How (and when) to dispute a credit card charge

We’ve all been there — you open up your credit card app or check out your account online to pay a bill or look over recent purchases, and you notice a charge that doesn’t add up. Either it’s at a merchant you don’t recognize, or it’s for a purchase you’ve made, but in the wrong amount. Or maybe the charge doesn’t reflect a return you’ve made.

Many may wonder what options they have for getting those errors fixed if the merchant is unwilling or unable to make the necessary changes. However, there is an option in those cases with your credit card company: issuing a dispute.

When can you dispute a credit card charge?

The Fair Credit Billing Act (FCBA) of 1975 gives consumers protection against creditors in certain situations regarding unauthorized charges and certain billing errors. Under the FCBA, you are entitled to be able to take action against a card issuer in circumstances for these types of charges:

• Unauthorized charges
• Charges with an incorrect date or amount charged
• Charges for undelivered goods and services
• Math errors
• Failure to post payments or credits for returns
• Failure to send bills to your current address
• Charges for which you request clarification or written proof of purchase

This means that you can’t dispute a charge just because you are dissatisfied with a product or service or didn’t agree with an authorized user making a certain purchase. Think of it this way: If you’re not willing to file a police report on the person who made the purchase without your permission, you shouldn’t try to dispute the purchase.

But let’s say that you order a product through an online seller, and that product arrives at your house shattered. If you are unable to resolve the matter with the merchant, you could then escalate to disputing the charge.

For TPG readers, this could also apply to certain extreme situations in trying to get refunds from airlines or other common carriers. If you are unable to get a refund from an airline when your flight is canceled or even trying to refund tickets from an airline that’s gone bankrupt, disputing the charge is likely the best option to resolve the issue.

Rule of thumb: Talk to the merchant first

Your first course of action should always be to reach out to the merchant in cases of billing error or order issues. Many times, this is the fastest way to get something resolved. And most companies will work with you to try and fix the problem without getting the credit card issuer or payment network involved.

But should you not be able to receive a warranted refund or other acceptable resolution from the merchant, a credit card dispute should be your next step.

How to dispute a purchase

If you notice a fraudulent purchase or another disputable charge (that you’ve already tried to resolve directly with the merchant), it’s time to reach out to your credit card issuer to dispute the charge through them.

If you suspect there’s been an unauthorized charge made to your account, you should call the customer service line on the back of your card to talk through next steps with the issuer, including replacing your cards and resetting your online account information.

Related reading: Credit card fraud vs. identity theft — how to know the difference

In this guide, I’ll focus on how to dispute a charge that deals with a merchant billing error or other associated issues.

Step one: Gather necessary evidence

Keep receipts, photos and any communication you’ve made with the merchant to try and resolve the issue. In many cases, your issuer will ask for evidence of the billing error and that you’ve made a good-faith effort to reach out to the merchant before they will step in.

Step two: Fill a charge dispute with your issuer

Most issuers offer an easy way to do this online, including Amex, Chase, Citi and Bank of America. Usually, there is a “Dispute This Charge” option when you expand a specific charge.

Remember that usually, you can only dispute charges that have already posted. Pending charges generally will not have a “Dispute” option available online or in the app.

If you can’t find where to submit a dispute online, you can also call customer service and dispute a charge that way.

Step three: Follow up in writing

Keep in mind that while the Fair Credit Billing Act does offer consumers protections, those protections are dependent upon you following its guidelines. This means you’ll need to send in a formal dispute letter by mail (yes, snail mail) within 60 days of the disputable charge.

The Federal Trade Commission lays out your specific rights and the guidelines you must abide by in order to be protected. They also provide a sample letter you can use.

Now, this step isn’t required to dispute a charge with your credit card company if the issuer has other avenues to request a dispute. And most of the top credit card companies will work with you to resolve the issue. But it is worth noting that the only way you’ll technically be covered in the eyes of the Fair Credit Billing Act is by sending in a written request.

Chargebacks: What happens when you dispute a purchase

So you’ve disputed a purchase. What happens next?

Many issuers will issue you what’s called a chargeback. Essentially, a chargeback is a reverse credit card purchase. A charge is sent back up the line from your account to your card issuer to the merchant bank and back to the merchant, all through the payment network used (such as Visa or Mastercard). This way, a charge is removed from the consumer’s account and the issuer is able to “charge back” the cost to the merchant when deemed appropriate.

Bottom line

The Fair Credit Billing Act does offer protection in cases where unauthorized or incorrect charges are made on your account, and most issuers are diligent about helping cardholders where possible.

You should only dispute charges in the appropriate circumstances outlined above. But the dispute and chargeback process can help cardholders receive refunds and correct billing errors in the cases where you are unable to make it work with a merchant.

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