A bridal shop that recently went bankrupt left many brides-to-be in trouble – the shop had their money and their dresses. Brides who made deposits on dresses using cash, check or debit card were left with nothing. But brides who made deposits by credit card can probably get a full refund from the credit card companies. That is because the federal Fair Credit Billing Act (FCBA) says you do not have to pay credit card charges for products or services that you never receive.
To use the Fair Credit Billing Act to your advantage, it may make sense to use your credit card to pay for:
- Travel: If the airline or cruise line goes out of business before your trip, you get all your money back.
- Shopping on the Internet: If the goods never arrive, you can get your money back from the credit card company.
- Buying Furniture (or things that have to be delivered): If it does not arrive, you get your money back.
- Deposits: If the business closes before you get your goods or services, you can get your money back.
Debit Cards Are Not Credit Cards
Remember, there is a big difference between a true credit card and a debit or check card with a Visa or Master Card logo. With a credit card, you charge an item, the credit card issuer pays the seller, and then you repay the credit card company, with interest, when your monthly bill comes.
However, with a debit and check card, money is withdrawn directly from your bank account when you buy something. Debit and check cards are covered by the federal Electronic Funds Transfer (EFT) Act, and they come with fewer consumer protections than true credit cards.
This sometimes gets confusing because store clerks ask ‘debit or credit’ when you hand them your debit card. They may change how they process the card based on your answer – by having you sign a receipt instead of putting in your PIN – but they can’t magically transform your debit card into a true credit card.
For More Information:
Learn more about the FCBA and consumer credit protections available.
Get additional details for consumers about the EFT Act.