Credit card numbers get stolen. Merchandise gets lost in the mail. Purchases mistakenly get charged more than once. These all-too-common situations can result in charges to your credit accounts that shouldn’t be there.
However, you have rights and protections under the Fair Credit Billing Act that allow you to dispute charges in certain instances. Here is a look at three reasons you may want to dispute a credit card charge and what you can do if these situations arise.
How to dispute a credit card charge
Not every type of charge is eligible for a dispute with a credit issuer. For example, if someone who is authorized to use your credit card makes a purchase you don’t approve of, you likely won’t be able to successfully have that charge reversed. You could, however, have more success disputing charges under the following three circumstances.
The Identity Theft Resource Center reports that up to 14.2 million credit card numbers were exposed due to data breaches in 2017, an 88% increase over the previous year.
Add to that the prevalence of credit card information being skimmed at points of purchase, hacked from your computer or phone through viruses and malware, or stolen from discarded statements with full account numbers, millions of consumers are vulnerable to seeing unauthorized or fraudulent charges on their accounts.
If you do come across unauthorized charges to your account, report the activity to your card issuer as soon as possible — ideally no later than 60 days after you receive the statement. Reporting can be done by phone, and it’s a good idea to follow up with a written dispute letter. Most credit card issuers will immediately cancel the card and send you a new one with a different account number.
After you notify your credit card issuer about the activity, they will conduct an investigation into the unauthorized charges. In most cases, the charges are removed from the account — but some liability can be passed onto you, which is why knowing your rights is important.
Under the Fair Credit Billing Act, cardholders can only be held liable for $50 of unauthorized charges, though most card issuers have zero-liability policies. You also can’t be held responsible for any amount incurred through fraudulent purchases made by phone or online. If you report your card as lost or stolen before charges are made or if just your card number was stolen and used, you won’t be responsible for any unauthorized purchases.
It’s important to note that different fraud policies apply to debit cards that can be used for credit transactions.
Adele Alligood, financial advisor and credit expert with EndThrive, says, “[W]hen you choose to swipe your debit card as credit, the card still works like a debit card — and you could be liable for $50, $500, or all of the fraudulent charges.” Check with your bank to find out what policies and procedures apply to fraudulent charges with a debit card.
Sometimes computers and people make mistakes. A glitch can cause a transaction to show up twice on your bill — or not at all. A food server could mix up your card with someone else’s and charge their dinner to your account. A cashier could add an extra zero to the amount charged to your card.
All of these situations are considered billing errors, and your first step in disputing these charges should be to contact the business that charged your card. Explain what happened and ask them to investigate the purchase. You may also be asked to provide receipts and copies of your bill to show the charges are in error.
“The good news is that most companies will be willing to work with you to fix the mistake and refund you the amount,” says Alligood. “Why? Because they can incur chargeback fees from the credit card company if it was found to be an error on their behalf.”
“Chargebacks are a double whammy for merchants,” Alligood continues. “Not only will they be charged a fee, but they'll also have to pay back the funds that were credited to the consumer.”
If working with the company at the point of purchase doesn’t result in a refund, you can contact your credit issuer and dispute the charges within 60 days. Some companies offer more time, depending on their established terms and conditions.
Disputes can be started through online accounts or over the phone. But to secure your rights under the Fair Credit Billing Act, you should send a written letter to the credit issuer’s address for billing inquiries and include your name, account number, the amount you’re disputing, the reason for the dispute, and copies of receipts or any evidence to prove the error. The Federal Trade Commission has a free sample letter you can use, and it recommends using certified mail with a return receipt to send your completed letter.
The credit issuer has 30 days after receiving your letter to acknowledge your complaint in writing. They may conduct an investigation or simply resolve the issue. If an investigation is performed, you won’t be responsible for paying on the disputed amount during that time.
The creditor must notify you in writing about their findings and actions taken. All of this must be completed within two billing cycles after your letter has been received. If you disagree with their findings, you have 10 days from receiving their decision to send a written notice of your dispute. You can also file a complaint with the Consumer Financial Protection Bureau, which will launch its own investigation into your claim.
You didn’t get what you paid for
What happens if you used your credit card to pay for a mattress that was delivered in poor condition, and you sent it back to the seller? Or if you ordered a shirt from an online retailer and it never came? How about if a seller won’t refund an eligible return?
In situations like these, it’s best to try and resolve the disputed credit card charge directly with the seller, as they will often want to avoid chargeback fees that can cost anywhere between $25 and $100.
Alligood recommends keeping copies of all receipts, credit card statements, email exchanges, and even the seller’s return policy to present as you make your case to them for a refund.
“Quoting their policy directly using their own words can let them know that you mean business,” she says. “This is particularly true in situations where they attempt to convince you that you missed the fine print, even when you clearly didn't. Also, it doesn't hurt to let the seller know that you're prepared to issue a dispute with your credit card company. [A] dispute equals chargeback fees.”
If working directly with the seller doesn’t resolve the matter, then you can file a dispute with the credit issuer using the billing error steps detailed above. However, if your claim doesn’t qualify as a billing error, you can ask that your credit card issuer withhold payment to the merchant and help to resolve the dispute.
Creditors are not required to comply with these requests, and to be eligible for consideration, you would have to show that you’ve already made a good-faith effort to resolve the matter with the seller, that the purchase in question was at least $50 in value, and that it took place either in your home state or within 100 miles of your billing address.
One key takeaway, no matter your situation, is to keep on top of your credit card statements and check that the amounts you’re being charged match the amounts you sign for on credit receipts. This will help you spot a problem as soon as possible and take the appropriate actions toward resolution.