How to Dispute a Credit Card Charge
When an unexpected charge shows up on your credit card statement, it's easy to panic and assume you're a victim of identity fraud. However, not all erroneous charges are the result of fraud, and you don't always have to go to great lengths to get them resolved.
The Fair Credit Billing Act, or FCBA, offers protections to consumers against billing errors. To exercise your rights under this law, here's what you need to do.
Double Check That It's Wrong.
The first step in disputing a charge is to make sure the charge is truly wrong. "Try to understand the transaction before you dispute a charge so you are certain there is an error," suggests Natasha Rachel Smith, personal finance expert for cash-back website TopCashback.com, in an email.
Here are some examples of when you should dispute the charge:
-- You didn't authorize the transaction. When a charge from a vendor you don't recognize shows up on your credit card statement, it's important to dispute it as quickly as possible to avoid being liable.
-- You were overcharged. If you were charged more than what your receipt reflects, it's possible someone entered the amount incorrectly -- or intentionally overcharged you. In both cases, you should contest the charge with the merchant first.
-- You were charged more than once. Getting double-charged for a product or service is pretty common and may be resolved with a call to the merchant.
-- What you bought didn't come as advertised -- or at all. While it can take more effort to contest a purchase that arrives damaged or isn't delivered as agreed, it can still be a valid reason to dispute a charge.
But don't dispute a charge if:
-- You have buyer's remorse. Credit cards make it easy to purchase something you can't afford. However, regretting that $350 Bluetooth headphones purchase is not a valid reason to dispute the charge. If you really can't afford it, check whether you can return it.
-- You're unhappy with a purchase made by an authorized user. If an authorized user of your credit card makes a purchase he or she can't afford, you may be tempted to dispute the charge to avoid paying it. However, neither merchants nor credit card companies will consider this a valid reason to dispute the charge.
It's also possible that the charge is legitimate and you simply forgot you made it. For example, an auto-renewal charge for a service like Pandora or Amazon Prime can catch consumers off guard
[Read: The Best Low-Interest Credit Cards of 2018.]
Wait until the unfamiliar charge actually posts before disputing it. Some pending charges will correct or simply disappear before they're posted to your account. Hotels and gas stations, for example, often place an initial charge on your credit card to request authorization for the transaction from your bank. Pending restaurant charges typically don't include the tip you added and may appear lower than you expect at first.
Determine If It's Fraud.
Fraudulent charges are handled differently than inaccurate charges. For example, if you are the sole user of your credit card and notice a $200 Walmart purchase was made in New Jersey, even though you live in California, your credit card number has likely been compromised. In this case, you should contact your credit card company immediately and report the charge as fraud.
Many credit cards allow you to report fraudulent charges online. If the charge is indeed fraudulent, your existing card will be canceled, and the bank will issue you a new card with a new number.
Contact the Merchant.
But if it's not fraud, most experts recommend that you first work with the seller to resolve the dispute before getting your credit card issuer involved. "While you may be tempted to go directly to your credit card issuer, to fully exercise your rights [under FCBA] you should first attempt to reconcile the error with the merchant in question," says Jennifer McDermott, a communications manager and consumer advocate at Finder.com, a personal finance website that allows users to compare credit cards. Working with the merchant is typically faster than going through the dispute process with your credit card. "A phone call and explanation of what has occurred might be all that is needed for a quick refund," she says in an email.
If a phone call doesn't fix the issue, you should escalate the dispute by sending a letter to the merchant. McDermott suggests writing a detailed description of the error, including when it occurred and "whether you were overcharged, charged twice or another error." Make a copy of the letter and send it via certified mail.
[Read: The Best Student Credit Cards of 2018.]
Tell Your Credit Card Company.
McDermott says that if the merchant doesn't resolve the error in a timely manner, it's time to get your bank involved. The FCBA requires that you submit a written notice to your bank's billing department within 60 days of the charge appearing on your credit card statement. Like with fraudulent charges, many banks allow consumers to submit disputes online. You'll need to provide copies of your receipts and any other supporting documents. You can also dispute a charge via certified mail.
Lou Haverty, owner of personal finance and investing website Financial Analyst Insider, says in an email that keeping your receipts is important if you want to contest a charge. A year ago, he discovered a waiter had added a zero to a tip he'd left. Haverty had saved the receipt and sent it to his credit card company. "It took about a month but the charge was reversed and the restaurant manager called to apologize."
The FCBA requires creditors to send a letter acknowledging your complaint within 30 days of receiving it. If the bank agrees with your dispute, it will issue a "chargeback," or a reversal of the transaction. If the bank finds that you owe the disputed amount after all, you should receive a notification letter within two billing cycles, or no more than 90 days, of when your bank receives your letter.
[Read: The Best Cash Back Credit Cards of 2018.]
Keep Paying Your Bills.
During an investigation, you are not responsible for paying the disputed charge or any related charges, though these amounts may still apply against your credit limit. In fact, most major credit cards have zero dollar liability policies to protect cardholders from inaccurate or fraudulent transactions. It's important that you continue paying your credit card bill for legitimate charges during the dispute, however.
"You cannot stop making payments to the bank, or other creditors owed during this time ... if you have other outstanding amounts that have not been called into question," says McDermott.
With some patience and an understanding of your rights as a consumer, you can successfully dispute a credit card charge without hurting your personal finances.
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