How to Dispute a Credit Card Charge and When to Do It
We've all experienced it—logging into your credit card app or checking your account online, only to find a charge that seems off.
It could be from an unfamiliar merchant, or perhaps it's for a purchase you recognize but at an incorrect amount. Or maybe it doesn't account for a return you've processed.
Many people wonder what steps they can take to resolve these discrepancies if the merchant is unwilling or unable to correct them. In such situations, you can turn to your credit card issuer: filing a dispute.
Let’s explore the best approach to reclaiming your funds when something appears amiss on your credit card statement.
When can you contest a credit card charge?
The Fair Credit Billing Act (FCBA), enacted in 1975, safeguards consumers from creditors in specific situations involving unauthorized charges and billing mistakes. According to the FCBA, you have the right to take action against a card issuer in these cases:
- Unauthorized transactions
- Charges with incorrect dates or amounts
- Charges for goods or services that were not delivered
- Mathematical errors
- Unposted payments or credits for returns
- Failure to send statements to your current address
- Charges that require clarification or proof of purchase
This means you can't dispute a charge simply because you're unhappy with a product or service, or if you disagree with an authorized user’s purchase. In other words, if you aren’t prepared to file a police report against someone who made a purchase without your permission, you shouldn’t dispute that charge.
Imagine you order a product from an online retailer, and it arrives at your home completely shattered. If you can't reach a resolution with the seller, you may need to escalate the situation by disputing the charge.
For readers of TPG, this might also pertain to extreme cases involving refunds from airlines or other common carriers. If you're unable to secure a refund from an airline for a canceled flight, or if you're seeking to refund tickets from an airline that has gone bankrupt, disputing the charge is likely your best recourse to resolve the issue.
General advice: Contact the merchant first
Your initial step should always be to reach out to the merchant when faced with billing errors or order problems. Often, this is the quickest way to find a solution. Most companies are willing to assist in resolving the issue without involving the credit card issuer or payment network.
However, if you find yourself unable to obtain a legitimate refund or satisfactory resolution from the merchant, filing a credit card dispute should be your next move. It is in the banks' best interest to assist you in recovering your funds.
"Banks are streamlining the charge dispute process for their customers; they aim to maintain customer satisfaction, and with the rise in dispute requests, growing competition, and the changing expectations of cardholders, banks have to simplify the process for their clients," explained Monica Eaton, CEO of Chargebacks911.
Now that we’ve discussed when to dispute a charge, let’s dive into how to do it effectively.
Steps to dispute a transaction
If you identify a fraudulent transaction or any charge that you believe warrants a dispute (especially after attempting to resolve it directly with the merchant), it’s time to contact your credit card issuer to initiate the dispute process.
JOSE LUIS PELAEZ INC/GETTY IMAGESIf you believe an unauthorized charge has been made on your account, you should immediately contact the customer service number located on the back of your card to discuss the necessary steps with your issuer, which may include replacing your cards and updating your online account details.
Step one: Collect the relevant evidence
Retain receipts, photos, and any communication you've had with the merchant in your attempts to resolve the issue. Often, your issuer will require proof of the billing error and evidence that you've made a sincere effort to contact the merchant before they will intervene.
Step two: Submit a charge dispute with your issuer
Most issuers provide a straightforward way to do this online, including Amex, Chase, Citi, and Bank of America. Typically, you'll find a "Dispute This Charge" option when you click on a specific transaction.
Keep in mind that you can typically only dispute charges that have already been posted. Pending charges usually won't have a "Dispute" option available in your online account or app.
If you're unable to locate the online dispute submission area, you can also contact customer service to dispute a charge via phone.
Step three: Follow up with a written request
It's important to note that while the Fair Credit Billing Act provides protections for consumers, these protections require you to adhere to its rules. This means you'll need to send a formal dispute letter via mail (yes, the traditional postal service) within 60 days of the charge in question.
The Federal Trade Commission outlines your specific rights and the procedures you must follow to ensure protection. They also provide a sample letter that you can utilize.
MASKOT/GETTY IMAGESSubmitting a written request isn't mandatory for disputing a charge with your credit card issuer if they have alternative methods for dispute requests. Most leading credit card companies are generally willing to assist you in resolving the issue. However, it’s important to note that to be fully protected under the Fair Credit Billing Act, you must submit a written request.
With that in mind, if you're facing challenges getting your issuer to address a dispute, be sure to send a written request to ensure that the issuer is held accountable to the fullest extent of the law.
Chargebacks: What occurs after you dispute a purchase?
So you've filed a dispute for a purchase. What are the next steps?
Many issuers will provide what is known as a chargeback. Essentially, a chargeback is a reversal of a credit card transaction. The charge is routed back through the chain—from your account to your card issuer, then to the merchant's bank, and finally back to the merchant, all via the payment network used (such as Visa or Mastercard).
In this process, the charge is removed from the consumer's account, and the issuer can "charge back" the amount to the merchant when deemed appropriate. Keep in mind that you will forfeit any rewards you earned from that transaction.
Bottom line
The Fair Credit Billing Act provides protection against unauthorized or incorrect charges made to your account, and most issuers are proactive in assisting cardholders whenever possible.
You should only initiate disputes in the situations described above. The dispute and chargeback procedures are designed to help cardholders obtain refunds and rectify billing errors when resolving issues directly with a merchant is not possible.
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