This is a good one to be aware of as we recently were subjected to this situation and are canceling our citi card account in response.
We made an online purchase from a merchant after thoroughly reading their policies on delivery and terms and conditions. We completed the transaction and paid the final dollar amount including a delivery charge. The product arrived with additional COD charges not stated anywhere in terms and conditions or in shipping policies so we contacted the vendor who stated that they refused to honor our purchase price and would charge us a 40% restocking charge if we didn't accept the COD charges. We contacted Citicards and were told to contact them after the return was completed and the merchant had received their products back which we did. We were then told that we have no protections or chargeback rights on the transaction because we refused delivery. Apparently it is fully acceptable mastercard policy to allow merchant account holders to apply any COD charges after the fact to transactions without notification or statement prior to delivery and acceptance is not grounds for chargeback nor is refusal and you are fully subjected to the merchants return policy.
Now thats one to be VERY aware of when dealing with online merchants, it is only a matter of time before more merchants become aware of this loophole and exploit it for maximum effect allowing for COD charges many times the amount of the agreed upon transaction and refusal to accept can result in a no refund policy ensuring the merchant retains an unaccepted and undelivered product for full resale value as well as collecting full sale value each time he commits one of these transactions.
We would take this to court if the loss was high enough but sadly enough such criminal activity goes unchecked because of the costs of litigation. Its very disappointing to see credit card companies supporting this sort of activity though.