. However, you should first call the hotel, give them the cancellation number and request a credit. If the credit does not appear on your next statement, notify your card issuer in writing and give them the cancellation number you received.
Credits that Don't Appear on Your Statement

If you return goods that you purchased on a credit card, be sure to get a receipt showing your card account number and the amount of the credit. If it does not appear on your statement, you may withhold this amount. You should notify your card issuer in writing and enclose a copy of the receipt.