The Risks of Automatic Bill Paying: How to Avoid Online Money Traps
Know Your Rights
When disputing an automatic debit, your legal protection depends on whether funds were withdrawn from a credit card or checking account, says Gail Hillebrand, senior attorney with Consumers Union.
Checking Account: Your bank must investigate your complaint and has 10 business days to resolve the issue. If it can't, it must restore the money to your account until the matter is settled. The bank is not legally obliged, however, to handle disputes over debits you authorized. If you order a product and receive the wrong size, for instance, the bank needn't get involved. However, a bank must heed your instruction to not make a payment from your account if your request is made at least three business days in advance.
Credit Cards: No matter why you're disputing a charge to your credit card, you have a "charge-back" right, meaning you can usually contest the charge and withhold payment in the event of a dispute. You must make a real effort to resolve the matter with the billing company before you ask your credit card issuer to reverse the charge. After that, at your request, the credit card company will stop payment and contact the business to determine whether your complaint is legitimate. If the creditor agrees with you, your refund stands; if not, you must pay the disputed amount, plus finance charges.
Originally published in Ladies' Home Journal magazine, July 2006.