What Happens When You Dispute a Transaction With Your Bank?

When an unfamiliar or incorrect charge appears on your bank statement, understanding the process of disputing a transaction is important. A transaction dispute is a formal complaint initiated by a cardholder with their bank regarding a specific charge on their account. This process protects consumers from various issues, such as unauthorized charges, billing errors, or problems with goods and services purchased. The aim is to resolve the discrepancy and, if warranted, reverse the transaction to return funds to the cardholder’s account.

Preparing to Dispute a Transaction

Before contacting your bank to dispute a transaction, gathering comprehensive information and attempting to resolve the issue directly with the merchant is beneficial. Issues can range from unauthorized charges or incorrect transaction amounts to undelivered goods or services, or duplicate charges. For instance, if a service was not performed as expected or an item arrived damaged, these are valid reasons for a dispute.

Collecting all relevant documentation is a key preparatory step. This includes receipts, order confirmations, and records of communication with the merchant, such as emails or chat transcripts. Details like the exact transaction date, the amount, and the merchant’s name as it appears on your statement are necessary. Having this information organized helps streamline the dispute process with your bank.

Understanding the difference in protections for credit cards versus debit cards is important. Federal laws, such as the Fair Credit Billing Act (FCBA) for credit cards and the Electronic Fund Transfer Act (EFTA) for debit cards, provide different levels of consumer protection. While both offer avenues for dispute, specific timelines and provisional credit rules differ significantly. Knowing these distinctions can help set expectations for the dispute process.

Filing Your Dispute

After gathering necessary information, formally submit your dispute to your bank. Banks offer several methods for filing, including online banking portals, phone calls, written correspondence, or in-person visits. You will need to provide the collected details.

This includes the transaction date, amount, merchant’s name, and a clear explanation of why you are disputing the charge. Providing supporting documentation, such as copies of receipts or communication with the merchant, can strengthen your claim. Specific timelines govern how quickly you must file a dispute to retain certain protections.

For credit card transactions, the FCBA requires you to notify your creditor in writing of a billing error within 60 days of the statement date on which the error first appeared. For debit card transactions covered by the EFTA, you have 60 days from the statement date showing the error to report it. Adhering to these timeframes is important, as exceeding them may affect your rights and the bank’s obligation to investigate.

The Bank’s Investigation

After filing your dispute, the bank begins its investigation. The bank will acknowledge your dispute, often within 30 days for credit card issues. For debit card disputes, especially those related to unauthorized transactions, banks issue a provisional credit to your account, usually within 10 business days, allowing you access to the disputed funds while the investigation proceeds.

During the investigation, the bank reviews the evidence you provided and may communicate with the merchant or payment network. They examine transaction details, merchant information, and documentation submitted by both parties. The bank’s goal is to determine if the transaction was authorized, correctly processed, and whether there was an error or fraud involved.

Investigation timelines vary. For credit card disputes under the FCBA, the bank must resolve the issue within two billing cycles, or no more than 90 days. For debit card disputes under the EFTA, the bank has 45 days to complete its investigation, though this can extend to 90 days for certain cases, such as foreign-initiated transactions or new accounts. You may be asked to provide additional information during this period.

Dispute Outcomes and Further Actions

Upon conclusion of the investigation, you will receive notification of the outcome. If the dispute is successful, provisional credit for debit card disputes becomes permanent. For credit card disputes, the disputed charge is removed from your account, and any related interest or fees are corrected. This means the funds are returned to you, or your credit is restored, effectively reversing the original transaction.

If the dispute is denied, the bank will provide a written explanation detailing why the claim was rejected. Any provisional credit previously granted will be reversed, and the original charge reapplied to your account. If you disagree with the bank’s decision, you have the right to appeal. You can request supporting documents and present additional information to strengthen your case.

If an appeal with the bank does not resolve the issue, other avenues exist. You may consider filing a complaint with regulatory bodies such as the Consumer Financial Protection Bureau (CFPB) or the Federal Trade Commission (FTC). These agencies can act as mediators or investigate the bank’s compliance with federal regulations. Pursuing the matter in small claims court or consulting with an attorney might also be an option.