Credit Card Expert Disputes Erroneous Charge, Frustration Ensues

Georgetown law professor and Credit Slips blogger Adam Levitin is having trouble disputing an erroneous $176.96 charge on his Citibank Amex card from PACER, the federal court’s online docket system, which he accesses for free. The professor is a consumer credit expert and should have no problem understanding and fixing the error, right? Fat chance.

Let’s first check out the professor’s relevant credentials:

Professor Levitin’s research focuses on financial institutions and their role in the consumer and business credit economy, including credit card regulatory and competition issues, mortgage lending, identity theft, DIP financing, and bankruptcy claims trading.

So he’s a damn-smart expert on credit thingies. Let’s see how he handled Citibank.

I called Citi and disputed the charge. The charge is a billing error under 15 CFR part 226.113(a)(1). Unfortunately my dispute did not compute in the Citi system. Because I was contesting an unliquidated amount of the charges, however, my case didn’t fit into one of their eight dispute check boxes. (Note that Reg Z does not require that I know the amount of the error. See 15 C.F.R. Part 226.113(b)(3).) Finally, after speaking to a supervisor, I just decided to dispute the entire amount because that was the only way I could go forward with a dispute given the unbending parameters of Citi’s computer system. I also contacted PACER to make sure that they had processed all my fee exemptions.

Fast forward to earlier this week. I still hadn’t heard anything from Citi or PACER about the dispute’s resolution. But, to my great surprise this month’s Citi statement arrived. It says that I owe the full PACER balance and there’s a finance charge tacked on for the disputed amount.

When I called Citi to inquire, I was told that I hadn’t disputed the charge the previous month. This was in spite of fact that there were numerous notes about the nature of the dispute in my file. In other words, Citi had taken down all sorts of details about my dispute, but never actually processed that I was disputing the charge. Citi entered the dispute a month late, and only after I called to check up on it.

Well, Citi has now (supposedly) removed the finance charge and recorded the charge as contested. But Citi tells me that I need to submit documentation about the dispute or the charge will be reinstated. That means I have to send some 50 pages of court orders to Citi at my own time and expense for a merchant’s mistake. The duty to investigate a billing error is Citi’s. Nothing in Reg Z requires that the cardholder submit written documentation to the card issuer at my own expense. So why am I footing the bill? (Maybe there’s language to that extent buried in my cardholder agreement…)

The professor sees five problems with the situation:

1. His credit report may take a ding from the late payment, something he has no control over and Citibank’s CSRs are too incompetent to fix.
2. The surprise rate on the finance charge was 101.211%
3. After futzing with a compound interest calculator for half an hour, the professor couldn’t figure out how Citibank was calculating the finance charge.
4. The late payment could trigger universal default provisions with his other creditors, causing a world of financial pain from Citi’s mistake.
5. He can’t close the account without losing his rewards or further dinging his credit score.

We take away one very simple lesson that every policymaker should appreciate: a renowned expert on credit cards is being harmed by his creditor and is practically powerless to fight back. Does this seem fair or reasonable to anyone?

My Very Own Risk-Based Repricing Experience [Credit Slips]

Comments

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  1. anonvmoos says:

    why didnt mr Levitin just take a credit from PACER for his overbilling instead of including citibank? since it seems he will continue to do business with PACER , why not let them iron out the issues?

    this way 1. if anything goes wrong (like it did), the credit score wont be affected and 2. less calls and frustration dealing with financial problems from two different companies at once.

  2. cotr says:

    i have citi for cards and banks. They have tightened some insane strings. Try calling them without your account number. They can not find your account searching with your name, ssn, phone, or address. they suck.

  3. DadCooks says:

    And this surprises anyone?

    ALL the credit card companies continue to get less and less customer/consumer friendly.

    A long story short–recently it took American Express 4-months to resolve a problem with two charges from the same company (total about $175). Email communications were not allowed after the first round–had to send hardcopies of invoices, hardcopies of my emails to and from the problem company, and sign a very legal statement that what I said and sent was the truth, the whole truth, and nothing but the truth.

    I have not had a credit card problem in several years–last time took less than 30-days and only a single email explanation on my part to reach resolution.

  4. newyorkjerry says:

    It’s not easy dealing with Citi. I have their AAdvantage Master Card, and received an offer for their AAdvantage amex card at no additional fee. I accepted, got the card, and they then billed me an annual fee. When I called to complain, they told me that they never made such an email offer. When I sent them an email, the offered a $20 credit as a good will gesture for them charging me the $85 fee, meaning they thought I should be happy to only pay $65 for a no fee card. I cancelled and they suggested that next time I received such an offer, I should try again.

    Next time I got the offer, I did foolishly sign up, confirming that there was no fee. When I got the card I again called to confirm there was no fee. Then I got the first statement, and there was the fee. They wouldn’t remove it, so I asked for a retention rep and then his supervisor, who confirmed that this is a common problem, they know about it, but their computer system would not allow them to credit back the annual fee. He suggested that I cancel the card (great retention angle), wait to get another offer, and sign up again.

    As the old saying goes, “Fool me once, shame on you. Fool me twice, shame on me.” I asked him how it should be worded for “Fool me a third time…” The Citicard supervisor sympathized buy had no answer.

    What a shame. Years ago Citi was an industry leader.

  5. philipbarrett2003 says:

    @newyorkjerry
    Same happened to me with the Citi AA card, funnily enough my wife got one at the same time & has never been billed an annual fee!

    @DadCooks
    I have found Amex to be extremely fast & efficient when resolving claims & recently got some “time & trouble” money out of American Airlines thanks to them. I’ve also used their collect call number from a payphone in Seoul Airport. They sorted out my travel problems & then called my wife to let her know I was delayed.

  6. henwy says:

    I don’t get it. Aren’t you supposed to submit documentation when you dispute a charge? I mean, how are they supposed to know if the dispute is valid if there’s no documentation on your part? Do they just take your word for it?

    Last time I disputed a charge, I sent in around 20 pages worth of documentation. I wanted to make sure that they saw that my claim was valid and I got the result I wanted in the end.

  7. headhot says:

    3 words,
    Small Claims Court.

    If they want to screw with you and not follow the law, its some lawyer fee time.

  8. Crazytree says:

    wow I was going to say that NOBODY gets a fee exemption from PACER but then I found this:

    [www.pawb.uscourts.gov]

  9. FLConsumer says:

    I want to hear how he’s exempt from PACER fees… I don’t know of any exemptions off the top of my head. If they exist, they’re very limited. I know your usual “academic” uses still require that you pay for PACER use.

  10. ecwis says:

    @FLConsumer: See the post right above yours…

    [www.pawb.uscourts.gov]

  11. drdom says:

    First off, PACER isn’t free. As with the post above I’m not intimately familiar with every tiny detail, but the exemptions are few and far between. None of my academic work, pro bono work, or anything else, to my knowledge is exempt.

    Second, for an “expert”, he handled this like a putz. Why get so hyper-technical. If there’s a problem with a charge, dispute it in writing in simple, straightforward terms. Getting all technical and detailed is just asking to make this more complicated. So you can impress everybody with how much you know, cite the sections of CFR etc. Great, but a simple, well written letter, explaining what’s wrong and what you want, has the best chance of getting resolution of the matter. If you’re smart enough to be a law professor at Georgetown, you should be able to write a simple, to the point letter, shouldn’t you??

    Unless of course you’re looking for a fight, or to impress everyone with how much of an expert you are.

  12. drdom says:

    I stand partially corrected. Apparently PACER does extend exemptions in some cases. Still doesn’t explain why doing this the hard way makes much sense.

  13. edrebber says:

    The customer is supposed to first contact the merchant to correct a billing error. If the the customer can not resolve the billing error with the merchant, then they are supposed to send a letter to a specific address to dispute the charge. The professor gets an F for failing to follow the written instructions.

  14. Melt says:

    I agree, for someone who is an “expert”, following the very simple procedures would probably have pushed his dispute much farther than the ” than thou” approach.

  15. Adam Hyland says:

    @anonvmoos: What good is a credit from a service you access for free?

  16. ChaosMotor says:

    Companies to never, ever, ever do business with:

    Citi
    JP Morgan
    Chase Manhattan
    Bank of America

  17. brosnan6 says:

    @edrebber:
    Yeah but seriously, who does that anyways? I’ve never bother ed and always just file the dispute with the CC company. I figure it’s not my problem to deal with. And if you’re dealing with a dispute against a large company, it’s not like your CC company can call somebody and confirm that you indeed tried to fix the problem with them first or not.

  18. anonvmoos says:

    @Adam Hyland: in his story he mentions disputing only part of the charges.

    “Because I was contesting an unliquidated amount of the charges”

    “Finally, after speaking to a supervisor, I just decided to dispute the entire amount”

  19. newyorkjerry says:

    Philip, I’ve always found Amex great at handling disputes, but if what Citi told me is correct, their Aadvantage Amex card is processed through Citi’s network, not Amex.

    Interestingly, I called Amex to complain, and got a callback from an investigator who was interested, took down the details, and said that he didn’t know how to handle this, but would pass the info to another department, adding that if I got the offer again, I should call him. I assume that I’ll get the offer again, so we’ll see what happens.

    On some level it’s good to hear that someone else had the same problem I did, confirming that Citi has a serious problem.

    (Not that this would help me.)

  20. GoldHoops says:

    Only on this site would people find fault with the way a credit expert handles a credit situation. The story was posted to point out how hard it is to get something that should be a simple matter ironed out…even for someone who KNOWS all of the intricacies of the system. Instead of pointing out all of the things you believe he did wrong, why not just appreciate the point of the article. Geesh!

  21. gravedi66er says:

    @brosnan6

    “I’ve never bothered and always just file the dispute with the CC company. I figure it’s not my problem to deal with.”

    If it’s not YOUR problem to deal with then whose is it?

    So called credit expert Levitin screwed up from the get go…or lied. The first question asked by the credit card company in a dispute claim is to ask the cardholder if they have tried to resolve the problem with the merchant. If they say no then the credit card company can do nothing. They are required to give the merchant a chance to rectify the situation. Of course you will get plenty of people who lie and say they know nothing about the company or why they were charged.
    If Mr. Levitin receives this PACER service for free then how did they get his credit card number in the first place? Obviously he gave it to them for something. Why didn’t he contact PACER, point out their mistake and ask for a refund? Everyone wants someone else to take care of their problems these days instead of just attempting to solve it themselves. We have become a nation of bed wetters and thumb suckers.

  22. snowpuff says:

    “The duty to investigate a billing error is Citi’s. Nothing in Reg Z requires that the cardholder submit written documentation to the card issuer at my own expense.”

    Uh, yes you are required to file your complaint in writing under the Fair Credit Billing Act. No, the credit card issuer is not required to take your complaint over the phone. Yes, they can require you to submit documentation.

    These are some of the most basic rules of disputing a credit card dispute.

  23. snowpuff says:

    @GoldHoops: Actually, the gentleman seems to have a very poor understanding of the credit card dispute regulations. Seems like his expertise lies in bankruptcy and Consumerist somewhat overstated his bona fides.

  24. snowpuff says:

    @GoldHoops: Well, unfortunately this gentleman has a very poor understanding of the regulations of credit card disputes. It appears his expertise is in bankruptcy and Consumerist may have overstated his bona fides…

  25. clickable says:

    Good Lord! Talk about making mountains out of molehills! “The charge is a billing error under 15 CFR part 226.113(a)(1).” Pompous much? Maybe the charge is a bookkeeping mistake, Professor?

    If they want your statement about the dispute in writing, give it to them in writing. One page, three paragraphs at most. They are not interested in the history, nature, or details of the agreement with Pacer. They’re not trying to trap you, they don’t need itemized breakdowns from anyone, and they don’t need tens of pages of court orders. Methinks the professor likes his little drama.

    Professor, they just want to know why you are disputing the charge (because it is an error under the agreement between yourself and Pacer). Once they have your statement, they will ask Pacer if this is correct. Pacer will examine its records and presumably will confirm that the charge was indeed billed in error. The charge will be reversed and the dispute will be resolved.

  26. huadpe says:

    @anonvmoos: He gets free access to PACER forever. He never has a bill to pay them, so a credit is useless.

  27. 67alecto says:

    Major issues with this as this supposed “Expert” doesn’t seem to know how credit cards or Reg. Z works:

    “1. His credit report may take a ding from the late payment, something he has no control over and Citibank’s CSRs are too incompetent to fix.” – he wasn’t late with a payment, so there wouldn’t be anything to report

    “2. The surprise rate on the finance charge was 101.211%” Nice shocking headline, except that credit card always charge you interest on the average daily balance if it isn’t paid in full. At least he correctly identifies it as the “effective rate” and not the actual APR – after going for the shock value, of course.

    “3. After futzing with a compound interest calculator for half an hour, the professor couldn’t figure out how Citibank was calculating the finance charge.” Wow, I mean..wow. APR/365 times average daily balance/100 times days in the cycle. Not cutting him any slack since he’s “the expert”.

    “4. The late payment could trigger universal default provisions with his other creditors, causing a world of financial pain from Citi’s mistake.” Again, no late payment – just a situation where balance wasn’t paid in full – and his finance charges were credited back. The onerous task he describes of having to provide documentation will consist of Citi sending him a form letter with a couple of sections to send back after signing it. He would only need to provide all those court documents if PACER was going to fight it.

    “5. He can’t close the account without losing his rewards or further dinging his credit score.” He is so upset, but not willing to forfeit $33 by closing his account with them. The “hit” he’d take on his credit report is so minor (a handful of points which would be recovered in a couple of months).

    What further irritates me is that he says he’s not required to submit this dispute in writing, yet in one of his source links for Reg. Z ([www.bankersonline.com]) it says:

    “b) Billing error notice. A billing error notice is a WRITTEN notice from a consumer that: ” (emphasis added)

    and

    The creditor may require that the written notice not be made on the payment medium or other material accompanying the periodic statement if the creditor so stipulates in the billing rights statement required by Secs. 226.6(d) and 226.9(a).

    (1) Is received by a creditor at the address disclosed under Sec. 226.7(k) no later than 60 days after the creditor transmitted the first periodic statement that reflects the alleged billing error;
    (2) Enables the creditor to identify the consumer’s name and account number; and
    (3) To the extent possible, indicates the consumer’s belief and the reasons for the belief that a billing error exists, and the type, date, and amount of the error.

  28. FLConsumer says:

    @drdom: Those who can, do. Those who can’t, teach.

  29. icedcornholio says:

    Sorry, I find this hysterical. Any ‘expert’ knows that you have to file a dispute in writing. On the back of every credit card bill it says “contacting us by phone will not protect your rights” or something like that.

    You always have to put the dispute in writing.

    I believe that’s in 15 CFR part 226.113(a)(1), paragraph 23, section 12.a. (Kidding, who the hell quotes chapter and verse to dispute stuff like that)..

  30. ConsumerAdvocacy1010 says:

    I say f*ck the credit card companies. Visa for one can burn in hell. Nothing but incompetent asshats, the whole lot of ‘em.

  31. aquanetta says:

    I was totally following the story until “15 CFR part 226.113(a)(1)”.

    The whole story could’ve been further summarized to: Citibank is run by a bunch of greedy nincompoops who are creative at accounting, even the one guy who should know his way around the system got f*cked. The end.

  32. TangDrinker says:

    PACER is run by the federal court system. Anyone who says “bring it up with the merchant” has never dealt with trying to get something corrected on PACER invoices.

    I don’t think his citation is correct. There is no 15 CFR 226. I believe he means 12 CFR 226.13. Maybe that’s why Citibank ignored his pleas – he was citing to something that doesn’t exist. In his blog entry he cites to Banker’s Online. I would have thought a law professor would know to cite to the original statute text.

    You can find the full text at the site below.

    ecfr.gpoaccess.gov

    I’m not a lawyer, just a law librarian.

  33. Horace1 says:

    Good grief. What a bunch of ninnies most of y’all are. Get a life. Some of you playa haters are so caught up on the term “expert” and trying to bring him down that you missed the point. The prof’s long-winded post has a real simple message: this is a system that screws even sophisticated individuals, so how can Joe America hope to navigate it?

    I don’t think the professor is actually pissed or anything like that. (Take a look at his responses to comments on his blog–he puts some caps in those “knuckleheads,” (his term–way old school!) who posted similar comments like the ones here. He makes pretty clear that $14 finance charge or $33 in rewards isn’t what this is about. It’s about a system that makes the little guy have to suck it up.

    Also, small claims court? Hahahahahaha. No chance. There’s binding mandatory arbitration in the prof’s cardholder agreement, I bet.

  34. AaronC says:

    @Horace1: They are hardly Ninnies. They are commenting on the article just as you, and they were not the first to use the term “expert”. When an “Expert” makes such a simple mistake and over dramatizes the situation, they should be called out. This site is about consumer rights and protection. Not about blaming the corporation for every little thing and getting free money. Too many people on this website want to blame the business just because they are a business.

  35. framitz says:

    ‘Expert’, yeah right. I can’t believe a so called expert would even do business with Citi.

  36. merefaucon says:

    “a renowned expert on credit cards is being harmed by his creditor and is practically powerless to fight back.

    imagine how an uneducated desperate people feel as they find themselves in the same situation. being an expert or a professor doesnt make it more painful. at least you have the resources to just pay it.

  37. cbearnm says:

    Maybe there is come schadenfreude in seeing an ‘expert’ screw up, but the fact is, the way it was handled IS his fault.

    Call in to register the dispute and get the proper forms to file in writing.

    Get the paperwork, complete it .. concisely, and return it to Citi. I have done this a couple of times and it’s a relatively straight forward process. Fill out the affadavit that you did not authorize the charge and get it returned.

    They will check with the company that made the bad charge and correct it. The charge will be credited back to the card.

    Some people just enjoy making things more of a challenge than they need to be. Mr Levitin appears to be one of those. As a credit “expert”, he should be one of the first to realize that ‘phoning in does not preserve your rights’.

    There will be exceptions to the rule, but by and large, these disputes are handled fairly well in most instances. If you make it more difficult to decipher what you are saying, you WILL make it more difficult to solve.

  38. BugMeNot2 says:

    I wouldn’t see the Indiana PACER’s even if it was free!

  39. lotsofchunks says:

    Mr Expert:

    Dealing with idiots that care less about you than their next break is part of life. Citing laws etc doesn’t work for these people. You have to follow their procedures if you want results.

    Yes you know more but evidently you don’t because many people don’t have a citi card for the very reason you cited. That is unless they don’t have a choice because they can’t pay their balance.

    In which case they can mistreat you all they like cause you are a American slave to debt.

  40. Horace1 says:

    @AaronC–I don’t think the professor is attacking Citi because its a business. His other blog posts are often pretty pro-business. He’s attacking Citi because Citi goofed and because it provides an example of what’s wrong with the current consumer credit system.

    @ Mr Expert–read the prof’s post more carefully. He cites chapter and verse in the blog post. I wouldn’t assume that he’s so dense as to try doing that with the card issuer.

    @cbearnm–so let’s get this straight–the prof calls in, speaks with a supervisor, is told that the dispute has been registered, but we shouldn’t care at all about that because there is fine print saying that calling in “won’t preserve your rights.” Sure, I can send everything certified mail, return receipt and all that and “preserve my rights,” but for a small dispute like the professor’s it really isn’t worthwhile–write up a letter, print it, go to the post office, wait in line, etc. How many people go to that trouble over a $14 finance charge?

    Of course most disputes get resolved correctly and fairly. But the really scary point the professor makes is that if Citi fucks up, it can trigger a cross-default clause on another card, so other cards’ balances get hit with penalty interest rates. Good luck getting that straightened out. Maybe the other issuers will lower your rates, but they’ll probably take months to ratchet them down.

  41. Buran says:

    @newyorkjerry: Can’t you dispute it as an invalid charge with them considering you have in writing their offer and can send it right back to them as a dispute support document?

  42. Buran says:

    @FLConsumer: Try telling that to my parents, both of whom teach or have taught earlier in life, and many other very talented teachers. We wouldn’t have a future if it wasn’t for good teachers. Why the teacher hate? Seriously, why?

  43. AloysiaRhinoceros says:

    Comment on Credit Card Expert Disputes Erroneous Charge, Frustration Ensues Regarding the professor’s comment:

    But Citi tells me that I need to submit documentation about the dispute
    or the charge will be reinstated. That means I have to send some 50
    pages of court orders to Citi at my own time and expense for a
    merchant’s mistake. The duty to investigate a billing error is Citi’s.
    Nothing in Reg Z requires that the cardholder submit written
    documentation to the card issuer at my own expense. So why am I footing
    the bill?

    This is the curse of too much knowledge. From my experience as a CSR at
    a different bank, what Citi needed was a brief written letter that
    states: “I was incorrectly charged $176.96, please remove the charge
    from my account:” That’s all the documentation they need.

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