What Happens When I Dispute a Charge?

A charge dispute represents a consumer’s right to challenge a transaction appearing on their account statement. This process provides protection against issues like unauthorized spending or disagreements over goods and services. When a charge is incorrect, fraudulent, or for an undelivered product/service, initiating a dispute allows the financial institution to investigate. This safeguards consumers from financial liability when a merchant fails to fulfill their obligations.

Gathering Information for Your Dispute

Before initiating a charge dispute, gather information about the transaction. Key details include the precise transaction date, exact amount charged, and merchant name as it appears on the statement. Additional documentation, such as order confirmations, receipts, and contracts, should be readily available. If the issue involves a product or service, photographs of damaged goods or screenshots can provide evidence.

Compile records of communication with the merchant, noting dates, names, and conversation summaries. This includes attempts to resolve the issue directly with the merchant, often a required step before involving the bank, particularly for credit card disputes related to product quality. Documenting these attempts, including emails or call logs, demonstrates a good-faith effort. This evidence can be crucial during the bank’s investigation, providing a clear timeline of events and the merchant’s response, or lack thereof.

Initiating the Dispute with Your Bank

After gathering information, formally initiate the dispute with your financial institution. Consumers can contact their bank or card issuer via phone, online portals, or mail. Many institutions offer online dispute forms or dedicated customer service lines for this purpose, which can be the most efficient methods for starting the process.

For credit card transactions, the Fair Credit Billing Act provides protections. This act stipulates consumers have 60 days from the statement date to dispute the charge in writing. While some issuers might offer a longer window, submitting the dispute as soon as possible preserves all rights.

When submitting the dispute, clearly state the reason for the challenge, such as an unauthorized charge, a billing error, or a failure to receive goods or services. Provide the collected evidence and documentation to support the claim. The financial institution must acknowledge receipt within 30 days. Consumers are not required to pay the disputed amount or any associated finance charges while the investigation is underway.

The Dispute Investigation Process

Once initiated, the financial institution investigates the contested charge. The bank acts as an intermediary, reviewing the evidence provided by the consumer and typically contacting the merchant for their perspective and supporting documentation. The bank evaluates both sides to determine the validity of the claim.

During this period, many financial institutions may issue a provisional credit to the consumer’s account. This temporary credit returns the disputed amount to the consumer, allowing them access to the funds while the investigation is ongoing. A provisional credit is not a final resolution; it can be reversed if the investigation concludes in the merchant’s favor.

The bank has up to two billing cycles or 90 days to complete its investigation. The bank may communicate with the consumer, requesting additional information or clarification to aid in their review. Promptly responding to these requests helps avoid delays in the resolution process. The merchant also has an opportunity to present evidence, such as proof of delivery or signed receipts, to counter the consumer’s claim.

Outcomes and Next Steps

Upon concluding the investigation, the financial institution communicates its decision regarding the charge dispute. There are two primary outcomes that can result from this process: the dispute is resolved in the consumer’s favor, or in the merchant’s favor.

If the financial institution finds the consumer’s claim to be valid, the provisional credit, if issued, becomes permanent, and the consumer is not held responsible for the disputed charge. This is often referred to as a chargeback, where the funds are permanently reversed from the merchant’s account and credited back to the consumer. In such cases, any finance charges or fees related to the disputed amount are also removed from the consumer’s account.

If the investigation concludes in the merchant’s favor, the original charge will be reinstated on the consumer’s account. If a provisional credit was provided, it will be reversed, meaning the funds will be debited back from the consumer’s account. The bank must provide a written explanation detailing the reasons for its decision. Should a consumer disagree with the outcome, they may review the explanation for any new evidence they can provide to appeal the decision, though the avenues for further recourse become more constrained at this stage.