Clearing the Air Over Credit-Card Bill

Question: I was an employee for a small furniture manufacturing company. One of my tasks was to pick up an air conditioner at an appliance store, paying with a company check. The store checked my ID and took my Visa number.

Soon after this, the company ran into financial problems, and I had to leave because they were unable to pay my salary. The owners of the company disappeared, leaving their debts behind.

Not long after this, I received the charge for the air conditioner (about $350) on my Visa bill. This I refused to pay and contacted the store that billed me, but to no avail. I told them I had not signed a charge slip, so they had no right to bill me. They said I had signed a receipt.

Then I contacted my Visa card company, Citibank, and told them the situation. After many form letters and after signing an affidavit stating that I had not authorized such a purchase, the credit-card company came back and said I still had to pay.

My question is: Am I liable for this, and is there any way I can get out of paying the debts of the company I worked for?

Also, if I am liable and refuse to pay, is there any way to avoid hurting my credit if I cancel the Visa card and refuse to pay that charge?--J.McD.

Answer: I suppose we can take some small comfort in the fact that your employers didn’t send you out to take delivery on a $12,000 company car.

You can take even smaller comfort, I’m sure, in the fact that you handled your end of the mix-up exactly as you should have.

“I don’t know how something like this could have happened, and I’m really surprised that Visa billed him for the air conditioner,” a puzzled Geri Schanz muses. She is the spokesperson for TRW Information Services. “He certainly did the right thing.”

Letter to the Company

Under the provisions of the Fair Credit Billing Act, any dispute like this should trigger a letter from the injured party to the credit-card company challenging the billing. And you certainly did that.

“But then,” Schanz adds, “Visa is supposed to notify us about the dispute, and until it’s resolved, no delinquency will show up on the man’s credit report. The fact that he’s still being billed indicates that this wasn’t done and that the ‘delinquency’ is still showing up as a delinquency.”

Any such dispute must be in writing to the credit-card company (not to TRW and not by phone), and Visa then had 60 days to get back to you. Apparently this was done all right, but strictly on a “take it or leave it” basis, which didn’t address itself to the obvious miscarriage.

At this stage of the game, Schanz suggests that you continue to pursue the matter with Citibank. And in the meantime, find out for sure that Visa-Citibank is indeed labeling you as being seriously delinquent. You can do this by writing to TRW Information Services, 505 City Parkway West, Orange 92668. You’ll have to include your full name, your address or addresses for the past five years, your Social Security number, your date of birth and a check for $8. (The report is free if you’ve been turned down for credit in the last 60 days because of this brouhaha.)

If the report you receive from TRW does, indeed, show that Visa-Citibank is still reporting you as delinquent, Schanz adds, then you should compose a letter of 100 words or less (very similar or even identical to the one you wrote me) and send it back to TRW, where it will be attached to your credit record and will be automatically sent to anyone making future inquiries about your standing.

The letter is a two-edge sword, however. In addition to becoming a part of your credit record, it also prompts TRW to contact Visa-Citibank and compels Citibank to re-verify the validity of this air-conditioner charge--which, in all good conscience, they should have a rough time doing. And failing to reverify it, the delinquency is dropped.

What is the rationale for massive, New York-based Citibank billing you for your employer’s air conditioner in the first place? And when notified by affidavit of the true facts of the matter, why did it stubbornly insist that you pay?

Beats me. We’ve been in contact with Citibank at least a half-dozen times in the past week. They have all the facts at hand--including your Visa card number--and, time after time, we’ve been assured that “we’ll get right back to you about what happened.”

The latest at press time from Beverly Wolfson, Citibank’s spokesperson: “I’ve been calling our people on this and haven’t got an answer back yet. It takes a little while to investigate these things. And even though it’s been a week, it takes time. This is a tremendous operation here--especially with credit cards--and we’re talking about one gentleman who’s one in 6 million.” Perhaps then, in time, Mr. One-in-Six-Million . . . . Meanwhile, should you cancel your Visa card and just walk away from this unpleasantness?

“I certainly wouldn’t ‘just walk away,’ ” TRW’s Schanz argues.

“That’ll leave a stain on his credit record for the next six years. He should put his letter on file with us and then, if he wants to cancel--and I can certainly understand why he might--he won’t have this following him around.”

Q: What’s happened to the way banks used to encourage thrift? I can remember when you could walk into any bank with a single buck, and they were happy to open a savings account for you. Today it seems that you’ve got to put a gun to their heads to get them to accept anything-- and, even then, nothing less than $100 or $200.

Our son recently wanted to make a major purchase (involving about $1,700), but he didn’t have the credit background to finance it himself. So we struck a deal: We’d put up the money (at no interest) if he would agree to open a joint savings account with us and arrange to have $50 automatically transferred from his checking account each month. This was early in March. He took $50 into the bank to open this account.

In the first place, they told him that they wouldn’t open the account for less than $100, that he’d have to wait until April 1 or he’d be charged a $3 service charge and that in order to have us as co-signers (so that no one can withdraw the money without all three signatures), he’d have to bring the bank a photocopy of both his mother’s and my drivers’ licenses!

Bank Can’t Lose

What is all this nonsense? This is a simple savings account where there’s no way in the world the bank can lose any money. And with three signatures involved, certainly no one is going to be depositing and drawing out money all the time and creating a lot of paper work for the bank. The whole thing strikes me as a ridiculous exercise in paper shuffling for no good reason except to discourage personal savings accounts.--D.C.

A: Local bankers are the first to admit candidly that the old days of the free toaster (for opening a savings account) are long gone. Even in the salad days, alas, small savings accounts didn’t really pay their own way--opened one day, closed the next, or the customer would use it in lieu of a checking account and drop by a couple of times a week to pick up lunch money.

Still and all, we’re told that the majority of banks still encourage thrift to the extent of waiving most, if not all, of their service charges and minimums for minors opening a savings account. Your son doesn’t classify as a minor or, if he is one, he’s a minor with unusually expensive tastes.

Because you didn’t tell me the name of the bank, we’ve had to piece together prevailing practices here by talking to two or three bank spokespersons--any one of whom may or may not represent the bank in question.

The $100 minimum for opening an account is a fairly common practice (with some banks, it’s twice that), and the $3 service charge is also a standard practice when the customer’s savings account dips below some arbitrary figure ($200 or $250 is common) in any quarter.

So in a perverse way, one bank spokesman said, the teller was actually doing your son a favor by telling him to hold off until April 1--the beginning of the second quarter of the year. By opening the account at the tail end of the first quarter, his $100 deposit would’ve been under the minimum and would’ve automatically triggered the $3 charge. That’s the theory expounded by one local banker, at least, who also added rather superiorly that it would be a moot point if your son’s account were with his bank, which doesn’t levy any service charge at all on savings accounts with an automatic transfer feature.

The bank’s requiring a photocopy of your and your wife’s drivers’ licenses sounds indeed like bureaucratic nonsense on the surface, but it actually has a sound basis (whether, as lay people, we like to concede it or not).

Because the account will require three signatures for any withdrawal, all three of you have obviously had to fill out signature cards for the bank before the account is even opened. But sooner or later--when the debt to you has been repaid--there will definitely be a withdrawal. At that time, the bank will have to compare those withdrawal signatures with the original signatures. Thus, before all of this can happen, the original signatures have to be pre-verified against your drivers’ licenses before the whole plan goes into effect. Whether all of this is worth the candle or not is something only you can decide. But if it’s the only practical way to get your money back from this kid--go for it.

Don G. Campbell cannot answer mail personally but will respond in this column to consumer questions of general interest. Write to Consumer VIEWS, You section, The Times, Times Mirror Square, Los Angeles 90053.