You go to the bridal salon to pick up your wedding dress only to find that the store has disappeared, along with your deposit.
If you paid by credit card, you probably can contest the charges, says Henry Sommer, supervising attorney at the Consumer Bankruptcy Assistance Project in Philadelphia. If you used cash, check, or debit card and the store went bankrupt, you can make a claim with the bankruptcy court as an unsecured creditor. You'll probably be eligible for priority status for up to $2,425 of the amount owed. But you may end up with pennies on the dollar after waiting months or years.
How credit-card chargebacks work
If you used a credit card for a purchase and have a problem with the retailer, you may be able to obtain a chargeback from the card issuer. Federal law grants this right under two scenarios:
These apply to charges you didn't authorize; that are the wrong amount; for goods that were never delivered or delivered late; and for delivered items that were misrepresented or in the wrong quantity. To make a claim, write to your issuer within 60 days of the issuing date on the statement in which the charge first appeared. State the specific reasons you think there was an error on your bill. Some issuers extend this period, but don't count on it.
Claims and defenses
You can request a chargeback under the claims and defenses provision for any legal reason you have to cancel a sale directly with the seller, including if there's a problem with the quality of the merchandise. You have up to one year from the statement date to make a claim. You must meet four requirements: The disputed amount must be over $50; you must be able to prove that you made a good-faith effort to obtain a refund or credit directly from the seller; you can dispute only up to the outstanding balance on your card (if your balance is zero, you can't use this provision); and the merchant must be within 100 miles of your home and in your home state.
While you're disputing charges, you can withhold payment for the amount at issue, but you must pay the undisputed portions of your credit-card bill to avoid late fees and finance charges. A successful chargeback won't prevent the merchant from pursuing you directly for payment, including in court, if it feels the chargeback was unwarranted.
This article appeared in Consumer Reports Money Adviser.