What Does It Mean to Dispute a Transaction?

Disputing a transaction involves formally challenging a charge on a financial account, such as a credit card, debit card, or bank statement. This process allows individuals to address charges they believe are unauthorized, inaccurate, or fraudulent. It provides a structured way to seek resolution when direct communication with a merchant has not been successful.

Understanding Transaction Disputes

A transaction dispute can arise when a charge is not legitimate or as expected. Unauthorized charges occur when a transaction is made without the account holder’s consent, indicating fraudulent activity. An incorrect amount, where the charge differs from the agreed-upon price, is another common reason. This includes being charged twice for the same purchase, known as a duplicate charge.

Disputes occur when goods or services are paid for but never received, or when they are significantly different from what was described or promised. If a subscription or order was cancelled, but a charge still appears on the statement, this is a valid reason to dispute the transaction. Regularly reviewing account statements to identify discrepancies promptly is important.

Preparing for a Dispute

Before initiating a formal dispute with a financial institution, gathering information and documentation is important. Collect details such as the exact transaction date, the amount of the charge, the merchant’s name as it appears on the statement, and the reason for the dispute. This information helps in accurately identifying the problematic transaction.

Supporting documentation is valuable in the dispute process. Include copies of receipts, order confirmations, and any correspondence with the merchant, such as emails or chat logs, detailing attempts to resolve the issue directly. Retain proof of delivery or return, like shipping information or tracking numbers. Attempt to resolve the issue directly with the merchant first, documenting these attempts, as this may be a prerequisite for the financial institution’s involvement.

Starting the Dispute Process

Once information and documentation are gathered, contact the financial institution that issued the account. This means reaching out to the bank, credit card issuer, or payment processor directly. Most financial institutions offer methods for submitting a dispute, including online through their banking portal or mobile application, by phone, or by mail.

Clearly state the reason for the challenge and provide all gathered information and documentation. For credit card transactions, federal law provides 60 days from the statement date to dispute billing errors or fraudulent charges. Deadlines for other issues or debit card transactions vary, but consumers typically have 60 days from the statement date to dispute unauthorized debits. Prompt action is recommended, as pending charges cannot be disputed until they are fully posted to the account.

What Happens After You Dispute

After a transaction dispute is initiated, the financial institution investigates the claim. During this period, especially for debit card disputes, a temporary credit is often issued to the account, allowing access to the disputed funds while the investigation is ongoing. For credit cards, the disputed amount is withheld from the balance due, and no interest is charged on that portion during the investigation.

The financial institution reviews the evidence provided and contacts the merchant for their perspective and supporting documentation. The account holder is kept informed of the dispute’s progress through various communications. The resolution process can take several weeks, or up to 90 days for credit card disputes.

The investigation concludes with a decision, resulting in the dispute being resolved in the consumer’s favor, making any temporary credit permanent and removing the charge. If the dispute is denied, the temporary credit is reversed, and the original charge is reapplied to the account. If the consumer is not satisfied with the outcome, they have options to provide additional information or appeal the decision, depending on the financial institution’s policies.