How to dispute a credit card charge

Let’s be honest: There’s a thrill that comes with spending your hard-earned cash on something you’re really excited about. And on the flipside, there are few things more frustrating than spending it on something that turns out to be a let-down — whether it’s a clothing order that never arrives, a high-tech device that breaks almost immediately or a service that pales in comparison to what was advertised and what you paid for. But in those cases, the money isn’t necessarily out of your hands forever. If you paid with a credit card, you may be able to dispute the charge — in those cases and in the case of fraud.

“The ability to dispute transactions and get resolution is a big advantage for using credit cards,” said Liz Weston, personal finance columnist for NerdWallet. “You don’t want to abuse the power of dispute, but you shouldn’t hesitate to use it when it’s justified.” Ahead, brush up on what you need to know to stay within those parameters.

Know when you can and can’t dispute a charge

Regardless of your credit card company, the Fair Credit Billing Act (FCBA) gives you the legal right to dispute charges in three primary scenarios: fraudulent or unauthorized charges, billing errors (for example, if a retailer charged you the wrong price, a return wasn’t credited back to you or you paid for an order that never arrived) and complaints about quality (for example, something broke shortly after you bought it).

In the latter scenario, you can only file a dispute if you spent more than $50 on the product or service and did so in your home state or within 100 miles of your billing address (per ValuePenguin, online transactions are valid as well). And if you’re reporting a fraudulent purchase, you’re legally only liable to pay a maximum of $50, though “almost all [credit card] issuers are going to even waive that $50 fee, so essentially in practice there’s $0 liability,” said CreditCards.com industry analyst Ted Rossman.

Triple check that the charge is incorrect

When retailers lose in a dispute, they have to pay not only the amount initially charged but also additional chargeback fees and processing rates, NerdWallet reported. So before you file a claim, make sure it’s valid. “Don’t dispute charges before you do a little research,” Weston said. “If it’s a merchant you don’t recognize, check the name on a search engine to get more context – the address or some other detail might jog your memory. Also, look back at your calendar for the date on which the item was purchased to see if that rings any bells. And ask your family members. Many of us have started to dispute a charge only to realize, ‘Oh, yeah, I remember that purchase now’ or to find out someone in our family had used the card.”

And if it was a family member and you didn’t give them the okay to make that purchase, it’s still important to think twice before simply filing a dispute claim. “Some people dispute charges made by family members because they simply don’t want to pay for it, but that’s not right,” Weston said. “If you’re not willing to file a police report, then suck it up and pay for it. Don’t put the merchant on the hook.”

Not only is it costly to the merchant, but you can also suffer consequences if you improperly file a dispute claim and it gets denied — particularly if you refuse to pay the bill, which Weston noted can negatively impact your credit score. That said, if your claim gets rejected and you still believe you have a right to a chargeback, you do have some options. “You can call the issuer and ask how to appeal,” Weston said. “You can sue the merchant in small claims court. You can make a complaint with the Consumer Financial Protection Bureau. [Or] you can call your congressional representative, because sometimes they’re willing to help consumers with issues like this.”

Work with the merchant first

If you’re dealing with a billing error on the merchant’s side, or a problem with the quality of your purchase, try to get your money back directly from the company before taking the dispute route. Not only is it the law (the FCBA requires you to “make a good faith effort to resolve the dispute with the seller first), but you’ll also give the retailer a chance to make things right without incurring costly consequences. “Whether it’s the package never came, or something was damaged, or didn’t fit right [or] wasn’t what you were expecting... start with the retailer,” Rossman said. “Hopefully it gets resolved; but it it doesn’t, then I would use your credit card issuer as backup.”

Submit a claim as quickly as possible

If you notice a fraudulent charge, work swiftly to confirm it and notify your credit card company. “There’s actually no time limit for reporting credit card fraud, but you should do so as quickly as possible and get a new card to limit how much damage the bad guys can do,” Weston said.

As for billing errors and quality complaints, the FCBA states that you have 60 days after the first bill was sent to you to file a claim. “If you’re outside that window, the credit card issuer may consider the dispute as a courtesy to you,” Weston said, though it’s not guaranteed. The credit issuer then has 30 days after receipt to acknowledge your complaint in writing and two billing cycles to resolve the dispute.

While every credit card company is different, Rossman noted that in most cases you can file the dispute online, via your banking app, over the phone or through snail mail. The Federal Trade Commission provides a sample letter for disputing billing errors on its website, which you can use when sending your claim via snail mail. (They recommend using certified mail and requesting a return receipt.) Online, the process may be as simple as clicking a dispute button and answering a few questions. Regardless, be prepared to provide documentation in the form of receipts, written communications between yourself and the retailer and anything else that may support your claim.

Pay the rest of your bill

Per the FCBA, you can withhold payment for the charge in question until the dispute is resolved, though your credit card company can deduct the amount from your credit limit. In the case of fraudulent charges, “often times what will happen...is they’ll just immediately credit you that price” and then begin their investigation, Rossman said. “They do have fraud units at all these major credit card companies and they are going to actually go through the leg work of investigating what happened. ...But usually with fraud, it’s as simple as you report it, you get it taken off the statement, you’re not liable [and] they’ll give you a new card.”

If you paid your bill before discovering the fraudulent charge, Rossman said it gets trickier, but you should still be able to get the issue resolved.

Ultimately, your credit card company and the law are on your side when it comes to legitimate fraud or issues with purchases; so as long as you follow the rules, you should be able to make things right.