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When to Dispute a Charge on Your Credit Card

In most cases, if you purchase something using a credit card and you’re unhappy with the purchase, it isn’t too hard to return the item and receive a refund. With competition high amongst most retailers—especially against online giants like Amazon—a generous and easy return policy is a key part of a good customer experience.

But there are situations when you can and should ask a credit card company to reverse a charge, known as a “chargeback.” The federal Fair Credit Billing Act gives consumers the right to dispute a charge under specific circumstances—and many card companies will make the process easier than the law requires in order to keep you satisfied. However, attempting to obtain a chargeback without a legally valid reason is chargeback fraud, sometimes called “cyber shoplifting.”

Here’s what you need to know about properly and legally pursuing a chargeback.

What to dispute

Under the Fair Credit Billing Act of 1974, you have the right to dispute a credit card charge with the card issuer for three reasons:

  1. Fraud. Someone else—not a family member, friend, or other authorized user—used your card without permission to make an unauthorized purchase.

  1. Billing error. A merchant charged you too many times for something or for an incorrect amount. Or they haven’t credited your card for a promised refund.

  1. You’ve made a good-faith effort to resolve a problem with the merchant. Your first course of action is always to resolve the issue with the retailer. You might request a refund or replacement if the purchased item was faulty or mischaracterized, if you ordered online and received the wrong item, or if the item never arrived at your door.

If a merchant refuses to properly compensate you for any of these scenarios, you would have good cause to dispute the purchase. To successfully receive a chargeback, it’s important to keep record of all communications between yourself and the merchant—receipts, delivery notices, emails, etc. The credit card issuer will most likely ask for proof of effort to resolve the issue before they initiate a chargeback.

What not to dispute

Requesting a chargeback on your card isn’t a one-size-fits-all solution when you’d like your money back. Don’t pursue a chargeback if:

  1. The purchase was made by a friend or family member—even if they made it without your permission. A rule of thumb to follow is if you’re not willing to file a police report on the person who used the card, don’t file a chargeback for fraudulent card use.

  1. You’re unhappy with or regret a purchase but haven’t talked to the merchant about a possible refund or exchange. If you don’t attempt communication with the retailer first, they could successfully dispute your chargeback.

The consequences for attempting illegitimate chargebacks include becoming blacklisted from the business and having your credit card account closed (after you pay off the full balance, of course).

How to file a dispute

The process for filing a dispute is pretty simple and fast. After attempting to settle the dispute with the merchant and keeping record of all communications, you can call your credit card’s customer service number, fill out a form on their website, or submit a form in writing. The charge will usually be credited back to your account (meaning you don’t have to pay it as part of your upcoming credit card bill) while it’s under dispute.

If you need to dispute a purchase, it’s important to act quickly. If the charge is fraudulent or there’s been a billing error, you don’t need to talk to the seller before you dispute the charge. If you are lodging another type of dispute, you typically need to file it within 60 days of the transaction, at the latest.

Your rights during a dispute

The Fair Credit Billing Act outlines what the credit card company can and can’t do while it’s investigating a dispute.

They cannot:

  • Try to collect the disputed amount or the interest on that charge
  • Close your account
  • Report you to the credit bureaus for failing to pay the disputed charge

In addition, they must:

  • Acknowledge your complaint in writing 30 days after receiving it (unless the problem is resolved before then)
  • Resolve the dispute within two billing cycles after receiving your letter
  • Give a written explanation if they determine you still owe any portion of the disputed amount
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