If you’ve experienced a fraudulent charge or error on a credit card charge, a credit card dispute has a good chance of being resolved in your favor thanks to the Fair Credit Billing Act, which regulates how credit card companies handle these disputes. Here’s a breakdown of how credit card dispute works.
In a credit card transaction, disputing a charge is a situation in which a customer questions the validity of a transaction that was applied to their account. Credit card dispute can happen for reasons including
Complaints about the quality of a product or service don’t qualify as billing error disputes and they don’t get the same protections under the law. To open a credit card dispute, you send a letter explaining the situation along with copies of receipts or other evidence you have to your credit card company.
If the error is something minor like an arithmetic mistake, the company will probably correct it immediately. If a disputed charge is less than $25, there’s a chance the company will just remove the charge; as the New York Times reports, looking into disputed charges of $25 or less usually isn’t worth the company’s time. But disputes over charges of larger amounts that you authorized generally prompt the credit card issuer to investigate. In that case, the law requires the company to respond to you in writing within 30 days, as stated by the Federal Trade Commission. The company must complete its investigation and resolve the issue within two billing cycles or 90 days, whichever is sooner.
At this point, the company contacts the seller and investigates the transaction. If it decides that there was a billing error, it’s required to give you a written explanation of the corrections it’s making and to delete both the charge and any interest and fees that went with it. It’s also required to send you a written statement if it decides the bill was correct.
The Fair Credit Billing Act regulates what the company can do while it’s investigating:
The credit card company can decide you owe the disputed amount when there’s a disagreement between you and a merchant over a charge you agreed to. But in a case where you didn’t authorize the charge, there is more protection available for you. If your credit card was stolen and then used to make purchases, the company can’t make you pay more than $50 of the unauthorized amount, as the Federal Trade Commission explains. And if only the card number was stolen, so that you are still holding on to the physical card, you’re not obligated to pay any unauthorized charges.
Finally, the law limits what you owe if your credit card company doesn’t follow the procedures mandated by the Fair Credit Billing Act. Thus, if your credit card issuer tries to collect a charge while it’s investigating or violates the act in any other way, you should contact the Federal Trade Commission.
Need a helpful visual guide to how credit card dispute works? We’ve created a credit card dispute infographic that walks you through the process and highlights both your rights and your responsibilities when disputing a charge with a creditor.
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