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Can a merchant legally have in their terms & conditions that they can impose a pentalty fee if a consumer issues a chargeback?

Los Angeles, CA |

Can a merchant legally enforce a clause in their terms & conditions that they willimpose a pentalty fee of $400 if a consumer diputes their credit card charge for any reason?

Attorney Answers 1


Penalties in contracts are usually unenforceable and this provision would appear to be against public policy making it unenforceable. There are various laws that protect consumer rights to dispute charges. There may be specific provisions in the credit laws and regulations that would make this provision void. I would have to research that issue to give a definitive opinion.

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