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How to Successfully Dispute a Credit Card Charge

Marcia Frellick

November 28, 2012

In this season of frenzied shopping, shipping and swiping, chances increase that there will be items on your credit bill you’d like removed.

If the error is not your own, or the item or service you charged never arrived or was not to your satisfaction and the merchant won’t work with you, know that you can and should dispute the charge. The fact that you used a credit card gives you protections other payment forms don’t have because credit cards fall under the Fair Credit Billing Act (FCBA).

Here are some tips for disputing charges — and getting your money back.

Why charge disputes occur
Besides identity theft, which has its own set of recourse steps to follow, there are three main reasons consumers dispute credit card charges:

  • Someone billed you the wrong amount — for example, a waiter moved a decimal point on a tip or a retailer bills you twice for the same item.
  • You can’t return an item or didn’t get credit for an item you did return.
  • The items or service you received were not what you expected.

Sometimes, however, an unwanted charge can be chalked up to your own mistakes. Did you agree to a free introductory offer and forget to cancel before the monthly charges kicked in? Does the merchant’s return policy specifically state no returns on sale items?

Act quickly
Once you see the statement with a charge you intend to dispute, the clock starts ticking. You have 60 days under the FCBA to notify the creditor in writing that you’re disputing the charge.

But first try to work out the issue with the merchant. Start with a phone call, explain the problem and cite documentation to prove your case. Make sure you get the name of the person you’re speaking with and note the day and time you called. The merchant may agree to reimburse you because he thinks you’re right, or because he wants to keep you happy. Get any agreement confirmed in writing.

If the merchant rejects your claim or doesn’t answer you, and you’re still convinced you’re in the right, it’s time to take things a step further and contact your credit card issuer.

Getting a charge-back
Making your case to the issuer starts with opening up a dispute claim. Many banks have an online dispute process that you can access by logging in to your account. You can also call your bank to set the process in motion. However, experts also recommend sending a letter as back-up. In that letter, which you should send via certified mail, explain the problem, describe your attempts to resolve the issue with the merchant and state the amount you’re seeking. The Federal Trade Commission provides a sample letter.

“Make sure you don’t send the letter with your payment because the payment typically goes to a lockbox in a bank, which may or may not end up in the right hands. Look up the billing inquiries address on the statement and send it there,” says Howard Dvorkin, founder of Consolidated Credit Counseling Services in Ft. Lauderdale, Fla.

As soon as you do that you’ll get at least temporary relief.

Once the issuer acknowledges your dispute, you don’t have to pay that charge, and the bank can’t charge you interest on that amount, Dvorkin says. You can’t get reported to a credit bureau for non-payment, either. But the charge may continue to show up on your next statements.

Natalie Brown, spokeswoman for Wells Fargo consumer lending, says that once the bank gets the notice of the dispute, the charge goes into “dispute” status. Then the investigation begins, which can take up to two billing cycles.

You and the merchant may need to provide contracts, sales receipts and records in order to  resolve the issue, Brown says.

If the dispute is with the quality of the service, Brown says, you may need to enlist the help of a third party. For example, say you think a mechanic did a sloppy job on your car and won’t give you your money back. Getting another mechanic of your choice to take a look may help you.

“[The third-party merchant] would need to write a letter on their letterhead stating why the work that the previous merchant did was incorrect. This would support your claim and strengthen your position,” Brown says.

Card issuers have some leeway in interpreting the law, Dvorkin says. For example, the FCBA, which was enacted in 1975 before online shopping, states that, to pursue a charge-back, the purchase must have been made in your home state or within 100 miles of your home. Most issuers won’t hold you to that rule, he says.

Major issuers will also likely bend the 60-day time limit in the case of something you paid for but didn’t receive until months later or never received at all.

“Most of the larger banks will give you a break and won’t apply the letter of the law and they’ll fight for you,” Dvorkin says.

Banks are in a hard position, Dvorkin says, because they don’t want to alienate the customer, but at the same time, they don’t want to alienate the merchant who accepts their credit card.

If your issuer won’t work with you and you think you have a really good case, you can always take it to the Consumer Financial Protection Bureau, but only after you’ve exhausted all other options. The CFPB has a complaint system set up for consumers to log credit card issuer grievances here.

Tips on winning your dispute

Of course, there’s no guarantee you’ll win a charge-back dispute. Here are some tips to avoid having the dispute in the first place or, if it comes to that, to up your chances of winning:

  • Keep all receipts. Match them up with your credit card bill each month. Print and keep any website screens that show what you purchased and any terms of service.
  • Get a receipt when you return something. You’ve gone to the trouble of returning an item, but you may need the receipt to prove it was returned if the charge still shows up on your statement.
  • Get everything in writing. Verbal agreements are very difficult to dispute.
  • Keep all communication civil. You don’t want to give people a reason to work against you.
  • Keep your cardholder agreements. They may seem like jargon-filled, small-print monster documents, but they may help you determine whether you have a good case in the first place.