When credit card bills do not have to be paid
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AbstractThe card issuers do not widely advertise this discretion. Interestingly, not only is the cardholder uninformed of this right of complaint to the credit card company, the cardholder agreement, for its part, requires that the cardholder will pay to the issuer the amount of all signed charge slips, irrespective of any claims that person may have against the merchant. This conceals from the consumer the existence of the issuer's discretion to exercise this right to reverse payment. In another respect, the consumer reasonably expects that s/he can stop payment on the charge, just as if it was a cheque or installment payment. This expectation often springs from the card issuer's dual relationship with the consumer as that consumer's home bank. To defeat the consumer's reasonable expectations with legal subtleties would be bad for business, if not a source of unwelcome issuer liability. Concealing the issuers' discretion will both reduce the frequency of consumers' requests for the exercise of the discretion and make the exercise of the discretion appear more valuable to the consumer who receives the grace extended by it. The payment obligation may be set aside, therefore, in occasional and extraordinary instances, where the cardholder strenuously objects directly to the credit card company and resists payment for a good reason. If a consumer has a legitimate complaint, it will be investigated and the payment invoice may be cancelled or, if already paid, may be credited back to the consumer. This action would reflect unfavourably on the merchant, who has signed away this discretion to the credit card company in return for participation in the program. In summary, credit card companies are very powerful. Most people, consumers and merchants alike, want the convenience of credit cards. The card issuers, therefore, have the power to deny merchants the ability to accept their cards for payment unless the merchants waive some of their rights in transactions with third party consumers. The card issuer allows the merchant to serve as its agent; the card issuer accordingly wants to be able to discipline a merchant if the need arises, which all remains within its sole discretion. The business approach of the card issuers is that consumers are more important customers than merchants.
Article deposited after permission was granted by the editor of LawNow magazine, 06/28/2010.