Once you have sent notification to the credit card company about your intention to withhold payment, they are not allowed to report the amount under dispute as a delinquency to any credit bureau. Any actions have to be withheld until the dispute is resolved or a competent court has issued a judgment against you. By the same token, your lender cannot take action for collection or treat the transaction as “settled” unless they have conducted a reasonable investigation into the dispute.

If you feel that you should withhold payment, complete Form 76 and mail it to the credit card company address indicated for “disputed charges” (not for the billing address) and explain the reason for your decision not to pay. You should do this promptly: taking too much time about it will make your claim suspect. You should withhold only the amount corresponding to the defective or undelivered item plus the associated finance charges.

To bolster your position as best possible, ensure that your credit card issuer receives your dispute claim within sixty days of the credit card billing statement that first showed the item under dispute. You must explain and describe your attempts to resolve the issue with the seller. You should also attach documentation of all your attempts at resolution, including letters you sent to the seller regarding the disputed purchase and the copy of the credit card bill showing the item under dispute.

Perhaps this is why purchases made by means of credit cards are better than cash from a consumer perspective. The protection and mediation offered on purchases made through you credit cards essentially translate into built-in consumer assistance: help that would have cost you a great deal extra had you opted to pay for the disputed items by cash instead.

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