Why Would You Need to Dispute a Credit Card Charge in the First Place?
Admittedly, at first glance this may seem like an odd topic to write about. After all, are there really enough customers disputing credit card charges to warrant an entire article about the subject? The short answer: yes.
While exact statistics aren’t publicly available, the fact is that millions of credit card customers file disputes each year related to a company’s billing errors such as duplicate orders, charges related to autoship programs, hidden fees, in addition to “accidental” orders being placed. Unfortunately though, when consumers attempt to contact companies who engage in these types of activities to request refunds, they’re often met with horrendous customer service intended to make the process as frustrating as possible. In the end, this often means that these companies get to keep your hard-earned money, while continuing to scam other unsuspecting consumers. We’ve received countless customer reviews here at HighYa testifying to this fact.
But if you’ve contacted a seller and they refuse to provide a refund, you have another powerful tool available: Bypassing them altogether and disputing the charge directly with your credit card company. Keep in mind that any debit cards issued by a credit card company (e.g. Visa, MasterCard, etc.) also fall under this topic.
As such, we’ll cover 4 key pieces of information in this article:
- The basics of disputing credit card charges.
- The different types of credit card disputes.
- A guide to helping you dispute charges with your credit card company.
- What you can do if you disagree with your credit card company’s decision.
With this said, keep in mind that this article is based on experience and research, and should not be construed as legal advice. Instead, it is only intended to give you an overview of the credit card disputing process and to make you a more informed consumer.
The Basics of Disputing Credit Card Charges
If you’re thinking about disputing one or more charges on your credit card, keep in mind that you’ll be allowed to file your dispute under at least one of the following:
- The Fair Credit Billing Act (FCBA), which is a law that applies to "open end" credit accounts, like credit cards and revolving charge accounts, like department store accounts.” We’ll go into more detail about this later.
- Consumer protection available through different credit card companies. Because of the wide variety of coverage available from all the different card issuers, we won’t go into detail about this type of coverage. However, if you’d like to know more about purchasing protection, we’d recommend contacting your card issuer directly.
Under the FCBA, there is no limit to the amount you can dispute, but there are some stipulations that apply depending on the type of dispute you file (more about this in the following section).
However, even though you’re entitled to a review by the credit card company for charges like these, there are guidelines you need to follow, and you’re not guaranteed a specific outcome. In other words, once the credit card company has reviewed your case, it may not end up in your favor, and their decisions are typically final.
The Types of Credit Card Disputes
When it boils down to it, there are only two basic types of credit card disputes you can file:
- Billing Error Disputes – According to the Federal Trade Commission’s Fair Credit Billing Act, as a consumer, you have a right to dispute billing errors, which includes unauthorized charges, charges for the incorrect amount, “charges for goods and services you didn't accept or that weren't delivered as agreed,” and several others. Since the overwhelming majority of disputes are related to billing errors, this is what we’ll be focusing on in this article.
- Disputes of Quality – This is applicable if you receive a product that is defective or otherwise does not perform as reasonably expected. Claims filed under this category must be for at least $50, and purchased within your home state or within 100 miles of your address.
This is an important distinction, because billing error disputes are covered under the FCBA, which entitles you to a thorough review of the dispute by the credit card company, in addition to some protection under the law. However, disputes of quality are not provided this same level of protection, and often need to be handled through the legal system.
With this in mind, let’s look at some of the basics for disputing credit card charges related to billing errors.
A Step-by-Step Guide to Disputing Credit Card Charges
If you’ve made the decision to dispute a credit card charge related to a billing error, here’s an outline of what you can expect before, during, and after the process.
Step 1: Make a Good Faith Effort to Resolve Your Dispute with the Seller
If a charge appears on your credit card that you don’t agree with, it’s imperative that you contact the seller as soon as possible and make a good faith effort to have the charge(s) removed.
Because this is the first step, it’s a crucial that you gather any related sales receipts or other documentation you already have, and to maintain detailed correspondence records (e.g. emails, letters, etc.). In fact, as we’ll see in a moment, documentation supporting your position is usually one of the primary deciding factors.
Step 2: Inform the Creditor of Your Dispute
If negotiations with the seller fail to provide you with a refund, the next step is to notify your credit card company of the dispute.
To begin, you’ll first need to write a formal letter (the FTC provides a sample letter here) to the credit card company’s billing address advising them of the details. This letter must be received by the credit card company within 60 days of the bill’s mail date, and must include your full name, address, account number, and rationale for disputing it.
Because of the time limitations involved, it’s typically a good idea to send this letter via certified mail, and to also include copies of any documentation that supports your claim (be sure you hang on to the originals).
Important note: According to this article, there are close to two-dozen credit card dispute categories, and the one that appears to most often rule in favor of the consumer is “Unauthorized Charge.” While you should always be honest when filing, keep this in mind when sending your letter.
Step 3: Your Credit Card Dispute Investigation
Once the credit card company receives your letter, they’ll begin their investigation. After this occurs, they’re required to provide a written response to you within 30 days, and to have the dispute resolved within two billing cycles (not more than 90 days) thereafter. However, keep in mind that the credit card company is not a law enforcement agency, and simply reviews your case based on the detailed information you provide.
After filing your dispute, you’re well within your legal rights to withhold payment until a resolution is reached, which includes applicable finance charges. During this time, the creditor cannot take any kind of legal action against you for the disputed amount, or harm your credit rating in any way because of it.
Step 4: The Final Decision
Once your credit card dispute has been formally reviewed and decided upon by the credit card company, you’ll receive 1 of 3 written responses:
- If the decision is in your favor, the credit card company will explain the corrections that will occur and will remove any finance charges or interest associated with the disputed amount.
- If the credit card company decides you’re responsible for a portion of the charge(s), they must explain why and provide documentation supporting their decision, if requested by you.
- If the credit card company decides in favor of the seller and that the charges are legitimate, then they must explain why and provide supporting documentation. You’ll then owe the disputed amount and any related finance charges.
What Happens if You Disagree with the Credit Card Company’s Decision?
If you ultimately disagree with the credit card company’s decision related to your billing error dispute, you can notify them of your refusal to pay within 10 days. However, keep in mind that the company can send your account to collections at this point, in addition to reporting your delinquency to all three credit reporting agencies. If so, they must include a note specifically stating that you don’t believe the money is owed.
In an instance like this, arbitration may also be an option, although according to this article, “It's rare for cases to go to arbitration: At Visa, only one-tenth of 1% of disputes are decided in arbitration.” As such, this may not always be available.
On the other hand, if you disagree with the company’s decision regarding your quality of goods and services dispute, the only option you’ll have is to litigate against the company, just as you would with a seller.
Regardless of your credit card dispute type, if you strongly disagree with the outcome, you should also file a complaint with your state’s Attorney General. In some instances, this has caused a reversal of the credit card company’s decision.
We Want Your Feedback
At HighYa, our mission is to help you become a more informed consumer about the products available on the market, as well as your rights when something goes wrong.
Because of this, we want to know your thoughts. Did you find this information helpful? Have you disputed a charge on your credit card in the past? If so, what was the outcome, and what suggestions do you have for others? Be sure to tell us about it by leaving a comment below!
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