When fighting against fraud, inaccuracies, and unauthorized use, one of the most powerful tools you have as a consumer is the ability to dispute credit card charges.
Despite this, the Consumer Financial Protection Bureau reported in October 2015 that consumers were frequently confused about how to challenge inaccuracies on their billing statements.
To help you avoid any misconceptions, as well as errors that could result in a denial, this step-by-step guide will walk you through the credit card dispute process. At the end of this guide, we’ve also included an FAQ section for easy reference.
Let’s begin with some quick background information to find out why this process is available in the first place.
How Does the Fair Credit Billing Act (FCBA) Protect Consumers?
Enacted in 1974, the Fair Credit Billing Act—an amendment to the Truth In Lending Act—is, among other things, intended to provide consumers with the protection they need against unfair credit card billing practices. Primarily, it outlines a procedure through which they can dispute inaccurate and unwarranted charges.
During the dispute process, the FCBA prohibits credit card companies from billing for or charging interest on the amount in question, and they can’t close the account. However, you will be responsible for paying any other unrelated charges in the meantime.
Then, if it’s determined that the charge is fraudulent, companies must remove it from the customer’s balance, without impacting their credit score.
Finally, a chargeback is made to the merchant. Here, the creditor reverses the original charge related to the product or service in dispute. Then, the merchant will be responsible for repaying this charge.
But merchants aren’t the only ones negatively affected by chargebacks. Adam Jusko, founder and CEO of the comparison site CreditCardCatalog.com, added that when it comes to disputes, banks “end up doing a lot of administrative work to set things right, and they make no money from it. In fact, they lose money. They only make money from successful transactions.”
Because of this, Adam emphasized that chargebacks act as a big incentive for every party involved to keep the customer happy. In fact, if a merchant has an excessive number, they “could eventually be charged higher processing fees or lose their ability to process credit card transactions altogether.”
Are There Dispute Differences Between Credit & Debit Cards?
While the FCBA amendment is a powerful tool for disputing charges, it’s important to quickly point out that credit and debit cards are not covered equally. Why?
Chargebacks911 co-founder and COO Monica Eaton-Cardone told us that there could be some distinct differences in the chargeback protection provided between them:
“As for fraud protections, credit cards offer much more consumer-friendly protections than debit cards. The Truth in Lending Act limits the cardholder's fraud liability to no more than $50 for instances of credit card fraud.
“With debit cards, on the other hand, the cardholder’s liability is only limited to $50 if the fraud is reported within 48 hours of the incident. Beyond that, the liability threshold increases to $500 for fraud reported within 60 days of the incident. If the cardholder lets debit card fraud go unreported for more than 60 days, though, they are legally liable for all fraud losses.”
Now, let’s take a look at the process you can use to maximize the chances of having the dispute ruled in your favor.
How to Dispute a Credit Card Charge the Right Way
A quick note about the importance of organization during this process: Just like a judge will require different types of evidence during a trial, your creditor will request tangible evidence supporting your dispute in order to decide who’s in the right.
This might include past calls (date, time, as well as notes about what transpired), emails, receipts, and invoices. You might also consider locating a copy of the company’s terms and conditions, since this is what outlines the rules that you agreed to when placing an order on their website, if applicable.
This way—again, similar to a legal proceeding—the more supporting documentation you can provide to the credit card company, the more likely it is that they’ll judge the dispute in your favor.
However, these documents can easily become misplaced and not available when you need them. To potentially prevent this from happening, start by getting yourself organized. How?
If you already have digital copies of these documents, place them in an easily accessible folder on your desktop. Or, if you prefer to have something tangible, you can also print them out and place them in an actual folder. Just make sure you don’t misplace it.
For paper documents like packing slips or invoices, you can scan them to add to your electronic folder. Or, if you don’t own a scanner, taking pictures with your smartphone and then transferring them to your desktop can be a quick and easy alternative.
Finally, when copying lengthy online documents like terms and conditions, select all the text (Ctrl/Cmd + A), copy it (Ctrl/Cmd + C), and then paste it (Ctrl/Cmd + V) into your word processing software of choice (Word, Pages, etc.), Then, this document can be saved or printed.
Step 1: Make Sure That You Can Dispute the Charge
Before filing a dispute with your credit card, you need to make sure that your grievance is eligible. How can you tell?
According to the Federal Trade Commission, the FCBA stipulates that all credit card disputes must relate to billing errors, which include:
Unauthorized charges, as mentioned above. Although most credit card issuers waive the requirement, you could still be responsible for up to $50.
Charges that list the wrong date or amount, or that contain math errors.
Charges that you didn’t accept, or for goods or services that weren’t delivered as agreed.
Charges related to the company’s failure to post a payment or other type of credit (e.g., a return or refund).
Charges associated with failure to process address changes, as long as the creditor was notified of the address change in writing at least 20 days before the end of the billing period.
Charges for which you’ve requested an “explanation or written proof of purchase,” along with a claimed error or request for clarification.
Anything outside this “billing error” scope is not covered by the FCBA. Therefore, the credit card company isn’t legally required to provide dispute resolution services for charges related to defective or poor quality merchandise.
Step 2: Figure Out Who You Need to Contact
If you can dispute the charge based on one of the above reasons, you’ll likely need to reach out to your creditor at some point. However, exactly when this should occur depends on whether the error is related to theft, fraud, or unauthorized use, or if it’s related to an actual inaccuracy.
Note: While it’s certainly understandable that you might be frustrated based on the situation, it’s important to emphasize that you’ll be speaking with many different people during the process. Stay calm and never raise your voice, even if the person on the other end of the phone does.
Be organized (as mentioned earlier), as well as factual and polite in your conversations, while avoiding speculation.
Billing Error Disputes
If the dispute involves a potential billing miscalculation (e.g., your receipt shows a price of $75, although your card statement shows you were charged $175), you should start by making a good-faith effort to contact the merchant who sold you the item and attempt to resolve the situation.
In fact, if you file a billing error dispute with your creditor without having already reached out to the merchant, it could be considered a strike against you during the investigation.
Monica Eaton-Cardone told us this is because:
“Customers should always attempt to contact the merchant before going to the bank. Merchants are usually happy to provide a return in order to avoid the complications of a chargeback, and given that the process could take up to six months to finally resolve, it’s in the customer’s best interest, too.
“Plus, if the issuing bank finds their customer committed ‘friendly fraud’ [disputing a legitimate transaction with the bank] by failing to contact the merchant, they may penalize the cardholder with fees or even cancellation of the customer’s account.”
Despite this, a 2014 study conducted by the company found that “58 percent of cardholders never contacted the merchant before filing a transaction dispute, and another 28 percent only contacted the merchant after the dispute had already been filed.”
In other words, don’t be a statistic. In the event of a billing error, start by doing the right thing and make a good-faith effort to reach out to the merchant beforehand. If it doesn’t go well, don’t worry; we’ll discuss what to do in a moment.
Theft, Fraud, & Unauthorized Use Disputes
On the other hand, if your issue is related to theft, fraud, and unauthorized use, you’ll need to begin the process by contacting the creditor directly and filing a dispute.
When doing this, you’ll need to have all the relevant details of the transaction. Most of this information can be pulled from your credit card statement.
When contacting your creditor, you should also be able to request a copy of the sales draft. If for some reason the creditor is unable to assist, and if the transaction occurred at a larger, national retailer, they also might be able to pull a copy of the receipt from their database.
Also, it’s recommended that you file a police report, even if not required by the credit card company, as well as a fraud affidavit with the Federal Trade Commission, if applicable.
Pro tip: Whether related to billing errors or legitimate fraud, the New York Time’s Ron Lieber reports that if the charge amounts to $25 or less, the credit card company will likely just remove from the account, without an in-depth investigation.
Step 3: Download & Mail a Credit Card Dispute Letter
While calling the creditor directly is certainly the fastest methods of formally filing a dispute, most professionals recommend also sending a letter since it provides an extra layer of evidence in the process.
Pro tip: To perhaps help save time, the FTC provides a template letter that can be downloaded and completed in minutes.
What should you include?
In the letter, Bankrate recommends summarizing your earlier resolution attempts with the merchant (including phone calls), with relevant information like names and dates. Also, “state what you want the company to do.”
In the same article, Ruth Susswein, deputy director of national priorities for Consumer Action, notes that while "you're not required to have proof to dispute a charge," if you do, you'll want to include copies with the letter.
Going back to the organization we discussed earlier, also add copies of any related correspondence you’ve had with the company, as well as receipts and phone call notes from earlier attempts.
Also, don’t forget to include your name, address, phone number, account number, charge specifics (such as the merchant, date, and amount), statement closing date, and the explicit reason why you feel it’s necessary to dispute the charge.
When it’s time to send your letter, do so via certified mail, since you can request a return receipt that provides proof when your letter was mailed and received. Similarly, if you get any physical forms from the creditor, complete and return them promptly via certified mail as well.
Whether they send you forms or not, the creditor must acknowledge your dispute and provide a written reply within 30 days of receiving it. If they don’t, the FCBA stipulates that they must immediately remove the disputed charge.
What Happens After You File Your Credit Card Dispute? The Investigation & Resolution Process
After receiving your letter, the creditor is legally obligated to investigate the dispute and provide a resolution within 90 days. To reemphasize a point from earlier, you won’t be responsible for the charge in question during the process, but it can still be factored into your overall credit limit. You’ll also need to continue paying your bill if a balance exists.
From there, every dispute is unique, as is the resolution process. In some instances, such as those related to identity theft, the creditor might advise that you cancel your existing card and have a new one issued.
The creditor will likely attempt to contact the merchant, and if they have a difficult time reaching someone, the investigation will likely be concluded (in your favor) quickly.
On the other hand, depending on the evidence you provided in your dispute, the creditor might rule in the merchant’s favor and conclude that you do, indeed, owe the charged amount. What are some common reasons for this?
Was Your Credit Card Dispute Denied? Here Are Potential Reasons Why
The Consumerist’s Ben Popken outlines ten circumstances where your chargeback request could be denied. Some of the top ones (outside of those we already discussed) include:
You requested the chargeback outside of the 60-day window
Your purchase occurred outside of the U.S.
You didn’t send your dispute letter via certified mail or obtain a send receipt
You didn’t contact the merchant and give them the chance to remedy the situation
You chose the incorrect dispute reason
You made the purchase using a Mastercard, which requires cardholders to fully comprehend all requirements and cancellation/return policies before making a purchase—even if not readily disclosed by the merchant
Writing for FindLaw’s blog, Le Trinh notes that “If the credit card company denies your fraud claim, you are entitled to ask for an explanation and to appeal the decision.” Furthermore, if you encounter additional evidence to support your dispute (e.g., receipts, police reports, etc.), be sure to submit those ASAP, which could help overturn the denial.
If that doesn’t go anywhere and you firmly believe you’re in the right, you can file a complaint with the Consumer Financial Protection Bureau.
As perhaps a last—and potentially very expensive—resort, you may be able to contact an attorney who can negotiate with the creditor on your behalf. If that fails, they can also help you file a lawsuit to recoup your money.
The Bottom Line About Disputing a Credit Card Charge
The fact of the matter is that the ability to file disputes—and enlist the help of creditors to mediate and resolve them—provides everyday consumers with an enormous amount of leverage when combating erroneous credit card charges.
However, it’s our duty as consumers to do so responsibly. How? By reaching out to merchants in a good-faith effort to resolve the situation, before filing a dispute. And from there, you'll need to closely follow the above steps in order to maximize the likelihood that the creditor will resolve the situation in your error.
Quick Reference FAQ
What does a credit card dispute mean?
This is a process where consumers can dispute the validity of a transaction when related to a billing error or fraud.
What is a billing error dispute?
One related to a billing miscalculation (e.g., your receipt shows a price of $75, but your statement shows you were charged $175).
What is a fraud dispute?
One related to charges that weren’t initiated or authorized by the cardholder.
What is a quality dispute?
One related to a product that is defective or otherwise does not perform as reasonably expected. This dispute does not have the same level of protection and often needs to be handled through the legal system.
How long do you have to dispute a credit card charge?
You must notify the creditor within 60 days of noticing the charge.
What happens after you dispute a charge on your credit card?
The creditor must suspend the charge, provide a written response to your dispute, and provide a resolution within 90 days.
Can I dispute a credit card charge that I willingly paid for?
No. All disputes must relate to billing errors or fraud.
How do you write a credit card dispute letter?
The easiest option is to download the FTC’s template letter. Be sure to include a summarization of your attempts with the merchant (if applicable), names, dates, proof (if any), copies of emails, receipts, why you feel it’s necessary to dispute the charge, and specifically what you want the company to do. Send it via certified mail.
What is friendly fraud?
Filing a dispute and requesting a chargeback on a legitimate transaction (i.e., one the consumer made or authorized).
What can you do if your dispute is denied?
Appeal with the creditor, write a complaint letter to the CFPB, get a lawyer involved, or file a lawsuit.
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