Disputing a charge on your credit card

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Everyone makes mistakes, and sometimes the entity making the error is your credit card company. Luckily, you’re protected by the Fair Credit Billing Act (FCBA), which provides, in part, some processes by which consumers can dispute a credit card charge. The FCBA also requires that the credit card company investigate the matter when requested. If the card company finds it made an error on your statement, it must correct it.

Sometimes, the retailer or other merchant processing the charge actually makes the error. Examples can include accidental double charges, being charged the wrong amount or having someone make fraudulent charges on your card. In these cases, the credit card company has the ability to issue a chargeback. That just means the charge is reversed, and the merchant in question returns the money that was paid to them.

For a chargeback or any other type of remedy to occur, you typically have to dispute a charge on your card. Find out more about credit card disputes below.

When can you dispute a credit card charge?

There are three reasons you can legally dispute a charge on your credit card so you aren’t ultimately responsible for it.

When someone uses your card without your permission

This doesn’t mean that someone authorized on your card, such as a spouse, bought something you didn’t agree with. That’s a problem you have to work out with the person in question.

Instead, this refers to people fraudulently using your card or credit card number. It might mean someone you know—who is not an authorized user—taking the card without your knowledge and making purchases. It could also refer to a stranger stealing your card and using it or someone stealing only the credit card number and making purchases online.

When there is a billing error

Examples of this can include your electric company processing a double payment in error or your cable company billing you for a higher-value package than you actually have. In these cases, you may want to contact the company first because most are more than willing to reverse the charges themselves and save everyone the time involved in a credit card dispute investigation.

But if that’s not the case or you can’t or don’t want to involve the company for any reason, your credit card issuer can typically help.

When the merchant won’t help you resolve an issue with the purchase

If you make a purchase that doesn’t live up to the understood agreement, you may want to return the purchase. If the merchant won’t help, you may be able to file a credit card dispute. Note that this is meant for issues such as a damaged or incorrect product and not as a way to recover from buyer’s remorse.

For example, if you order size 10 shoes and get size 8, but the merchant refuses to accept a return, you may have a case for a dispute. But if you simply order a pair of shoes, get exactly what you ordered and decide you didn’t want to spend that much after all, a dispute may not be the ideal path to a resolution.

Try to avoid friendly fraud

Friendly fraud occurs when someone tries to use the credit card dispute process to force a chargeback on legitimate charges. The above example of wanting to return shoes because you decided you didn’t want them after all could be an example of friendly fraud if you force a chargeback over it.

Friendly fraud also refers to filing a credit card dispute for a chargeback simply because you think it’s easier than going to the retailer for a refund. But retailers lose more money to chargebacks due to chargeback fees, the fact that they don’t get their merchandise back and the labor time associated with handling the dispute and chargeback.

These losses can hurt all types of business but can be especially harmful for small or new businesses. And if you abuse dispute systems in this way, you can actually be blacklisted by companies who will not accept your method of payment anymore. That’s true even if you didn’t mean any harm in filing disputes of this nature.

How to dispute a charge

But if you have a legitimate, legal reason to dispute credit card charges, you should. Follow the steps below for doing so.

1. Gather documentation that illustrates the charge was in error, if possible.
2. Make a good-faith effort to resolve issues with the merchant first. This can include calling or going to the store and talking to someone in customer service or billing. Let them know the issue and give them a chance to handle it.
3. Take steps to protect yourself if you believe fraud has occurred. That includes changing passwords, notifying your credit card company and putting a freeze on your credit report.
4. Contact your card issuer by mail, phone or online to file a dispute. Mail is the best method because it’s covered by the FCBA and creates a paper trail. But the other methods can also work.

If you don’t know what to write in a credit card dispute letter, don’t worry. The FTC offers a sample letter you can use.

Once you do write the letter, make sure you send it to the right address. Don’t send it to the address you mail payments to. Look at your statement or check online to find out the address for your creditor’s billing inquiries department.

How long do you have to file a dispute?

Under the FCBA, you have 60 days to file a billing dispute. That’s 60 days from the date when the original bill or statement with the inaccuracy was mailed to you, which means by the time you see the statement, you may have less than 60 days. Mailing your dispute letter certified mail with return receipt requested can be a good idea if you want to document that you met this deadline.

Look out for your credit throughout the dispute process

Throughout the process of handling your credit card dispute, make sure you’re keeping your overall credit in mind. This is especially true if you were the victim of identity theft. In such a case, there’s a good chance that you might have other issues to deal with. Sometimes bringing in help, such as working with a credit repair firm such as Lexington Law, can help you deal with multiple issues on your credit report.

And even if you’re only dealing with the one billing issue, make sure you follow up. Ensure that in the time it takes to deal with the issue, the credit card company doesn’t mark you as missing a payment or report a missed payment to the credit bureau. If that does happen, you may need to write a separate credit dispute letter to the bureau requesting that the negative item be removed.

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