What is a Credit Card Dispute and How Do They Work?

Posted by Sha'Kreshia Terrell in Credit CardsSeptember 2, 2022(Last Updated September 2, 2022)4 min read
Key Takeaways
  • Credit cards offer valuable consumer protection, among them being the ability to file a credit card dispute if you notice suspicious activity on your account.
  • Disputing a credit card charge helps protect yourself from fraud and inaccurate information that is reported to your credit report.
  • In 1974, the Fair Credit Billing Act (FCBA) was signed into federal law, limiting consumers' liability while protecting them from unfair billing practices.
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Credit cards offer valuable consumer protection, including the ability to file a credit card dispute. If you dispute a credit card charge, this means you disagree with a charge on your account and want the creditor to resolve the issue. 


 

How Can I Dispute a Charge on My Account?

 

A credit card dispute can be submitted either by phone, mail, or online. You must provide evidence that the charge was made in error, such as a receipt or invoice that shows the correct price or an email from the seller indicating that they accidentally charged you too much money for your purchase. You should also include any communication between you and the seller about this issue so that the seller is aware that an error occurred on their end.

 

Types of Credit Card Disputes

 

When disputing charges, it is important to know what category your dispute falls under so that you may adequately dispute it. If you are aware of the type of dispute, you can easily talk to your credit card company or the merchant that has made the error in charging your card.
 

Recommended Read: How to Negotiate With Creditors
 

Disputes can include but are not limited to:

 

  • You notice a fraudulent charge on your account (i.e., unauthorized charge)
  • You were overcharged or incorrectly charged by the merchant
  • You didn't receive a refund when you returned an item you purchased
  • You didn’t receive an item you purchased
  • The credit card issuer has incorrectly processed your payment (i.e., account billing error)

 

Account Billing Errors
 

Account billing errors may include being charged for a product or service you never received, the incorrect amount for a product or service, or being charged multiple times for the same purchase.

 

Unauthorized Charges

 

Unauthorized charges on your monthly statement are a form of credit card fraud. This means that someone who does not have the right to use your credit card has made a transaction with your credit card without your knowledge. The charges can appear with or without your card being in your possession. It’s important to keep your credit card either in your possession or in a safe place at all times.

 

Recommended Read: How to Protect Your Email Account and Personal Information

 

How To Dispute Errors

 

Although the dispute process can vary by the credit card company, The Fair Credit Billing Act (FCBA) gives consumers the right to receive a quick response from their credit card company if they dispute a charge. In addition, the FBCA protects your credit score from negative effects during a dispute investigation.
 

Under the FBCA, creditors have 30 days to acknowledge your complaint in writing once your dispute has been filed. They must have the dispute resolved within 90 days or two billing cycles after receiving your letter.
 

It’s important to note that your dispute is protected by federal law if your request is within 60 days of the date when you received the statement bill that includes the error.
 

The FBCA provides additional protection to you as the consumer. It prohibits the creditor from reporting negative information to the credit bureaus that could negatively impact your credit score. The FBCA also requires creditors to post payments, issue refunds, or credit overpayments to your account soon after their dispute investigation is complete.

 

Dispute by Mail
 

To dispute by mail, write a dispute letter to the creditor at the address listed under “billing inquiries.” Include your name, address, account number, and a copy of the statement report with the listed billing error and other supporting documents.
 

Dispute by Phone
 

Call the number on the back of your credit card to dispute over the phone and explain that you want to dispute a charge. A representative will ask you for the necessary information and create a file for investigation.

 

Dispute Online

 

To dispute online, login into your account and follow the instructions to dispute. Have all supporting documents readily available in case your card company needs it.

 

Investigating the Dispute

 

While the dispute investigation is ongoing, you are not obligated to make a payment on the amount that is being disputed. You do, however, have to make a payment on any balance owed that is separate from the dispute.

 

 

According to the Federal Trade Commission (FTC), the creditor can not take any legal action against you or collect the disputed amount. They can not threaten your credit rating, close your account, or report the disputed amount as delinquent.

 

Can a Dispute Affect My Credit Score?

 

A creditor can report to the credit bureau that you are challenging a bill. It is against federal law for a creditor to deny credit applicants because you exercise your right to dispute.
 

However, keep in mind that just because you dispute a charge doesn’t make it go away. Some disputes are denied, put back onto the account, and require payment. It will only go away if, after investigation, the creditor decides that the charge was rightfully unauthorized. 

 

As previously mentioned, a creditor can not report to the credit bureaus any negative information that has to do with you disputing a charge. Therefore the dispute process does not affect your credit in any way.

 

You should not see any charges regarding your dispute while the investigation is still ongoing. If the charges are truly yours, only then will the charges reappear along with any finance charges or interest accrued at the time of purchase, and should you resume payment after that.

 

Recommended Read: 3 Tips to Build and Improve Your Credit Score

 

The Money Wrap-Up

 

When using your credit card, it’s important to be responsible. Credit card holders should review their monthly statements to ensure there are no errors. If there is an error on your statement, you must immediately contact your credit card issuer or file a dispute.
 

When filing a dispute, you must be as detailed as possible and include all information, such as receipts that prove the merchant or credit card issuer has made a mistake. Fortunately for credit card holders, federal laws have been put in to protect them as a consumer.

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