In a rare compliment to the credit card industry, this article summarizes the consumer benefits of using a credit card in a merchant dispute situation. Main benefits noted were as follows:
CardHub.com, a website that compiles information on the credit card industry, conducted a study recently to determine how the four major credit card networks (Visa, MasterCard, American Express, Discover) and the 10 largest credit-card issuers proceed in common disputes with customers, including situations in which a merchant has been unresponsive to a customer complaint. Following are some of the results as reported by CardHub.
The credit card networks that responded (only Visa did not) all have chargeback policies that tend to give the edge to the consumer.
All of the issuers and networks that responded indicated that when a merchant fails to respond to a customer complaint, it is charged back as a matter of policy. (So the customer receives a credit for the amount in dispute.)
There are situations, however, in which the merchants tend to win disputes. The most common are disputes over a tip when the customer has no proof, such as a receipt, to back up an allegation.
There were no significant differences among the networks and issuers that responded in terms how they handle the chargeback scenarios outlined by CardHub. USAA was a little more consumer-friendly in disputes over tips; it credits the customer account without a receipt.
Consumer dispute protections of credit cards are a generally overlooked product benefit by for credit card marketers. While issuers do not wish to drive up chargeback rates by encouraging disputes, consumers are not always well-informed about the advantages of using credit cards, especially over debit cards, should a merchant dispute arise.
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