Federal law provides several rights for consumers who have paid by credit card and find they need to dispute charges for goods or services.

The "billing error" rule applies if there is a mistake on a bill, the goods or services were not delivered or were late, or the merchant did not comply with the contract.

In cases that billing errors occur, there are steps to follow:

1. Provide written notice of the dispute within 60 days after the creditor sent the bill or statement. Use the address identified on the creditor's bill for "billing inquiries."  
2. The creditor must acknowledge your inquiry within 30 days and has up to 90 days to investigate and either correct the bill or explain why the creditor believes it is correct. 
3. In the meantime, the creditor may not attempt to collect the claimed debt.

Under the second rule the seller's charges may be disputed if the goods do not arrive or, even if they were accepted, a good legal claim against the seller because the goods do not comply with the contract or the seller does not honor its return policy may apply.

There are limitations to keep in mind that do not apply under other rules:

1. You may only dispute charges you have not yet paid.
2. You must have made a good faith attempt to resolve the dispute with the seller.

There are two additional requirements that apply under this so-called "claims and defenses" rule. The sale must be for more than $50 and have taken place either in your state or within 100 miles of your home address. (In some states, telephone and web transactions may be considered as taking place where you are.) These dollar and distance limitations do not apply if the seller issued the credit card, was in a special business relationship with the issuer, or made an offer in a credit card issuer's mail to you.

Online purchases are a great example of when using a credit card may be better.  Greater legal protection is available against the seller if the goods are defective or if a credit card number is used without authorization.  It is easier for to review the records when a credit card is used.  

Note: This information was prepared as a public service by the Illinois State Bar Association and is a joint project with the Illinois Press Association. Its purpose is to inform citizens of their legal rights and obligations.