Do you have a transaction on your credit card bill that you don’t believe you should be obligated to pay? You may be able to recoup your funds by disputing the charge.
Money expert Clark Howard said in an episode of his podcast that more and more consumers are contacting him in a panic because of unrecognized or unwarranted charges on their cards. He says the key to combating fraudulent or unwarranted charges is to monitor your billing statements proactively and take immediate action to dispute bad charges when you see them.
(Oh, and make sure you’re spending with a credit card instead of a debit card. Always.)
Disputing a charge to your credit card is perhaps the most useful tool you have to combat paying for unwarranted transactions. But not all transactions can be disputed, and time is a big factor in disputing many transactions.
As a consumer, you should know your rights so that you’ll know what to do if a fraudulent transaction is charged to your credit card. In this article, I’ll walk you through what you’ll need to know if you’re thinking about disputing a charge.
Disputing Credit Card Charges: Table of Contents
- What Does It Mean To Dispute a Charge?
- What Type of Charges Can Be Disputed?
- Things You Need To Know About Disputing a Charge
- Form Letter To Use To Dispute a Charge
- Refund vs. Chargeback: What’s the Difference?
- How To Dispute a Charge With Your Credit Card Issuer
- Final Thoughts
What Does It Mean To Dispute a Charge?
Disputing a charge on your credit card is the act of flagging a particular transaction as inaccurate and asking for a review by your credit card issuer. The goal, of course, is to get that charge removed.
This can be done a few different ways, and each card issuer may have a preferred method for how to raise the alert that you have a potentially inaccurate charge on your bill.
Some credit card issuers make this process incredibly simple by placing a prompt to dispute a charge underneath each of your transactions on your statement online.
Others may have a process that is a little more complex. This could include asking you to call customer service or fill out a form on their website.
Note that a charge that is in need of dispute is different from a fraudulent charge. I’ll discuss that later in the article when I go through the types of charges that can be disputed.
What Type of Charges Can Be Disputed?
You may be wondering if the charge you have an issue with is even eligible for dispute.
First, let’s talk about fraud. If you notice transactions on your credit card statement or online activity page that you did not make, you should call the phone number on the back of your credit card immediately to get a fraud investigation started.
Fraudulent activity is different from a disputed charge and will likely require an immediate deactivation of your existing credit card number as well as an investigation by the card issuer to recoup their funds. As long as you report the fraud quickly and accurately, you should be protected from owing any money on those illegal transactions.
Aside from a criminal making a fraudulent charge on your card, let’s talk about charges that can be disputed on your credit card.
This is not an exhaustive list, but here are some of the more common reasons you may need to dispute a charge:
- Unauthorized charges (a merchant you deal with charging you without your permission)
- Charges that have the wrong amount
- Charges processed on the wrong date
- Billing errors (math errors, duplicate charges or otherwise)
- Incomplete services
- Goods not delivered by the merchant
You may not be able to dispute every type of transaction on your card successfully. Things such as a service rendered in an underwhelming fashion could be a bit of a gray area. Technically, the merchant may have delivered on what it promised even if the result of the transaction is not to your satisfaction.
Things You Need To Know About Disputing a Charge
As you’re determining whether your charge should be disputed, here are some things to keep in mind.
The Fair Credit Billing Act Provides Protections
If you feel you’ve been wronged in a credit card transaction, the law may be on your side. The Fair Credit Billing Act was put into federal law with consumer protections on many of the transactions we described above in mind.
You can access and read the rights provided in this act here. And if you find that you’re not being treated in compliance with these protections, you can file a complaint with the Consumer Finance Protection Bureau.
You Are on the Clock To Make Your Dispute
Clark tells you to be on top of your credit card bills for good reason!
According to the Federal Trade Commission, “You must notify your credit or debit card company of any error you’re disputing within 60 days of the date that the first statement on which the charge appears was sent to you.”
If you miss that window, you may simply be out of luck: You’ll owe the money whether the transaction was valid or not.
Your Card Issuer May Ask You To Try To Resolve the Issue with the Merchant First
You may be surprised to learn that some credit card issuers want you to try to handle the first step of the dispute before it gets involved.
While your card issuer may be able to remedy a simple mistake, such as a double charge, without reaching out to the merchant, some card companies want you to give it a shot first.
Take a look below at the section of the Chase website where it guides credit card customers to contact merchants to give them a chance to resolve the disputed transaction.
As Chase suggests to its customers, make sure you document all communication if you do contact the merchant on your own. It could be key evidence in the dispute moving forward.
Don’t Pay for the Disputed Transaction, but Be Prepared for a Temporary Credit Limit Reduction
If you decide to move forward with a dispute, it’s in your best interest to communicate with your card issuer that you don’t want to pay for the transaction in question.
After all, paying for it could be construed as an acceptance that you actually owe the money.
While your card issuer may allow this transaction to be frozen while it’s under investigation, you should be warned that the company may also temporarily lower your credit limit to protect itself (and you) from overspending in the meantime.
For example, if the disputed transaction is for $500 and you have a $2,000 credit limit on your credit card, you probably can expect the card issuer to lower your spending power to $1,500 until the issue is resolved.
Form Letter To Use When Disputing a Charge
Team Clark’s Consumer Action Center recommends that you call your credit card company to begin disputing a charge and then follow up with written documentation.
Many times the written portion of the process can be submitted and documented online through the credit card issuer’s website.
Other times, you may be required to send a physical copy of the letter through the mail. If you do that, Clark strongly recommends that you send it via Certified U.S. Mail so that you have a paper trail that confirms your card company has received your letter.
This written documentation will be used for the investigation of the dispute, so it’s important that you get it right.
The Federal Trade Commission has made this easy for you by creating a form letter that you can use (just plug in your details) to ensure that you’re providing the proper information.
Here’s how that form letter reads:
Think of the disputed transaction as trying to win a case in court. You want to put your best foot forward in communication, tell the truth and document everything along the way.
Refund vs. Chargeback: What’s the Difference?
If you have a charge on your account under dispute, there are generally two different ways to reclaim your money.
The first is a simple refund.
The second is called a “chargeback.” While the end result is the same for you, it can be a lot different for the merchant — and not in a good way.
If your card issuer has to process a chargeback to recoup the funds that the merchant attempted to take, it may levy a fee against that merchant and sometimes even the merchant’s bank.
How To Dispute A Charge With Your Credit Card Issuer
It’s important to note that the dispute process can be a little different from one card issuer to another.
As I discussed earlier, many of them have a prompt for you to start the process while viewing individual transactions on your card’s app or online portal.
Many of them also have pages on their websites where you can find instructions for jumping through the proper hoops to dispute a charge.
Here are quick links to the relevant information for some of the popular American credit card issuers:
Again, Team Clark’s Consumer Action Center recommends making a phone call to the card issuer first. Calling should start the documentation process on the card issuer’s end, which could be especially important if you’re up against that 60-day deadline when you find the problem charge. Also, talking to someone may help you determine the best way to work your dispute through that particular company’s system.
If you find yourself in a situation where you need to dispute a charge, remember that proactive communication is the key to a successful resolution.
Reaching out to your credit card issuer immediately to flag the transaction via app chat, email, website form or phone call is going to be your best bet for getting clear direction on how to properly dispute it.
And remember Clark’s advice on monitoring your credit card statements for any funny business.
Time is of the essence when it comes to both fraud and disputable charges, so quickly identifying a potential problem helps increase the chances of getting it resolved without damaging your wallet.
Do you have a success story from disputing a charge on your credit card? Or have some tips for people who are in the process of doing so? We’d love to hear your thoughts in the Clark.com community.