Merchant trying to collect payment for defective product

Dear Consumer Ed:

I purchased a product that was faulty and disputed the charge with my credit card company. I had the charge successfully removed from my account. Now the merchant has turned the matter over to a collection agency. Can they do that?

A: Generally, once the credit card company has reversed the charge, it’s between the credit card company and the merchant to determine whether the charge was valid. Since the credit card company did remove the charge, the merchant likely lost that fight.

If the merchant has turned the account over to a collection agency, you should strongly consider disputing the charge with the collector. You must do so, in writing, within 30 days of receiving notice of the debt from the collection agency. You should verify that the letter from the collection agency informs you that you have 30 days to dispute the charge. If the letter does not inform you of this right, the letter itself may violate the Fair Debt Collection Practices Act and, as a result, the debt may also be uncollectable for that reason. If you dispute the charge, the collection agency must ask the merchant for proof of the debt. The merchant has 30 days to produce this evidence. During these 30 days, the collection agency cannot proceed to collect the alleged debt from you if you have informed the agency that you are disputing the charge.

Dear Consumer Ed:

I am shopping for a new refrigerator, and many of the ads I read say 50% to 90% off. It seems like everyone has the same deep discounts. What’s going on?

A: Oftentimes, a retail seller will induce a buyer to purchase one of its products by comparing that product’s advertised sale price with some prior or existing reference price in a way that leads the buyer to believe that by purchasing from that specific seller he or she is saving the difference between the reference price and the advertised sale price. Consequently, so-called “comparative pricing” can be a powerful advertising tool, and when coupled with the seller’s own incentives to maximize sales (and the prospective buyer’s desire to obtain a bargain), it may provide the seller with power to take advantage of consumers.

In response to these concerns, federal and state legislators have enacted deceptive pricing statutes that essentially prohibit sellers from advertising their products’ prices in ways that may mislead a buyer. Generally speaking, it is deceptive for a seller to compare sale prices with some other reference price unless the seller can somehow show that the reference price is bona fide. If, in fact, the reference price is the actual, bona fide price at which the article was offered to the public on a regular basis for a substantial period of time, this provides a legitimate basis for the advertising of a price comparison, and the item being advertised is a true bargain.

The advertised sales you are seeing regarding refrigerators may well be legitimate, but be cautious when you see sales with such deep discounts. The best thing you can do to protect yourself from phony bargains is to do your own price comparing. See what other retailers are charging for the same product, and thereby determine if the store is really offering you a great deal or not.

Again, both federal and state laws prohibit retail companies from advertising discounts if the discounts are not legitimate. If you believe that a particular store is deceptively offering discounts, please make a complaint to the Georgia Department of Law’s Consumer Protection Unit by calling 404-651-8600 or visiting www.consumer.ga.gov.

Consumer Ed is brought to you by the Georgia Department of Law’s Consumer Protection Unit. Go to ConsumerEd.com to submit your question and read additional consumer tips. Remember…we do not give legal advice. Always consult a lawyer about legal issues.