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Dispute on Recurring Charge or Termination Fee

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Question: 
If a customer has a contract with a merchant (such as Direct TV) and has given them authorization in the past to debit their account and now wants to dispute a charge (such as early termination penalty or not returning the equipment), can we just decline this because a contract is involved, or do we have to give provisional credit and submit the dispute to the merchant to see what their response is? If we have to submit, can we require that they give us a copy of the contract or proof that the equipment was returned to determine if the contract was fulfilled in order to dispute otherwise just decline for lack of proof?
Answer: 

You cannot decline because a contract was involved. If the contract allowed for an early termination fee, which was charged appropriately, the consumer agreed to and authorized the charge.

If you go back to the merchant and they need time to provide you with materials for your investigation, you may pay provisional credit, but reading the agreed upon contract shouldn’t take that long. You can ask the merchant and the customer for a copy of the contract. The customer is under no obligation to assist you, however. Reg E only requires that he identify the account and why he believes an error occurred. You are not empowered to impose additional requirements. Failure to meet valid requests for more information may be considered in your claims decision, but you can't deny the claim on this alone. If the merchant fails to provide that contract in a very short period, ask them again. Is there a version online to which the customer agreed? Hopefully, that can be reviewed before provisional credit is owed.

First published on BankersOnline.com 8/30/10

First published on 08/30/2010

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