How To Dispute a Credit Card Charge—The Dispute Process Explained
PYMNTS’s 2022 report shows that 24% of e-commerce customers across the U.S., U.K., and Australia have disputed at least one credit card charge during the previous year.
Be it a small miscalculation or a large unauthorized transaction, you have the right to file a dispute and, if accepted, receive a refund.
To carry out the dispute process successfully, it is critical to understand its intricacies. This article aims to educate on credit card disputes, answering questions like:
- What are some valid reasons for disputing a credit card charge?
- How to dispute a credit card charge
- What happens when you dispute a credit card charge?
Valid Reasons for Disputing a Credit Card Charge
As per the Fair Credit Billing Act (FCBA), consumers generally have the right to withhold any disputed payment made with a credit card until the dispute gets investigated and resolved, which typically takes place within 90 days. Charges you can dispute usually include:
- Duplicate charges or charges containing a processing error, such as a wrong authorization date or total amount charged
- Charges for undelivered, canceled, returned, or defective goods or services
- Unauthorized or fraudulent charges
Conditions To Be Aware Of
To be able to withhold a payment, the charge must fulfill the following three conditions:
- The cost of the goods or services in question must be over $5.
- You must have paid for said items in your home state or within 100 miles of your current billing address.
- You must have attempted to resolve the issue with the seller first.
It is also important to acknowledge that you must initiate the dispute process within a certain time frame to successfully withhold a payment. The table below details how much time you have to dispute a payment based on the type of issue you’re dealing with:
| Type of Issue | Time Limit |
|---|---|
| Billing error |
60 days |
| Defective, canceled, or undelivered goods or services |
120 days |
| Fraud |
60 days |
How To Dispute a Credit Card Charge—Wrongful Billing, Undelivered Goods, and Quality Issues
The process of disputing a credit card charge varies depending on the card issuer and the nature of the problem. It is necessary to take the following steps when disputing a charge that involves a billing error, undelivered goods, or quality issues with the delivered item or service:
- Review the transaction
- Contact the seller
- Contact the credit card issuer
- Write a dispute letter
Review the Transaction
You should write down the details of the transaction, such as the authorization date, total amount charged, payment location, and anything else that may be relevant to your case. Gather all the information and documentation in one place as you will need to provide them as proof to support your claim.
Contact the Seller
You should inform the merchant about the issue you’ve experienced and provide them with the documents and information you gathered as proof to support your dispute. Ask them to correct the mistake or issue a refund (depending on the reason for the dispute). Make sure to document as many details about the interaction as possible, including:
- When you got in touch with the merchant
- Who you spoke with
- What their resolution entailed
In the case of quality or delivery issues, contacting the seller and requesting a refund is typically the easiest and fastest way to resolve the dispute.
Contact the Credit Card Issuer
If the merchant rejects your requests or fails to deliver upon the agreement, you can then file a dispute with your credit card issuer. Get in touch with the issuer via phone, email, or in person to check their terms and find out what information you need to provide in order to proceed with disputing a payment.
For delivery or quality-related issues, you may be able to file a dispute with the issuer and initiate a chargeback if the seller doesn’t accept your request or doesn’t follow through on the refund. The issuer typically has two billing cycles or 90 days (whichever is shorter) to process your request. During this period, consumers don’t have to pay the amount or any interest as per the Fair Credit Billing Act. You may even receive a temporary or provisional credit while your case is being investigated.
Write a Dispute Letter
According to the official Federal Trade Commission (FTC) guidelines, you must send a dispute letter to the credit card issuer. Most card issuers provide their own dispute forms to consumers who file a credit card dispute with them, but if they don’t, it is critical to send them a dispute letter using the address they provide for billing inquiries, not the address for sending payments.
When writing the dispute letter, make sure to include your name, address, and account number, as well as the description of the issue in detail. You should also attach copies of receipts and any other evidence you may have that supports your claim. It is strongly advised that you use a certified mail service and ask for a return receipt as proof that you’ve sent the letter.
How To Dispute a Credit Card Charge—Unauthorized Charges
If you suspect that a charge is fraudulent, it is important that you take the following steps to successfully file a dispute:
- Review the transaction
- Contact the issuer
- Contact the credit bureaus
Review the Transaction
In Chargebacks911’s 2023 survey, merchants claimed that 44% of chargebacks filed against them occurred as a result of friendly fraud. This type of fraud refers to when a consumer intentionally makes a purchase with a credit or debit card and then disputes the charge as “unauthorized” with their bank despite the fact that they don’t have a legitimate reason to report it as fraud. In some cases of friendly fraud, the transaction is made by a member of the cardholder’s household without the cardholder’s knowledge.
Before you contest the charge, you must first confirm it didn’t come from either a family member, friend, or even yourself. Credit card issuers and retailers don’t take friendly fraud lightly and might not only reject your request but may also impose penalties.
If you determine that the charge is legitimately fraudulent, reviewing the transaction details may help your card issuer understand the scope of the problem and facilitate the investigation. Make sure to jot down the date, exact amount, the merchant descriptor, and any other important information that may be crucial to the investigation.
Contact the Issuer
You should report the fraudulent purchase to your credit card issuer as soon as possible. Some issuers allow consumers to file disputes for unauthorized transactions online on their official website, via their banking app, or over the phone by calling customer support. In any case, having everything in writing is always essential, so sending them an email or a letter to report the fraudulent charge is also highly recommended.
In case your credit card gets lost or stolen, the Fair Credit Billing Act (FCBA) protects consumers by limiting your liability to $50. However, most card issuers have zero-liability policies, which means they won’t require you to pay anything regardless of the law.
Contact the Credit Bureaus
Using the stolen data, the perpetrator may attempt to apply for accounts or collect credit in your name. That’s why it is critical to contact the three credit bureaus, i.e., Experian, Equifax, and TransUnion, so that they can place a fraud alert on your credit report.
Upon completing the three steps listed above, you should update your banking and credit card account login credentials and security settings and keep monitoring your account for further suspicious activity.
What Happens When You Dispute a Credit Card Charge?
Once you dispute a credit card charge, the issuer must respond in writing within 30 days and resolve the dispute 90 days from the initial filing date. If they determine that the charge was wrongful or fraudulent, your account will be credited.
If the issuer denies your request, they must provide a detailed explanation for their decision in writing. In that case, your card will be charged again if they provided a temporary credit throughout the investigation.
If you disagree with their final decision, you can appeal the decision by writing to the issuer again and presenting relevant evidence to support your claim. Another option is to file a complaint with the Consumer Financial Protection Bureau (CFPB). However, the issuer may still begin collection procedures to recover the outstanding amount that was previously credited for the dispute they rejected.
When it comes to fraud, each credit card issuer has distinct procedures in place. In most cases, if they confirm that fraud legitimately occurred, they will cancel your card and issue a replacement. If the losses were sizable, the issuer may also involve the authorities and have them investigate the case further.
The Importance of Protecting Your Financial Information Online
In 2022, the FTC received identity theft reports amounting to over $1.1 million, around 440,000 of which resulted from credit card fraud alone. Recently, as more and more people have taken advantage of digital payments, card-not-present fraud is becoming a prevalent concern. In light of these developments, knowing how to protect your card data during online transactions is crucial. Some of the steps you can take include:
- Using strong passwords—Set a strong, unique password for each account to make it more resistant to brute force attacks and other guessing methods.
- Enabling multi-factor authentication—With multi-factor authentication, you have to verify your identity to make a purchase or access your account, making the hackers’ job much more difficult.
- Activating transaction alerts—Enable transaction notifications and review each one thoroughly to detect fraud on time.
- Avoiding public Wi-Fi networks and risky websites—Hackers are known to intercept sensitive information on public, unsecured Wi-Fi networks. Providing your financial details to sketchy websites can expose them to potential threats if the merchant in question doesn’t employ proper security measures.
- Buying with virtual cards—A virtual card is a stand-in card number that you can use for online transactions to protect your real card numbers or bank information from potential hackers. Many banks offer virtual cards to their customers, but often with limited features. You should consider an independent virtual card provider, such as Privacy, to enjoy robust protection, comprehensive customization options, and increased control over your finances.
Gain More Control Over Your Finances With Privacy
A Privacy Virtual Card has a unique, randomly generated card number, CVC, and expiration date, and you can use it for online transactions at most places where all major U.S. debit or credit cards are accepted. You can either connect the virtual card to your debit card or a bank account and use it for online purchases as you would any other card. The difference is that virtual cards mask your real bank or card data, which protects it in case the vendor suffers a data breach.
Security and Convenience at Your Fingertips
Privacy is a BBB®-accredited company, abiding by the same high security standards as any well-known bank. Besides security, Privacy offers you more control over your payments and helps you manage your finances with ease. The table below breaks down some of the most notable Privacy features:
- Merchant-Locked Card: The Merchant-Locked Card locks to the first vendor you use it at. If the card number becomes compromised, the perpetrator can’t use it anywhere else. This card is perfect for subscriptions and recurring charges.
- Single-Use Card: The Single-Use Card closes a few minutes after the first transaction, making it useless to potential hackers. You can use it when shopping on unfamiliar websites with questionable security practices.
- Pausing and closing: You can pause or close your virtual cards swiftly without affecting your real card or bank account. Once you do, Privacy will block all further charges. Doing so allows you to prevent unwarranted charges from sneaky merchants and subscription services.
- Spending limits: Privacy Cards have customizable spending limits, which help you stay within budget and prevent merchants and subscription services from charging hidden fees.
- Browser extension for Chrome, Firefox, and Safari: The Privacy browser extension autofills card numbers at checkouts, allowing you to make fast and seamless purchases. It spares you from having to get your wallet or enter card numbers manually every time you want to make a spontaneous purchase.
- Mobile app for iOS and Android: The Privacy mobile app lets you create and use virtual cards wherever you are. By enabling real-time alerts, you can get notified when your cards are used or declined, helping you detect suspicious activity timely.
How To Get Your Privacy Virtual Cards
To give Privacy a try, follow these steps:
- Create an account
- Provide the information required to verify your identity
- Add a funding source (debit card or bank account)
- Request Your Privacy Virtual Card
Privacy’s basic plan is free for domestic transactions and includes 12 virtual cards a month, spending limits, the pausing and closing feature, and access to browser extensions and apps. Paid plans provide up to 60 virtual cards, 1% cashback on select purchases (totaling up to $4,500 a month), and no foreign transaction fees, among other benefits.
