Valid Reasons You Can Dispute a Charge

Consumers often encounter unexpected or incorrect charges on their credit card and bank statements. Federal law provides consumers with specific rights to challenge transactions they believe are erroneous or unauthorized. Knowing the valid reasons for disputing a charge is the first step in exercising these rights and protecting yourself from financial discrepancies.

Categories of Disputable Charges

Disputable charges generally fall into several distinct categories, each addressing a unique type of financial error or unauthorized activity. One common reason for a dispute involves unauthorized transactions, which occur when a charge appears on a statement without the cardholder’s permission. This can include instances of credit card fraud where an individual’s card details are stolen and used for purchases, or situations where a lost or stolen card is used by another party. The Fair Credit Billing Act (FCBA) limits a consumer’s liability for unauthorized credit card use to $50, though many card issuers offer zero-liability policies that further protect cardholders.

Another category encompasses billing errors, which are mistakes made by the merchant or payment processor. Examples include being charged an incorrect amount for a purchase, such as a higher price than agreed upon, or encountering duplicate charges for the same transaction. This also extends to charges for services or subscriptions that were previously cancelled but still appear on a statement, or charges that remain after a product return was made but a corresponding credit was not issued.

Issues with goods or services represent a third significant area for disputes. This category applies when a product paid for was never received, or when the item delivered was defective, damaged, or significantly different from its description. Similarly, if services paid for were not rendered at all, or were performed so poorly they did not meet the agreed-upon standards, a consumer may have grounds for a dispute.

Information to Prepare for a Dispute

Before initiating a formal dispute, gathering all relevant information and documentation is a crucial preparatory step. Consumers should collect specific data points related to the transaction, including the exact date and amount of the charge, the name of the merchant, and a detailed description of the goods or services involved.

Collecting supporting evidence is equally important to build a strong case. This can include receipts, order confirmations, and any tracking numbers if the item was shipped. Records of communication with the merchant, such as emails, chat transcripts, or notes from phone calls, are valuable, especially if they detail attempts to resolve the issue directly. Photos of defective items or screenshots of misleading product descriptions can also serve as compelling evidence.

It is generally advisable to attempt resolving the issue directly with the merchant first before involving your financial institution. Documenting these attempts, including the dates and times of contact, the names of individuals spoken to, and the outcomes of those conversations, can strengthen a dispute if direct resolution fails.

Steps to Initiate a Dispute

Once all necessary information and documentation have been gathered, the next step is to formally initiate the dispute with your financial institution. The primary method involves contacting your credit card issuer or bank directly, which can typically be done via phone, through their online portal, or by sending a written notice.

When contacting your issuer, be prepared to present all the information and evidence collected during your preparation. This includes transaction details and supporting documents that substantiate your claim. For credit card disputes, the FCBA generally requires consumers to send a written notice of the billing error to the card company within 60 days after the first bill containing the error was sent.

After receiving your dispute, the card issuer generally has 30 days to acknowledge receipt of your complaint and then up to two billing cycles, or a maximum of 90 days, to complete their investigation. During this investigation period, you are typically not required to pay the disputed amount, and the issuer cannot report it as delinquent to credit bureaus. If the dispute is found to be valid, the charge will be removed from your account, and any related fees or interest will be credited back.