What Is the Meaning of a Disputed Transaction?
Unravel the complexities of challenging financial transactions. Empower yourself to recognize issues, initiate claims, and navigate the process for accurate financial records.
Financial transactions are common, but sometimes payments are processed incorrectly, duplicated, or made without authorization. Consumers can formally challenge these charges by disputing a transaction. This process allows individuals to seek resolution and recover improperly taken funds.
Understanding Disputed Transactions
A disputed transaction is a formal challenge by an account holder regarding a charge on their financial statement. This applies to credit and debit cards. The aim of a dispute is to reverse an erroneous or unauthorized transaction.
Disputes fall into two main categories: unauthorized transactions and authorized transactions that went awry. Unauthorized transactions involve charges made without permission, often due to fraud. Authorized transactions are disputed for issues like incorrect amounts or failure to deliver goods or services. For card transactions, this resolution mechanism is called a chargeback, which returns funds to the cardholder.
Common Reasons for Disputing a Transaction
Several scenarios commonly lead consumers to dispute a transaction:
Unauthorized Charge: A transaction appears on a statement that the account holder did not make or approve, often indicating fraud.
Incorrect Amount Charged: The final amount billed differs from the agreed price.
Duplicate Charges: A single transaction is processed more than once.
Goods or Services Not Received: Despite payment, an item was never delivered or a service never rendered.
Defective, Damaged, or Not as Described: Goods received are defective, damaged, or significantly not as described.
Credit Not Processed: A refund or cancellation was expected, but the corresponding credit has not appeared on the account statement.
Initiating a Transaction Dispute
Initiating a transaction dispute requires careful preparation and timely action. Before contacting a financial institution, gather all relevant information about the problematic transaction. This includes the transaction date, exact amount, merchant’s name, and a clear explanation of the dispute. Collect supporting documentation like receipts, order confirmations, or communication with the merchant.
Contact the financial institution that issued the card or manages the account. This can be done through online banking portals, customer service phone lines, or by sending a written letter. For credit card disputes, the Fair Credit Billing Act (FCBA) generally requires written notification within 60 days of the statement date. For debit card transactions, the Electronic Fund Transfer Act (EFTA) also encourages prompt reporting, typically within 60 days, to limit liability.
Financial institutions often require specific dispute forms. These forms formalize the complaint and capture details for their investigation. Submitting the dispute promptly with thorough documentation is important, as delays can affect consumer protections.
The Dispute Resolution Process
After a consumer initiates a transaction dispute, the financial institution begins a resolution process. They typically acknowledge receipt within 30 days for credit card claims under Regulation Z. For debit card disputes governed by Regulation E, if the investigation cannot be completed within 10 business days, a provisional credit may be provided while the investigation continues. This allows the consumer access to the disputed funds.
During the investigation, the financial institution reviews consumer evidence and may contact the merchant for their perspective and supporting documentation. For credit card disputes, the investigation must generally be completed within two billing cycles, but no more than 90 days. For debit card disputes, the institution typically has 10 business days to investigate, which can be extended to 45 or even 90 days for certain types of transactions, provided a provisional credit is issued. The merchant has an opportunity to respond to the claim with their own evidence.
Upon completion, the financial institution makes a decision. If the dispute is resolved in the consumer’s favor, any provisional credit becomes permanent, or funds are returned. If no error is found, the institution informs the consumer, and any provisional credit may be reversed. Consumers may have an opportunity to appeal a denied decision with additional information or evidence.