Consumers get second chance on credit disputes

SAN FRANCISCO (KGO) -- Most people think that if there is an obvious mistake with a credit card transaction they'll be backed by their credit card company. As it turns out, that's not always true.

But you could get a little help sorting things out with that little white square card reader some businesses use.

Randee Paufve is a modern dance choreographer who travels frequently. In March she returned from a trip to New York. She jumped in an Arrow Checker cab at San Francisco International Airport for a ride to her Potrero Hill home.

The cab ride was just 12 miles and took only 15 minutes. She used her Chase Bank credit card to pay the bill for the ride via Square.

But, Paufve was shocked when she opened her credit card bill later that month. The charge was more than $900. She immediately called the taxi company and was told she would have to call her credit card company to dispute the charge. She filed a dispute with chase.

"I thought everything was going to be fine, it was such an obvious mistake," said Paufve.

But a couple weeks later she got a letter from Chase.

"Saying, that I lost and I was going to have to pay this," she said.

But she noticed in little tiny letters at the bottom of the letter that she could dispute the charge with Square.

"I didn't even know what Square was," she said.

Square is a credit card transaction system that allows anyone like taxi drivers or food truck owners to accept a credit card.

"Square I could only email them through their website, which I did one day and then a couple days later I did again and didn't hear back from them," she said.

Arrow Checker wouldn't go on camera but told 7 On Your Side their cab drivers are independent contractors and are not required to use the company's merchant account and instead can use devices like Square for payment. So, in this case, Paufve had to get her own money back.

Arrow Checker released a statement saying:

"If the cab driver had a merchant account with Arrow then we would have been able to return the money to the customer right away."

Chase and Square were also contacted by 7 On Your Side. Within two hours Paufve heard from both companies.

"I got a phone call from Chase and then I heard from Square, promising this would all get resolved," she said.

Joe Ridout is Consumer Action's Consumer Services Manager.

"You have the right to ask for a charge back from your credit card issuer within 60 days after an erroneous billing," he said.

In the end, Paufve was happy.

"Finally, the money ended up back in my account," she said.

In some cases, using Square and a credit card gives the customer double protection because the customer has a second channel to go through if the credit card company denies the dispute.