April 21, 2016
Merchant turned my account over to collections after I reversed charges on a faulty product
Dear Consumer Ed:
I purchased a product that was faulty and disputed the charge with my credit card company. I had the charge successfully removed from my account. Now the merchant has turned the matter over to a collection agency. Can they do that?
Consumer Ed says:
Generally, once the credit card company has reversed the charge, it’s between the credit card company and the merchant to determine whether the charge was valid. Since the credit card company did remove the charge, the merchant likely lost that fight.
If the merchant has turned the account over to a collection agency, you should strongly consider disputing the charge with the collector. You must do so, in writing, within 30 days of receiving notice of the debt from the collection agency. You should verify that the letter from the collection agency informs you that you have 30 days to dispute the charge. If the letter does not inform you of this right, the letter itself may violate the Fair Debt Collection Practices Act and, as a result, the debt may also be uncollectable for that reason. If you dispute the charge, the collection agency must ask the merchant for proof of the debt. The merchant has 30 days to produce this evidence. During these 30 days, the collection agency cannot proceed to collect the alleged debt from you if you have informed the agency that you are disputing the charge.