consumerism

Your Money: Disputing a Charge on Your Credit Card

The card issuer generally takes your word against the merchant or service provider at the outset, restores the money to your bank account temporarily or issues a credit and then goes about its investigation. It essentially demands that the merchant or service provider who supposedly did you wrong prove that it did no wrong at all.

But if you have never wielded this power tool of consumerism, there are a few things you should know first. The cat and mouse game that goes on behind the scenes can be tilted much more — or much less — in your favor, depending on which charges you dispute and how you go about disputing them.

Chances are you will need to use the dispute process sooner or later. We live in a world where you often cannot use cash to buy cocktails on an airplane and any individual can attach a card reader to a smartphone and accept card payments from anyone else. Mistakes will inevitably be made.

Meanwhile, all sorts of online businesses depend on recurring subscription revenue. Mistakes will inevitably be made again. Oops, we somehow forgot to honor your request to cancel your subscription. Oops, we forgot again. Oh, but now it will take until the next billing cycle. Sorry!

You have had the legal right to correct these mistakes ever since 1975, when the Fair Credit Billing Act went into effect. The law dictates that there be a process by which you can question unauthorized charges, billing errors and transactions involving goods or services you never received or merchants did not deliver in the way they were supposed to.

This creates problems for merchants. Plenty of people pretend that they never received products that were supposed to arrive by mail and then dispute the charge, hoping their card company won’t be able to figure out that they are liars and thieves.

Even legitimate beefs or misunderstandings create many problems. In the 12 months ending Sept. 30, 2012, Visa processed $2.07 trillion in transactions in the United States. While cardholders disputed just 0.037 percent of that amount, that adds up to $765.9 million in transactions under review. According to MasterCard, 0.05 percent of its transactions worldwide are subjects of dispute, so its card issuers will probably deal with over 15 million questionable charges this year. Several million of these disputes involve outright fraud, though none of the card networks would break out the exact percentages. Avivah Litan, an analyst at Gartner, estimates that 20 percent of disputes involve fraud.

The rest require a lot of manual labor. Every time someone initiates a dispute, the bank that issued the card must look into it. Someone has to contact the merchant and wait for a reply that may include a receipt or other documentation.

Merchants must carve out time to respond to each dispute. They also pay one-time fees for the privilege and may end up paying higher overall fees to accept cards if disputes are too frequent. Or they just get cut off from accepting cards altogether.

The true cost per dispute to the banks of all of this back and forth ranges from $10 to $40, according to a 2010 estimate by the consultants at First Annapolis. Given that cost, according to Scott Reaser, a principal there, many banks will simply absorb the disputed charge on a consumer’s bill and never contact the merchant if it is below a certain threshold.

That number will differ for every bank, though it probably averages around $25. Some large retailers, it turns out, have similar strategies, according to a 2009 Government Accountability Office report. So even if the bank contacts a merchant about the dispute, the merchant may allow the customer to win the dispute without bothering to investigate the complaint. The report did not say what the threshold was, and the G.A.O. is not permitted to identify the retailers it spoke to.

It is tempting to conclude that you can get away with disputing any old thing under $25 and not have to worry about tangling with the merchant again. But given that frequent disputes can lead to higher costs down the road, some merchants vow to fight every one.

Or they have consultants who make them fight as a condition of offering their assistance. That’s how Monica Eaton-Cardone, the co-founder of Chargebacks911.com, works with her merchant clients to help them keep their dispute rates down and get out (or stay out) of trouble with the companies that control their ability to accept cards.

Why does she operate that way? The answer begins with her own painful experience in the direct response business, selling things to people who sometimes didn’t like what they received in the mail or didn’t realize they had signed up for a recurring service with regular bills.

Faced with the threat of losing her ability to accept cards if the number of disputes didn’t decline, she realized there was a very basic problem with the process: she concluded that over 70 percent of the people disputing charges with their bank never called her, the merchant, to complain first.

Twitter: @ronlieber

Article source: http://www.nytimes.com/2013/01/26/your-money/what-happens-when-you-dispute-a-credit-card-charge.html?partner=rss&emc=rss

Adbusters’ War Against Too Much of Everything

Skip the mall and the neighborhood store, resist the urge to shop online and, by all means, don’t buy anything you don’t truly need.

So says Kalle Lasn, 70, maestro of the proudly radical magazine Adbusters, published in Vancouver, British Columbia. Mr. Lasn takes gleeful pleasure in lobbing provocations at global corporations — and his latest salvo is “Buy Nothing Christmas.”

“As our planet gets warmer, as animals go extinct, as the humans get sicker, as our economies bail and our politicians grow ever more twisted,” Americans just go shopping, Adbusters says on its Web site. Overconsumption is destroying us, yet shopping is “our solace, our sedative: consumerism is the opiate of the masses.”

“We’ve got to break the habit,” Mr. Lasn said in a telephone interview. “It will be a shock, but we’ve got to shift to a new paradigm. Otherwise, I’m afraid will be facing a new Dark Age.”

Of course, retailers will be facing a Dark Age if people really stop shopping. And because consumer spending accounts for roughly 70 percent of United States gross domestic product, an abrupt shift to nonconsumption would drive the already faltering economy to its knees.

There are no signs that consumers are heeding Mr. Lasn’s call, says Marshal Cohen, chief retail analyst at the NPD Group. “I find that people are shoppers or they’re not,” he said. “Shoppers keep shopping.”

So it’s easy to dismiss this latest campaign as yet another empty gesture from a figure on the radical fringe. Why take Mr. Lasn’s words seriously?

Well, last year, a campaign prompted by Mr. Lasn and his magazine improbably caught fire. It was Occupy Wall Street.

Adbusters gave Occupy its name and opening date and designed the poster with Occupy’s defining image: an elegant ballerina perched atop Wall Street’s raging bull while gas-masked figures loomed in the background. The poster contained this text: “What Is Our One Demand? #OccupyWallStreet. Sept. 17th. Bring Tent.” A digital version went viral.

Mr. Lasn’s main role in the Zuccotti Park occupation, however, pretty much ended there: he remained in Vancouver, never visiting the Lower Manhattan encampment and participating in the local organizational work that made it possible. But his contribution began long before then.

Born in Estonia, Mr. Lasn lived for several years in German resettlement camps with his parents after they fled the advancing Soviet army toward the end of World War II. The family moved to Australia when he was 7. He graduated from the University of Adelaide, where he studied theoretical and applied mathematics and then worked four years for the Australian military, writing computer code for war games.

Then he moved to Tokyo, where the skills he developed in Australia served him well. He started a market research company and, he says, did computer-based studies of ad campaigns for global corporations. The work was lucrative, and he used his money to see the world. It was 1968, and a left-wing student rebellion in Paris resonated worldwide. He says he imbibed the spirit of rebellion, and it changed him.

“Until Occupy, the greatest political movement I’d ever seen was the uprising of ’68. It really inspired me, and I’ve been running on that energy — and have been trying to recapture it — ever since.”

LAST year, he says, he did recapture it. Stirred by the uprisings in Algeria, Tunisia and Egypt — the Arab Spring — he and colleagues at Adbusters “began to consider the possibilities of achieving a soft regime change in the United States, of finding some way to tap into the revolutionary zeitgeist.” Out of those discussions came the idea of Occupy Wall Street.

Max Haiven, a postdoctoral fellow in art and public policy at New York University, who has studied Adbusters for years, said: “That was a fantastic initiative for them. They’ve been in global anticonsumption battles for years, and Adbusters has called for many big campaigns that never really happened. This one did. In a way, they got lucky.”

He added: “What led to Occupy Wall Street taking off was not just the iconic image of the ballerina and the bull but a number of factors — including on-the-ground activists building an organization through many, many meetings and relationships and hard work in New York and elsewhere. Adbusters didn’t do that. Other people did it.”

Mr. Lasn acknowledges the truth of that, and says he’s not a community organizer and certainly not a graceful politician. “I’ve said some things that have pissed people off,” he says. And it’s not just corporations like Nike, McDonald’s and Philip Morris that have been stung by him. Israel’s policies toward Palestinians are an Adbusters target.

Article source: http://www.nytimes.com/2012/12/23/business/adbusters-war-against-too-much-of-everything.html?partner=rss&emc=rss

Your Money: Disputing a Charge on Your Credit Card

Adbusters’ War Against Too Much of Everything

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