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Credit Card Dispute: What Happens After You Dispute a Charge?
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- July 2, 2015
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How Does Credit Card Dispute Work?
If you've experienced a fraudulent charge or error on a credit card charge, a credit card dispute has a good chance of being resolved in your favor thanks to the Fair Credit Billing Act, which regulates how credit card companies handle these disputes. Here's a breakdown of how credit card dispute works.
What Does Dispute a Charge Mean?
In a credit card transaction, disputing a charge is a situation in which a customer questions the validity of a transaction that was applied to their account. Credit card dispute can happen for reasons including
- Unauthorized or fraudulent charges
- Failure by the merchant to deliver merchandise
- Defective merchandise
- Billing errors
Complaints about the quality of a product or service don't qualify as billing error disputes and they don't get the same protections under the law. To open a credit card dispute, you send a letter explaining the situation along with copies of receipts or other evidence you have to your credit card company.
How do banks investigate disputes on credit cards?
If the error is something minor like an arithmetic mistake, the company will probably correct it immediately. If a disputed charge is less than $25, there's a chance the company will just remove the charge; as the New York Times reports, looking into disputed charges of $25 or less usually isn't worth the company's time. But disputes over charges of larger amounts than you authorized generally prompt the credit card issuer to investigate. In that case, the law requires the company to respond to you in writing within 30 days, as stated by the Federal Trade Commission. The company must complete its investigation and resolve the issue within two billing cycles or 90 days, whichever is sooner.
The Credit Card Company Investigates
At this point, the company contacts the seller and investigates the transaction. If it decides that there was a billing error, it's required to give you a written explanation of the corrections it's making and to delete both the charge and any interest and fees that went with it. It's also required to send you a written statement if it decides the bill was correct.
What the Company Can't Do During the Investigation
The Fair Credit Billing Act regulates what the company can do while it's investigating:
- It can't try to collect the amount that's in dispute or the interest on that charge, although you still have to pay the part of your bill that's not under investigation.
- It's not allowed to close your account.
- It can't report you to the credit bureaus for failing to pay the disputed charge.
How To Dispute Unauthorized or Fraudulent Charges
The credit card company can decide you owe the disputed amount when there's a disagreement between you and a merchant over a charge you agreed to. But in a case where you didn't authorize the charge, there is more protection available for you. If your credit card was stolen and then used to make purchases, the company can't make you pay more than $50 of the unauthorized amount, as the Federal Trade Commission explains. And if only the card number was stolen, so that you are still holding on to the physical card, you're not obligated to pay any unauthorized charges.
Finally, the law limits what you owe if your credit card company doesn't follow the procedures mandated by the Fair Credit Billing Act. Thus, if your credit card issuer tries to collect a charge while it's investigating or violates the act in any other way, you should contact the Federal Trade Commission.
Need a helpful visual guide to how credit card dispute works? We've created a credit card dispute infographic that walks you through the process and highlights both your rights and your responsibilities when disputing a charge with a creditor.
The CESI Team is committed to helping you reach your financial goals. If debt keeps you from living the life you dream of, contact us for a free debt analysis today and get started on the road to a brighter future!
* Note: The content on this page provides general consumer information. It is not legal advice or regulatory guidance. This information may include links or references to third-party resources or content. We do not endorse the third-party or guarantee the accuracy of this third-party information. There may be other resources available that also serve your needs, and we do not claim to provide an exhaustive list of all resources related to credit card disputes.
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Source: https://www.cesisolutions.org/2015/07/credit-card-dispute-what-happens-after-you-dispute-a-charge/