Have you ever had an experience when you opened your credit card statement or pulled it up online and were surprised to see a balance bigger than you expected?  I have.  It wasn’t pretty.  Sometimes we do this to ourselves, but there are times when a charge gets on a card without us knowing or maybe a merchant charged the wrong amount or wasn’t even authorized to make a charge at all.  In these situations there is hope.  In some cases, you can file a fraud claim and have the charge removed and in others, you have to file a dispute and challenge the charge that is on your card.  Fortunately the Fair Credit Billing Act is there to help consumers like you and me with situations like this.  It allows us to challenge the charge on the credit card through the dispute process.  Today I just wanted to take a few minutes and write about the ins and outs and all you need to know about credit card disputes.

First question, what is a credit card dispute?

It’s pretty simple, a dispute is when you, the person holding the card challenges a charge that has been made to your card.  You can’t just dispute any charge though.  Generally there are three different categories of charges you can dispute.  First, you can dispute charges that are unauthorized.  Second you can dispute charges when there is a billing error.  Lastly, you can dispute charges if there was a problem with the purchase.

Here’s a quick note on errors versus fraud.

Errors are transactions you might recognize but appear to be incorrect.  This could happen with things like subscriptions you cancelled but still got charges.  It could be for a product or service you never received.  It could be for a one time purchase that you returned but didn’t receive a credit.  Errors can also come as an incorrect amount, or a charge on your card when you actually paid with cash, like when you stay at a hotel.  Sometimes you might even get charged for the same thing more than once.  These are all errors and you can dispute them.

Fraud on the other hand is a little different.  A fraudulent charge is a transaction that you, nor anyone authorized to use your credit card account was charged.  You should verify that the charge was not made by another authorized user of your credit card and that you haven’t let anyone else use your card.  You should also review the transaction in detail to make sure the charge isn’t your charge where the merchant shows up on the history or statement with a different name.  In these cases you should immediately call the number on the back of your card to report it lost or stolen.

How long do credit card disputes take?

The short answer is 90 days or less.  Credit card companies have to have time to research the disputed charges.  They will investigate the charge.  This usually means they will charge back the disputed amount to the company who made the charge or contact them and require them to provide information proving the charge was valid.  It doesn’t usually take the full 90 days though.  I checked with Chase and they say this process usually takes 30 to 60 days to complete.

How do you file a credit card dispute?

OK, so you found a charge on your statement that you didn’t recognize and want to file a dispute.  The process is pretty simple.  The first thing you do before filing the dispute is call the company that made the charge.  If it was just an error they can reverse the charge right then.  Simple and fast. If this doesn’t resolve it you’ll need to contact your credit card company.  Each may have slightly different processes to gather your information, but if you put it in writing and mail it in they will have to respond.

Most companies have ways you can do this all online now.  When you login to your account and view the transactions, you should be able to click and get more information on that transaction.  On this page there is a link to click to start the dispute process.  You will be asked a series of questions about the transaction and then confirm that the charge wasn’t yours.

How long after recognizing an error do you have to file a dispute?

Once you have identified an error on your credit card, you have 60 days from the time the charge first appeared on your bill.  You can do this online or by letter.  The Federal Trade Commission (FTC) has provided a sample letter to help you with this.  Once you do this the creditor has 30 days to acknowledge your dispute and 90 days to research and resolve the issue.

How to win credit card disputes?

First verify that the charge is incorrect. Next, gather the necessary documentation showing that the charge should not be on your card.  Examples of this may include return receipts, contracts showing the correct amount, correspondence with the merchant cancelling the product or service, and documentation about defects or deficiencies with the product or service that was advertised.  Put together a clear and concise statement that illustrates the reasoning supporting the removal of the charge.  Finally make sure you file the information promptly with your credit card company to get the ball rolling.

There is one more thing.  Often the credit card company will send you various requests confirming your dispute or asking for additional information.  Make sure you respond promptly so the dispute continues.  A lack of response could cause you to lose the dispute.

Does a credit card dispute affect my credit score?

The process of filing a dispute does not affect your credit score.  The outcome of a dispute, however, can affect your credit score.  Depending on the amount of the charge it could make your credit score go up or down.  For example, a charge of $2,000 on a $5,000 card limit is would increase your credit utilization ratio 40%, which is higher than you want.  Once the charge is disputed and removed from your account that ratio will decrease by the same amount, dropping your utilization ratio which could increase your score.

One last note on how a dispute could affect your credit score.  Make sure you continue to make the payments that are due.  If you think refusing to pay your current payment will help, you’re wrong.  This is considered a default  and the credit card company will report you to the credit bureaus as late.  In addition, your account will then fall into the collections department and people will start to collect.  Just remember, if you are filing a dispute, you still have to keep your payments current.  If you stop making payments it won’t speed up the process and could potentially damage your credit.