Help, Expedia Sold My Chargeback To A Collection Agency!

Ed and his wife successfully filed a chargeback against Expedia for a canceled trip earlier this year. Now he’s being dunned by a collection agency for the amount that Amex refunded him.

Wife and I had a trip booked to London [this past February]. With the blizzard, flights were grounded for three days. Our plane tickets were refunded from Virgin, and our hotel was refunded from Travelocity, because the blizzard was out of control.

Expedia refused to reimburse part of our package. I filed a chargeback with Amex, and won.

Fast forward until Saturday, I receive a letter from a collection agency for the $493 on behalf of Expedia. We haven’t heard from them since the chargeback in March.

1). Is this legit? Can the company try and get money from me after Amex ruled in my favor?

2). My credit score is hovering around 760, and I don’t want a collections to go on there. Is there a way to avoid this?

I called Amex. I was on the phone for 40 minutes with them this AM. I talked to three different people, all who said Amex can’t do anything. I left a message for someone in the dispute department, but I imagine the same thing will be said.

A chargeback can be a useful tool to get your money back when you don’t think a business is being fair, but if Expedia wasn’t willing to refund you the money in the first place, you can imagine how it feels about this. Many companies will sell chargebacks to collection agencies so that they can make at least a little money off the debt, thus passing the problem back over to you.

Some of your options include contacting the collection agency by USPS and demanding proof of the debt, or disputing the debt (again, by USPS) and asking that they cease contact with you completely. (If you do this, the company has the right to sue you if it wants.) You can also send a letter to the credit reporting agency disputing the debt and ask them to remove it, although they don’t have to.

If you really don’t want to risk the hit on your credit score, you can always contact the collection agency and negotiate a much lower repayment than the full amount. Remember that the agency bought this debt for pennies on the dollar when you negotiate, and be sure to get any repayment agreement in writing first.

“Debt Collection FAQs: A Guide for Consumers” [FTC]

Comments

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  1. seth_lerman says:

    AMEX is right, they can’t do anything about this.

    And did AMEX really “rule in your favor”? Or did you just get a refund of the AMEX charge because Expedia never responded to AMEX’s request for information regarding the charge. A number of companies never do. I did a chargeback to DirecTV for an ETF charge they were not entitled to (I was out of contract) and they never responded to Discover card.

    The real question is what was your original agreement with Expedia? They may very well, per that agreement, be entitled to the $493 they say you still owe them.

    • ubermex says:

      If amex did it, then it was governed by expedia’s agreement with Amex. If they signed a thing with amex that says “you may get chargebacks, tough cookies” then they can’t go after you for it. They already agreed not to go after any amex chargebacks as part of their merchant agreement.

      • FatLynn says:

        Are you sure about that? I really don’t think it works that way.

      • seth_lerman says:

        Without the records of how AMEX determined to give money back to card holder we don’t know if what you are saying is true. It may very well be as I stated a case of Expedia never responded.

        In regards to their merchant agreement, I do not know the terms. I know back when I had my own retail store my merchant agreement listed a chargeback situation as having AMEX be a mediator but it would require me to respond to be binding.

      • nonzenze says:

        The agreement with AMEX doesn’t supersede the agreement between Expedia and the customer. It governs the payment that AMEX processes on behalf of the merchant but in no way releases the customer from the duty to carry out his contractual agreements.

        *That* agreement states (per the Expedia webpage, might have been changed since then) that the customer is not entitled to a refund for acts of God, which as a legal term of art certainly includes blizzards.

        The terms of a contract and how you chose to pay for that contract are entirely distinct matters. From the point of view of the Expedia-Customer contracts, this is no different than if he had passed a bad check or simply not paid at all.

        • castlecraver says:

          this is a good explanation. Thanks.
          Still though, makes me wonder what stops any ol’ merchant from declaring really broad or arbitrary “no refund” policies to insulate themselves from chargebacks. If Ed agreed to the those terms when he paid, that’s one thing. But refunds get denied for all sorts of sketchy reasons, and it seems like the consumer’s last-ditch option becomes pretty useless when a merchant can decide to ignore it, knowing that it’s then the consumer’s problem to dispute the debt and/or deal with the hit on their credit report.

          • huadpe says:

            The policy has to be enforceable in court. If you have a no-refunds policy that doesn’t allow refunds when you’re clearly at fault, a court will just ignore it, say you’re a tortfeasor, and toss you out on your butt.

            If you pay by credit card, you can chargeback with the consent of the credit card company, regardless of the return policy. The company can then sue you (or send you to a debt collector) in order to collect the charged-back funds. Whether or not the lawsuit succeeds depends on the opinion of the court on the particular circumstances and the reasonableness of the contract between you and the company.

        • SolidSquid says:

          It could do, depends on the wording. If the AMEX one just says “You may receive charge backs” then no. If, on the other hand, it says “In order to process AMEX payments, you must allow customers to issue chargebacks where appropriate and respond to requests from AMEX for informations in such situations” then it might, since they were in violation of the merchants agreement by accepting the payment while refusing chargeback (and therefore the entire payment was invalid)

          Not saying this is definately the case, but it’s not quite as clear cut as you seem to suggest

    • Telekinesis123 says:

      It has to say in your contract with them that you are giving up your right to use chargback if you do business with them. Paypal has this in their TOS stating you can only use it once.

      • Difdi says:

        Given that the purpose of a chargeback is to recoup money when the other party to the deal has reneged on their side of it, or delivered items not as advertised (to the point of criminal fraud), or has overcharged you, I wonder at the legality of such TOS provisions.

        Can a contract stating that you are not allowed to pursue someone through legal means for stealing money from you be legal or enforceable?

        • bd_ says:

          Chargebacks are not ‘legal means’ – they’re an extrajudicial mechanism for reversing charges. If you brought them to court, and the court ordered a refund, there’d be no recourse but an appeal. Chargebacks, however, are another ball of wax entirely.

  2. castlecraver says:

    So what Consumerist is saying is that Ed has no choice but to play ball with the debt collectors?

    Is there really no clause in the merchant agreement that says merchants must abide by the issuers’ chargeback decisions? Seems that without this, a chargeback would be pretty pointless to even have as a last-ditch option in cases like this.

    • DariusC says:

      Ignore their collection and if they put anything on the record, attach the ruling that AMEX gave you and tell them to eff off. Not only that, but you did not enter into a contract with the collection agency, so even if they bought the debt, they do not have the right to collect it. That is a bilateral contract modification.

      Perhaps I am wrong, but you owe nothing.

      Note: This is assuming he entered into a contract with the company when he bought his tickets…

      • FatLynn says:

        AmEx is not a court of law. Also, there are no details whatsover about his agreement with Expedia.

      • JMILLER says:

        Debts can be bought and sold. You entered into an agreement with Expedia, and they can sell their debt as they see fit. I had a mortgage with a bank that sold it to Chase. Do you think Chase can say i dont owe it? Get a law degree before you give advice you can not support

        • DariusC says:

          Really? Even if it is not mentioned in the contract? You can just have your debts sold without your knowledge or input? Sounds like a law needs changing. If a company cannot take on the risk of debt, they shouldn’t lend it out in the first place.

          • ames says:

            Yes. In fact, you can even be the one selling debt if you so decide. Tom borrows $500 from you. You, later, borrow $450 from Sue. Whoops, you can’t pay, or have other uses for that money. You are legally allowed to sell Sue the $500 debt that Tom owes you (for, say, $50). Sue then has all rights and privileges with respect to that debt that you had, and can go after Tom for the money.

          • Commenter24 says:

            The ability to freely assign contracts has existed for a long, long time and it exists to provide liquidity for businesses and to allow for risk-shifting. As far as the debtor is concerned, when it comes to repayment it really makes no difference who the money is paid to. This is why society allows companies and people to freely assign contracts.

          • LandruBek says:

            This technique was invented in Italy in the 13th century (if not earlier) and helped spark the Renaissance. For better or worse, it’s the way the modern world works.

        • Duke_Newcombe-Making children and adults as fat as pigs says:

          Correction: Debts can be *properly assigned*. How much you want to be that the collections agancy can’t properly provide evidence of the validity of the debt, or a valid assignment.

          To the OP, either (A) wait for the collector to harrass you after sending a certified mail cease and desist letter, and document each incident, suing them in your local court for FDCPA (Fair Debt Collection Practices Act) violations @ $1,000 per, or (b) Negotiate with them for a lesser amount (again, they maybe paid $.05 max on every dollar of the disputed amount), with a written agreement that they’ll delete any tradeline reported to the credit reporting agencies, and consider the agreed-upon amount to be the full, total, and paid in full balance. Either way, they get dealt with.

      • Commenter24 says:

        Internet lawyer fail. Contracts are generally freely assignable and assignees of contracts retain all of the rights the initial contracting party had.

      • Griking says:

        Just ignoring the collection agency will just hurt your credit whether you feel it’s justified or not.

      • SenorBob says:

        wrong Wrong WRONG!

        A chargeback is the same as stopping payment on a check. In no way does it eliminate the debt.

    • Loias supports harsher punishments against corporations says:

      Is that indeed true? Must companies who allow use of credit cards abide by that company’s chargebacks?

      Consumerist?

      Internet?

      Would someone provide a link?! Los Links!!!

    • ShruggingGalt says:

      I’m not sure if AMEX has a different policy, but I know that Visa and MC will basically state on certain items “Contact cardholder regarding this dispute” which to me reads as : “You’re going to have to sue the cardholder if you think they are lying on this matter”

      Granted, if the cardholder lied, like “I never received the services” when in fact, they did, in many jurisdictions – the ones where the Mayberry PD doesn’t have anything better to do, can go after the cardholder for theft of services. It’s just like bouncing a check.

    • dg says:

      Well, the OP will have to deal with the debt collectors – but doesn’t have to pay anything. My response to them via Certified Mail, Return Receipt Requested would be “This is not a valid debt. Please provide proof of your claim to the contrary to me at the above address.”

      I wouldn’t pay them a dime, but I’d sue their asses for 10x more than what they were claiming if they kept it up.

  3. FatLynn says:

    There are not enough details to figure out what is going on here. He booked through both travelocity and expedia? I don’t understand what he had in the expedia package that wasn’t hotel or flights.

    • Ed5781 says:

      My Expedia package with a cruise down the Seine in France…It was cheaper there than anywhere else, so that is why I used Expedia.

  4. Loias supports harsher punishments against corporations says:

    Pay for the collections money by credit card and…

    …wait for it…

    issue a chargeback!

  5. HeyThereKiller says:

    I’m pretty sure it has to be USPS Certified Mail + Return Receipt… not just sent by USPS

    • Devil505 says:

      That’s just for proof that you sent it.

      • JMILLER says:

        and that they received it.

        • huadpe says:

          Both of which are very important…unless you believe that debt collectors are truth-telling saints.

          Are you interested in a 99 year lease on new toll operations on a bridge collecting Manhattan to Brooklyn by the way?

    • AustinTXProgrammer says:

      It depends how the OP wants to play. You can get a “certificate of mailing” for about 60 cents that IS admissible in court. It doesn’t guarantee they received it, but it shows you sent something. Let’s say you have a collection agency that just told your Ex about debt in violation of the FDCP. Generally the debt collectrs take the stance that you can’t prove it so it didn’t happen. You send them a certified letter to cease collection and disputing the debt. While that will OFTEN get them to go away if you have a legitimate well reasoned dispute (and would be appropriate in this case) a letter that says “Dont Kontact me, I dispute ths debt” sent with a certificate of mailing will often be completely ignored. But if you have a photo copy of the letter and a certificate of mailing it is enforceable. You sue them on both counts (the telling your Ex, and contacting after being told not too) and can prove one. You win.

  6. Master Medic: Now with more Haldol says:

    Why anyone continues to purchase from these websites is beyond comprehension.

    • Marshmelly says:

      I always purchase my flights through Expedia and I’ve never had a problem with them.

    • JF says:

      I’ve been wondering the same thing too. There have been so many stories of late hitting this site about problems like this one…..

      I personally only use those sites to find the hotel I want to stay at and then call the property directly. I’ve never been quoted a price higher than what is on the travel sites anyhow……

  7. Nighthawke says:

    Sounds like Expedia is going to have a losing 3rd quarter… They are not going to get any of my or my friend’s business.

  8. Tim says:

    Whoa. The most important question here is the first one: is Expedia within their rights to do this?

    I was under the impression that Expedia has an agreement with Amex, and that part of that agreement is that Amex’s decisions about chargebacks are final. The entire transaction was done within Amex, and Amex decided that Ed deserves the money back.

    If chargeback decisions can be appealed through the collections process, there’s a major problem with the chargeback system!

    • Tim says:

      Plus, when you sign for a credit card transaction (or, in the case of Internet orders, a virtual signature), you literally agree to abide by the terms of your agreement with the credit card company. You do NOT agree to pay the merchant the money no matter what. So really, Expedia has no proof of the debt.

      • FatLynn says:

        Not true. You accept expedia’s terms and conditions when you buy something on their website.

      • JMILLER says:

        Actually, you agree to Expedia’s terms and conditions. There is a check mark you must check before making a purchase saying you agree and understand. Expedia has that proof, which is more than sufficient. Please check your law before you give unsubstantiated rumors.

        • Dalsnsetters says:

          Please check your (law) website Terms and Conditions before you give unsubstantiated rumors.

          FTFY.

    • FatLynn says:

      AmEx is not a court of law. It is, in effect, an arbiter. If consumers want to eliminate mandatory binding arbitration clauses from contracts, because they generally favor big companies, there is no reason to think that a civilian arbiter (AmEx) that rules in our favor should have some type of superpower. It cuts both ways.

      • Tim says:

        Both the merchant and the consumer chose to accept Amex’s terms when they entered into the agreement to sell/buy the ticket. Amex decided that under its terms, the consumer does not have to pay for the ticket. If Expedia believes Amex didn’t follow its own agreement, Expedia should be dealing with Amex. Or maybe Expedia shouldn’t deal with Amex anymore if it doesn’t agree with Amex’s terms. But the point is that the chargeback happened under Amex’s terms, which it has made clear to both Expedia and Ed.

        • Commenter24 says:

          I don’t think that Amex decided that the customer didn’t have to pay for the ticket; I think Amex decided that the customer had the right, under his agreement with Amex, to order Amex to rescind payment. Amex did NOT decide that the customer had no further obligation to Expedia.

    • meltingcube says:

      If the contract between Expedia and the customer stated that part of the charge was non-refundable, and then the customer proceeded to get refunded for it, then Expedia is well within it’s rights to send it off to a collection agency. Many people seem to falsely think that a chargeback can solve all their problems, however it only makes it worse when you now cost the other company fees, and had already agreed with them to give them that amount of money.

      Karma’s a b*tch

  9. hotdogsunrise says:

    This picture is quite depressing, especially since it has been rainy and cold all weekend in central NY. It’s still August. I don’t want to think about snow yet!

    • womynist says:

      Ugh…tell me about it. I can say I do not miss living in Syracuse one bit. Winters in New England are much less harsh, although the locals here will tell you otherwise. I usually retort with “well, you’ve never lived in Central NY”.

      • BurtReynolds says:

        You should try moving south. I live outside of DC and being from Syracuse just gets me frusturated when there is snow in the forecast and the “sky is falling” routine starts up around here. Granted, they suck at snow removal here, but you don’t need to go buy out Wegman’s supply of eggs, milk, and bottled water because of it.

        Oh yeah, and your Corvette doesn’t do well in the snow.

    • Loias supports harsher punishments against corporations says:

      Try the Mid-West.

      Heat Wave!!

    • Verucalise (Est.February2008) says:

      I hear you, Central NYer myself.

  10. frank64 says:

    It is way to easy for companies to put things on your credit reports and cause major damage. There should be another step, such as court where disputes like this are settled before it can be listed on a credit report.

    • Anonymously says:

      If they’re really lucky they’ll get you fired from your job, prevent you from finding a job, or cause your car insurance rates to skyrocket!

    • common_sense84 says:

      There is no way the collection agency can list this on your credit report. They do not have your SSN number. They have a debt, a name, and minimal contact info from expedia. That is not enough for them for them to do anything.

      • AustinTXProgrammer says:

        I would not count on that.

      • econobiker says:

        Could you tell that to the shysters at Palisades Collections or whatever else they are named? Those guys can put bogus listings on credit reports from old info that they seemed to have gotten from GTE/ATT wireless records.

      • somedaysomehow says:

        WOW. You are seriously misinformed. All they need is your name, and possibly an address to add something your credit report. I WISH they needed a social!

  11. Telekinesis123 says:

    You are calling the chargeback a debt, but there is no debt since there was a chargeback. When they choose to accept payment in that form they also accept what comes with it and that is certain rights the cardholder has. Another case of having their cake and eating it too. There is no debt, there is nothing to sell I see this as nothing more than libelous slander on Expedia’s part.

    • Commenter24 says:

      You’re wrong. The debt arose when the customer revoked his payment via Amex. Now the customer has received “services” from Expedia without paying for them.

      As to the merchant agreement, even if there is a clause that says “you won’t go after the cardholder if Amex decides a chargeback in his favor,” I’m not sure that clause is enforceable by the cardholder against Expedia. The merchant agreement is a contract between Amex and Expedia, not between the cardholder and Expedia. The cardholder is at best a 3rd party beneficiary. While 3rd party beneficiaries have the right to enforce under certain circumstances, I’m not sure that this would be one of them.

      • fantomesq says:

        Yep. The debt remains and appears to be valid. Just because one guarantor backed out does not eliminate the debt.

  12. Nigerian prince looking for business partner says:

    I’m not sure why people have such a hard time grappling with the idea that chargebacks only recover the payment and do not deal with the underlying contract dispute.

    • Loias supports harsher punishments against corporations says:

      Some are saying the company, by allowing use of the AMEX card, is bound by AMEX’s decision on chargebacks.

      I’ve yet to see evidence posted to that effect, however.

      • ShruggingGalt says:

        Looking at the 2005 chargeback guide, it looks like only ONE class of merchants are required to abide by the chargeback decision (meaning that AMEX has the final say), and those are call Full Recourse.

        From the guide: “Term used to refer to situations in which
        American Express is entitled to charge back a
        Merchant for all questionable transactions.
        American Express has the right of full
        recourse if the Establishment does not comply
        with the terms of the Card Acceptance
        Agreement, or if the Merchant signs a full
        recourse addendum.”

        So unless Expedia is part of the high-chargeback merchants and had to sign an addendum to their agreement, the chargeback is the same as MC and Visa. Meaning it’s just like stopping payment on a check. That’s all.

    • Commenter24 says:

      It’s because people don’t want to accept the fact that chargebacks aren’t the magic bullet they like to believe them to be.

    • Griking says:

      Exactly.

      Blanket responses that I read on this website from people just saying to file a charge back drive me crazy because of this.

    • ames says:

      Probably because people throw it around here like it’s magic. “One word: chargeback”. Oh, consumerist commenters.

  13. dolemite says:

    How big a hit is something like this on your credit score? I recently ended up with a debt to Progressive Insurance showing up on my credit report. I haven’t checked my credit score, but I had around a 760-770 before this. The problem is, we switched insurance from Progressive to Allstate last year. Progressive claims that even though we canceled our policy with them, we never provided proof of insurance with Allstate, so they billed us another month. I never received any notices that the bill was due…I just used my free credit report and noticed I have 1 negative on there for a collections company. I mailed the collections company asking for proof of the bill, because honestly I don’t know what month/period this is for.

    • moorie679 says:

      I think it is around 30-40 points regardless of the amount however I am not sure myself, this whole credit thing is so convoluted it is mind boggling…..

      • dolemite says:

        Any clue on how long it takes to drop off after you pay it? Or does it stay on the credit report?

        • moorie679 says:

          7 years….but see my post below I am not 100% sure…it shows that the debt has been paid/modified/unpaid but you still take the hit, I read that it was illegal for them to take it off or they mess around and only contact 1 credit agency and this hit still shows up at the other two which then you might have to dispute

        • Nigerian prince looking for business partner says:

          It’ll stay on your credit report for 7 1/2 years if you just pay it with no conditions.

          When dealing with collection agencies, the best thing you can do is offer to pay a portion of the debt on the condition that the negative tradeline is removed from all of your credit reports. This is called a “Pay For Delete” (PFD).

          Outside of that, whether its paid or unpaid the negative tradeline will stay on your credit report for a very long time. You can write Good Will letters and if you’re reasonably persistent, there’s a marginal chance that they’ll remove it. But once they have your money, there’s very little incentive for them to play ball.

        • shangyle says:

          Yep, 7 years. It will display as “paid” but they have a right to keep it on there for the full 7 years.

    • badachie says:

      Why would you have to provide proof on insurance with another company in order to cancel your policy? It seems to that calling to cancel would be enough. Also, you don’t pay, they don’t provide coverage. And with Progressive, you pay in advance. How can you receive a service from Progressive without paying first?

      • dolemite says:

        All good questions, and I’m still trying to find out what happened. The problem is…wife was responsible for paying this bill, and apparently making sure bills are paid are low on her priority list, I’ve come to find out. I’m still not sure why I have this on my credit report. I guess just because my name was on the policy, despite the fact she is the one responsible for paying it. So I guess if you had a family of 4 people, everyone gets sent to collections?

        • moorie679 says:

          Once you get married I think you are treated as one entity rather than two individuals……again not 100% and not getting married

        • badachie says:

          Still, I would think that if you don’t pay your bill, your coverage is cancelled. End of story. Unless insurance coverage is considered some sort of contract where you agree to pay for six months. But I’ve never heard of this before.

          • Firethorn says:

            Auto insurance is standardly issued in six month intervals. This is the contract period. That you might have monthly or even weekly payments for it doesn’t change that the period is six months*.

            Now, whether they can actually ding your credit for that last month, I don’t know, but apparently so.

            *With clauses for partial refund if you dispose of the vehicle by selling or scrapping it.

        • jnrcorp says:

          Ok, I’d like to clarify this for everyone:

          1. A credit report can only be dinged if the company filing against you has your SSN.

          “dolemite,” you are the primary owner of the account and your insurance company has your SSN (all of them ask for it when you sign up). Therefore, YOU and you alone are responsible for paying the bill. If the policy was in your wife’s name as the primary holder, then it would be her credit report that would suffer.

          2. Credit reports are never treated as a couple.

          There is no such thing as my debt is your debt. What happens is two people are applying for a mortgage (etc.) and one person has bad debt and hence the application is denied because together the couple didn’t meet requirements. Another option is that a bill wasn’t paid and on a mortgage (etc.) where both names are listed (aka “joint” debt) and both reports are affected.

          3. Many states require that you never have a lapse in car insurance coverage. Therefore, an insurance company cannot cancel your policy until they have proof of your new policy. Typically, the effective date of the new policy is the date that the company will consider your policy canceled and will refund you the difference. However, late fees are still your responsibility if you didn’t pay.

    • IThinkThereforeIAm says:

      In my personal experience (I once got tagged for a $25 debt I was disputing but the company sold it to a collector) It can be pretty hefty. I got dropped from 800+ to somewhere into 700-720 … and it takes a long time for a bad debt to get off your report (I think it’s 7 years).

      And BTW: since OP’s debt was sold to a collection agency, it ALREADY has dinged his score. No matter what the collector says, the event that lowers your score is that the original debtor called your debt bad.

  14. moorie679 says:

    Based on what I read, once a debt goes to collection regardless of the amount $5 or $500 or $5000 you take hit of about 30 points regardless of paying, not paying, telling them to F-off etc. I also read that it was illegal for them to use this as leverage, ie:You pay this much and we will remove it from your score but some do it…..

    Can anyone confirm if this is true ? I have a debt dispute that is being handed over to collections and I really do not mind the hit considering there is no way in hell I will be buying a house or a car in the next 7 years in which this gets wiped clean anyways.

    • AustinTXProgrammer says:

      I don’t think they can offer to remove it as leverage, but you can certainly say they only way you will pay is if they remove it. All they care about is getting your money. Really, if they remove the tradeline and you get another loan to default on, some collection agency gets another chance to make money.

      I had one collection agency rack up about a dozen violations. I could prove 1 without a doubt and come close on several others. I sued them (eventually suit was dismissed without prejudice because of my attorney’s personal issues) and I haven’t heard from ANY collection agencies since. There are several Litigant lists that CA’s use and I strongly suspect I am on at least one of them.

  15. Skellbasher says:

    “If you really don’t want to risk the hit on your credit score, you can always contact the collection agency and negotiate a much lower repayment than the full amount. Remember that the agency bought this debt for pennies on the dollar when you negotiate, and be sure to get any repayment agreement in writing first.”

    So wait. This is the Consumerist, but the staff is advocating that the consumer just waive all their rights and legal protections and just ‘pay it’? I’m sorry, but this is absolutely terrible advice, especially on a site with the intent of helping consumers fight for their rights.

    Dispute the debt with the collection agency, and then contact an attorney to find out if a company can attempt to collect on monies that were charged back in your circumstance.

    Don’t just bend over and take it.

    • Commenter24 says:

      The advice given by Chris is actually pretty sound. For most people it’s going to be easier, quicker and cheaper to just pay the debt (or a portion of it). Attorneys are expensive and the fact is the Amex chargeback likely has little to no effect on the underlying contract between the customer and Expedia. As others have said, Amex isn’t a court nor an actual arbitrator. All Amex did was determine that the cardholder had the right to demand that Amex revoke the payment to Expedia; it has no effect on the cardholders underlying liability to Expedia. It could easily cost someone several thousand dollars in attorneys’ fees to fight something like this and still come out on the losing end. Chris’ advice is very realistic given the circumstances.

      • Skellbasher says:

        I did not suggest that someone hire an attorney to fight the debt.

        I did suggest that they contact an attorney for guidance if the collection attempts had any merit on his specific circumstances. Such an inquiry can be made at minimal cost. My lawyer provided me advice with collections issues 10 years ago for under $100, and it saved me thousands.

        It’s certainly a better option to explore than just bending over and taking it.

        • Nigerian prince looking for business partner says:

          I guess I don’t understand how he’s “bending over and taking it”.

          He had a contract dispute with Expedia and American Express issued a chargeback. He got his money back but the chargeback didn’t resolve the contract dispute. He talked to three different people at Amex who verified that they can’t do anything for him.

          Ultimately, this all will come down to the “Terms and Conditions” box that he checked when he completed his order. In all likelihood, Expedia is abiding by their end of the agreement because they designed it to protect their side of transactions.

          The OP has a few options:

          1. Do nothing — The collection agency likely wont sue over over such a small amount. They might resell the debt and potentially illegally reage the account to pressure the OP to settle. He just needs to wait it out for 7 1/2 years.

          2. Do nothing & dispute — He can not pay the collection agency while disputing the debt at the same time. If he has a clean credit report, he may stand a good chance with the dispute. At the very least, in many instances even if the credit agency rules against him they’ll never change the status of the tradeline as being disputed. FICO scoring models are very lenient when it comes to a single negative but disputed tradeline.

          3. Pay For Delete — Send a certified letter that explicitly does not acknowledge the validity of the debt but offers to pay it off for 50% of it’s value if the negative tradelines are removed from his credit report.

          • Skellbasher says:

            Simply paying the collection agency without finding out if the debt is valid is bending over and taking it.

            If the debt is valid, the agency can validate it properly. If they can not, it should not be paid.

            Any time the validity of a debt is in question, it should be vetted to make sure it is legitimate. Just paying it off and not bothering to check into it is the behavior that keeps less than reputable collection agencies in business.

    • George4478 says:

      Telling someone an option exists is not “advocating” that option. He DOES have the option of negotiating and paying, in addition to other options such as ignoring it, hiring a lawyer, writing his congressman, moving to Mozambique, etc, etc.

      • Skellbasher says:

        The option as framed in the story is a poor one.

        The OP will take a hit on their credit score no matter what once the agency reports it to the CRAs. Negotiating a smaller payment will show up on a credit report as such, and the OP will also receive a 1099-C form and have to pay tax on the difference.

        If the debt later turned out to be invalid, it’s going to be hard to get the money back from the agency, and just as hard to expunge the incorrect information from the CRAs.

        Debt collection agencies shouldn’t be paid until the debt is proven to be valid and legitimate. Advising anyone to just pay it first and ask questions later is a terrible idea.

  16. uniqueme says:

    My wife got a letter from a collection agency for a $25 Verizon phone bill from eight years ago, when she was a student. The statute of limitations had run out long ago, my wife swears she paid it, but I guess Verizon decided to sell the “debt” to the company for something nominal (a penny? maybe?) to get something for nothing, and the debt collection agency figures that there is a non-zero chance that someone will pay rather than dispute.

    My guess is this is what happened here. The chargeback occurred on the original transaction, and Expedia viewed this as a “debt” (with a nonzero chance of collection, since Amex ruled agaisnt them) and decided to sell it to the debt collection agency. The debt collection agency is gambling that at least 5% of the time (maybe even higher!) people will pay rather than encountering a person who knows their rights. It’s a gamble they take, and all you need to do is to write them a letter.

    Here’s a copy of the letter I wrote to the collections agency, and I haven’t heard from the scumbag collection agency since:

    This is the first I’ve heard from you, or any other company on this matter therefore, in accordance with the Fair Debt Collection Practices Act, Section 809(b): Validating Debts:
    (b) If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or any copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector.
    I respectfully request that you provide me with the following information:
    • (1) the amount of the debt;
    • (2) the name of the creditor to whom the debt is owed;
    • (3) Provide a verification or copy of any judgment (if applicable);
    • (4) Proof that you are licensed to collect debts in VA
    Be advised that I am fully aware of my rights under the Fair Debt Collection Practices Act and the Fair Credit Reporting Act. For instance, I know that:
    • because I have disputed this debt in writing within 30 days of receipt of your dunning notice, you must obtain verification of the debt or a copy of the judgment against me and mail these items to me at your expense;
    • you cannot add interest or fees except those allowed by the original contract or state law.
    • you do not have to respond to this dispute but if you do, any attempt to collect this debt without validating it, violates the FDCPA;
    Also be advised that I am keeping very accurate records of all correspondence from you and your company including recording all phone calls and I will not hesitate to report violations of the law to my State Attorney General, the Federal Trade Commission and the Better Business Bureau.
    I have disputed this debt; therefore, until validated you know your information concerning this debt is inaccurate. Thus, if you have already reported this debt to any credit-reporting agency (CRA) or Credit Bureau (CB) then, you must immediately inform them of my dispute with this debt. Reporting information that you know to be inaccurate or failing to report information correctly violates the Fair Credit Reporting Act § 1681s-2. Should you pursue a judgment without validating this debt, I will inform the judge and request the case be dismissed based on your failure to comply with the FDCPA.
    Finally, if you do not own this debt, I demand that you also immediately send a copy of this dispute letter to the original creditor so they are also aware of my dispute with this debt.

  17. JMILLER says:

    There is not way to decide this without more info. You said the trip was cancelled. I will assume that was Virgin (where you received a refund). You received a refund on your hotel (which is pretty standard with enough advance notice). My question is, what is the refund from Expedia? Did you buy play tickets? Some sales are final REGARDLESS. Most concerts, sporting events etc are non refundable. It is not their issue on how you get there. Without more details there is no way to make a decision.

  18. iamvika says:

    Very similar thing happened to me (and was posted on consumerist) – I talked to American Express and they said that there’s nothing they can do. Expedia said that since the debt was already sold to a collection agency, I have to deal with them.

    What pisses me off the most is that Expedia didn’t even try to contact me before selling the debt to see why a chargeback was issued.

    I filed a complaint with BBB and have been in written contact with the collection agency.
    I wish this guy good luck. If he finds something that works for him, I hope he lets us all know.

  19. smo0 says:

    This is why Amex isn’t accepted in most places…. they are the chargeback kings.
    On the other hand… my experience was that it falls under legal matters – they can’t go after Amex for the money, they’d lose… it’s up to the consumer to call the collection agency and if it gets to the next level – take it to small claims…. if they didn’t respond to a letter – what makes you think they’ll show up for court… you’d be surprised how many claims win by default because of this….
    Showing up is literally half the battle.

  20. common_sense84 says:

    Ignore it. Don’t respond to anything they send you.

  21. shangyle says:

    Think of a chargeback as canceling a check. Just because you can use your bank to prevent the payment from going through doesn’t mean you don’t owe the company to whom you wrote the check.

    If you are unhappy with service or other aspects of your contract you need to take legal action. In the meantime, they can take legal action to recover the debt.

    The suggestion from Consumerist to just pay it is a good one. It will help save your credit score (you can negotiate with collections to request they do not report to the credit bureaus) and you can recover the money when you take legal action.

    I would highly recommend going back and reading the fine print on your original purchase as well, you might be out of luck anyway if they say something to the effect of “Your purchase is non-refundable regardless of inclement weather or canceled flights.”

    • stevenpdx says:

      This. It’s just like putting a stop payment on a check that you gave to someone.

      The bank is not deciding the validity of the debt by allowing the stop payment.

  22. XianZhuXuande says:

    DO NOT PAY THE COLLECTION AGENCY. I am astonished to see this advice here and yes, it does warrant the caps. If you pay them they will report it to your credit reports as a paid collection, and it will hurt you just about every bit as much as a real collection would have. Want to lose some/all of your credit cards and take a 150 point hit on your report? Follow that advice.

    Research how to file a request with the collection agency for a debt *validation* and make sure that is done sooner than later (you’ve got thirty days from your receipt of the dunning letter before things get a little more complicated). You can either dispute this debt and press hard for its life to end, but this is a rocky road, especially if you’re not sure what you’re doing. This debt could appear again at any point down the road, and eventually in the hands of a shadier sort that will just go ahead and report it to your credit reports.

    Is your credit report that important to you? Either pay Expedia and get that the balance is resolved in writing (which you send to the CA with or after the debt validation to make sure you’re covered there), negotiate with Expedia or try techniques here (work through executive customer service, for example; PR, which you’ve started with here), or take Expedia to small claims court to contest the charges.

    Oh, and they probably didn’t buy it for pennies on the dollar. They got a discount, yes, but the bottom-feeding pennies on the dollar collection agencies come later in the life of most debts. The collection agency will not play nice and they will not follow the rules.

    • XianZhuXuande says:

      P.S. If anyone somewhat in the know is thinking, “Pay the CA and get in writing that they won’t report the result to your credit report,” don’t. Assume that the CA will not honor your agreements, and that they will do their best to cheat and weasel you in any way they can. Sure, this won’t happen in every case, but it happens quite frequently, and it isn’t a risk worth taking.

  23. Blackadar says:

    Not enough information. What part of the package did Expedia not reimburse? Did you appropriately cancel that part of the package and within the limits/time that you’re supposed to?

    Obviously, Expedia doesn’t think that you did and we don’t have any details to verify that you did. Many companies don’t fight charge-backs. It’s a costly and time-consuming process. It’s much easier to bundle all of them up, evaluate them at one time and then send those that weren’t legit (in the eyes of the company) to collection agencies. Just because AMEX ruled in your favor doesn’t prevent them from trying to collect from you. Because your complaint is similar to one on Elliott’s Travel Blog just a couple of weeks ago, I think Expedia just sent a round of uncontested charge-backs out for collection.

    So..

    #1 – Truly evaluate whether you met all the guidelines to cancel the $493. To be candid, you may not have purchased reimbursable tickets from Expedia. If you didn’t, then you owe the debt. Pay up.

    #2 – If you feel that the debit truly isn’t valid (and especially if you have some proof), get acquainted with the laws on collections. Asserting your rights to make them verify the debt in writing, etc. all may “convince” them to move on to greener pastures.

  24. indeeme says:

    “but if Expedia wasn’t willing to refund you the money in the first place, you can imagine how it feels about this.”

    Umm, no actually, I can’t. See, corporations aren’t people and can’t feel anything about this.

  25. farlo666 says:

    http://www.expedia.com/daily/service/legal.asp

    You may cancel or change your prepaid hotel reservation, but you will be charged the cancellation or change fee indicated in the rules and restrictions for the hotel reservation. If you do not cancel or change your reservation before the cancellation policy period applicable to the hotel you reserved, which varies by hotel (usually 24 to 72 hours) prior to your date of arrival), you will be subject to a charge of applicable nightly rates, tax recovery charges and service fees. In the event you do not show for the first night of the reservation and plan to check-in for subsequent nights in your reservation, you must confirm the reservation changes with Expedia Inc no later than the date of the first night of the reservation to prevent cancellation of your reservation. You must make refund requests for no-shows or early checkouts within 60 days after checkout.

    You agree to pay any cancellation or change fees that you incur. In limited cases, some hotels do not permit changes to or cancellations of reservations after they are made, as indicated in the rules and restrictions for the hotel reservation. You agree to abide by the terms and conditions imposed with respect to your prepaid hotel reservations.

  26. sopmodm14 says:

    if the debt isn’t valid, there should be laws against this fraud from the company that sold it off as such

    i’d try to get as much info and retrieve as much documentation to the nature of the chargeback…emails and old statements if possible

    heck, i’d bring them to small claims court or something if it falls to it.

  27. quail says:

    For those who have a collection agency coming after them, ask them to prove the debt. In dealing with a business debt that was signed off on ages ago, I had collection agencies pop up every so often telling me to pay. I calmly requested their information and I added that they needed to prove that the debt was owed, not some fact that they bought thousands of “debt” for 1/4 cent on the dollar or some such thing. I also gave them the contact information for my attorney to send the proof to.

    These debt collectors work on volume and they’re not interested in spending extra time on the issue. What I discovered was that they would sell my debt to someone else down the food chain. When the new collection agency called I’d request the same information and I’d warn them not to put anything against me with the credit reporting agencies or they’d face a lawsuit. It would be quiet for a few years and then another agency would call.

    It’s my hunch that anything after the first collection agency you’re dealing with are scavengers, guys who work on commission and will churn some list for as much as they can to garner a commission off of the payment. They will deal with debts that are past their dates for legal collection and they will lie, and brow beat you. I have no sympathy for those guys.

    That said, if you do owe the debt then pay it. Ask for a reduction if you can or a payment plan and then pay it.

  28. mcgyver210 says:

    People you need to understand just because you win a ChargeBack which incidentally most of the time the consumer wins on first go or 2nd go you don’t get out of the debt & you can be liable for the debt & collection fees. Now in a ChargeBack situation if the company is truly wrong they most likely will not come after you. Now in my company we make sure with paperwork & picture we can prove the debt & if you get an idea not to pay us we wont just go away you can bet you will be hearing from us. Of course we will take the legal approach though with things like placing a service lean on your property.

    I have been in business for many years & although merchant agreements are very one sided I can say I have yet to read a merchant agreement that I give all rights for collection over to the banks. Seriously if this was the case the WalMarts of the world wouldn’t even accept cards of any kind.

    Some consumers have abused merchants so bad it will impact all consumers sooner than later. Merchants are already fighting back against many things now in merchant agreements that are blatantly unfair to merchants.

    Example: Consumer buying a Coke on credit card which in reality means the merchant not only doesn’t make any profit but actually looses money on the transaction. So it would have actually been cheaper for the merchant to give you the Coke

    Just look at the news Merchant agreements are being look at as unfair & changes are being forced on the Card Companies who never really loose any money since merchants pay on all sides of a transaction.

    It is time to wake up people Merchants are tired of being door mats & realize they need cards but are no longer just saying ChargeBacks are a cost of doing business to be absorbed by all customers. The bad economy has caused this trend also with more consumers using ChargeBacks Fraudulently to get merchandise & services for free.

    Disclaimer: I am also a consumer so I do understand sometimes there is a need for legitimate ChargeBacks

    • apple420 says:

      “Consumer buying a Coke on credit card which in reality means the merchant not only doesn’t make any profit but actually looses money on the transaction. So it would have actually been cheaper for the merchant to give you the Coke”
      I’m paying $1.70 for water with a little sugar in it. I’m not sure how much the credit card fees are, but I’m sure someone is making a profit.

      • mcgyver210 says:

        Yes someone does make money but it isn’t the Merchant in most cases on that transaction example.

        1.70 + Tax (which the merchant also pays to collect)

        Pre Authorization Fee for this Transaction .27
        Amex 3.5% of total including Tax
        Batch Processing Fee .27
        This is just the basics not including the other cost related to the handling of your $1.70 bottle of Flavored Water.

        Yes The Bottled Water Distributors make a Profit & the Credit card Processors make a profit but when you break it down the retail merchant doesn’t & this is why if I buy from a merchant with a credit card I will try to buy enough to make it a good minimum transaction.

        Also it cost merchants even more sometimes when we use Rewards Cards.

  29. shufflemoomin says:

    I would have thought it was pretty clear cut. Whatever services you tried to chargeback for should have T&Cs from Expedia outlining if they were refundable or not. I get the feeling Expedia claimed up front that the services weren’t refundable, you went ahead and booked, something went wrong and you asked for a refund anyway, Expedia explained that the services are non-refundable and you weren’t happy and went crying to AMEX. Could I be getting warm here?

  30. KennyS says:

    Keep it simple. Don’t argue, just send the Collection Agency a letter with a delivery receipt saying:
    1. Send me proof of the debt.
    2. Send me proof that you are authorized to collect the debt.
    3. Send me proof that you are licensed to collect debts in (insert your state here).
    4. Stop calling me.
    I did this last May and haven’t heard from them since.

  31. Entendu says:

    Out of curiosity, why did the OP not use Amex’s travel protection?

  32. J Brill says:

    Send Expedia a note… or better yet have an attorney do it… telling them you are disputing the debt and you are going to file legal action to recover any damage to your credit unless Expedia disavows the debt.

    If they don’t play ball, then discuss with an attorney and sue them in small claims court for a couple thousand dollars.

    Tell the collection agency you dispute the debt and ask for proof of the debt and proof they are authorized to collect. Then tell them to go to… you know where and threaten to sue them if they report the debt to the credit agencies.

  33. Extended-Warranty says:

    Having worked in retail before, I know first hand that many people file chargebacks on ANYTHING they don’t find “satisfactory”.

    If it was in your agreement, then you don’t have a leg to stand on. Period. It’s the same as being beyond a return policy and then deciding you don’t want it. I wish more companies would go after consumers who abused this process.

  34. Ed5781 says:

    I am “the Ed” in the story. Thanks Consumerist!
    Anyway…I understand that it was non-refundable…so were my plane tickets from Virgin, and my hotel from Travelocity. Because we literally had two feet of snow, Virgin and Travelocity refunded the money without blinking!
    I contacted Expedia, and they said they couldn’t do anything. Their rep even suggested I do a chargeback!
    I guess my issue is, what is the point of even doing a chargeback, if the companies can just go after you for the money again? It seems like such a waste.
    Part of me wants to pay it to get it over with (and get in writing from the CA that it won’t show up on any of me CR’s), and the other half of me wants to say eff it, and fight it tooth and nail.

  35. TTFK says:

    Most Merchant Agreements for credit cards require the companies to agree that the Credit Card Company’s decision is final and the creditor is not allowed to initiate any collection activities.

    • mcgyver210 says:

      WOW I have never read a clause where I give the bank right of collection maybe that is with Very High Risk Businesses. If this was the case Merchants would quit taking cards due to all the Fraudulent Charge Backs it would bring daily. Merchants are already the bad guys in court & they loose more times on Charge Backs just so the Banks don’t have a mad card holder who can leave them. Merchants are stuck with the cards in most cases even if they don’t like it.

  36. friedduck says:

    Add one thing: whether or not the debt is still legal (good arguments on both sides) Expedia still should have gone through their normal billing practice before sending it to collections. In other words I don’t *think* you can jump straight to collections without notice

    • mcgyver210 says:

      Why waste more time once the OP did the ChargeBack that is plenty to show that the customer has no intentions of paying the debt so off to collections you go what is so hard to understand here? Again you don’t wipe a debt out by winning a Charge Back same as you don’t wipe a debt out by stopping payment on a Check.

      Also as I said already Banks will usually rule in favor of a card holder first time around & if they don’t & the card holder tries a second time they usually do then along with charge the Merchant for the Charge Back win or loose.

      Disclaimer: I am not on Expedia’s side I just don’t see what they done wrong comparing to my merchant agreements past & present.

  37. unojack says:

    looks like Expedia is gearing up for the next WCIA Challenge! taking the lead outta the starting gate!

  38. pot_roast says:

    This is probably one of those instances where travel insurance would have been handy. I have a co-worker that had another sad instance.. a family member was killed in an accident while they were on the trip, and the insurance paid for everything.

  39. kate708 says:

    So sorry to hear about this awful experience. We are looking into this immediately and are attempting to contact the customer. The Expedia team.

  40. kate708 says:

    So sorry to hear about this awful experience. We are looking into this immediately and are attempting to contact the customer. The Expedia team.

  41. consumerfan says:

    Reply immediately to the debt collector. Dispute the debt. The letter of dispute must arrive within 30 days. Send certified mail and require signature acknowledging receipt.

    The debt collector must then respond with proof of debt ownership before contacting you again.

    The burden of proof that the debt doesn’t exist or is resolved lies with the OP. The Amex resolution may or may not provide such proof.

    Wait until you receive confirmation of delivery and then start checking your credit report. If it appears after you have disputed the debt, you can dispute the entry. Include the letter, confirmation of delivery and the Amex resolution.

    After 30 days, you lose the right to dispute the credit entry. You then either take the hit on your credit or resolve with the new creditor.