Don’t initiate a credit card dispute until you’re sure that it can’t be resolved between you and the merchant. Disputes may be necessary in some cases, but if you try to initiate an illegitimate dispute you could, in some cases, face criminal charges.
Instances of false credit card disputes are increasing by 20% per year. This type of credit card fraud, known as “friendly fraud,” is a major crime that can earn you some serious consequences. If you see transactions on your credit accounts that you don’t recognize, you may need to file a credit card dispute. Just make sure your claim is legitimate so that you don’t accidentally end up committing fraud yourself.
Compare Credit Cards
Compare the rates, fees, and rewards of leading credit cards.
Compare Credit Cards
Why dispute a credit card charge?
Credit card holders are bound to come across charges they don’t recognize once in a while. Sometimes the merchant description doesn’t clearly indicate where the charge came from, or the consumer just needs to jog their memory to remember the origin of the charges. Other times, there is a real case of credit card theft, fraud, or a mistake on behalf of the merchant. In these cases, disputing a charge may be the only way to resolve the issue.
What is an unauthorized charge?
An unauthorized charge is a credit card charge that a consumer either didn’t initiate or can’t explain. Unauthorized charges can lead to large balances on your account or even having yourcredit card denied. Unauthorized charges are usually a result of one of two scenarios:
- Someone stole your credit card information and is using it to make purchases.
- A merchant charged you more than you agreed upon or the same amount multiple times.
Either way, unauthorized charges warrant a credit card dispute so that you can get your money back.
What is a chargeback?
Often, the outcome you’re looking for from a credit card dispute is a chargeback. A chargeback is a refund on behalf of the credit card issuer or the merchant as a result of a dispute. Credit card chargebacks are regulated by the U.S.Truth in Lending Act.
If a consumer files a dispute, the credit card issuer may demand the merchant pay back the consumer on account of the fraudulent or disputed transaction. In cases when this isn’t possible, credit card companies can initiate a chargeback. Usually, either the merchant or issuing bank incurs a chargeback fee.
One of the great benefits of using a credit card is the liability protection that it comes with. This will protect you against fraud and can make it easier for you to get your money back. Keep in mind that differenttypes of credit cardsmay have different terms, conditions, and protections.
The Fair Credit Billing Act
The Fair Credit Billing Act(FCBA) gives buyers the right to ask merchants for an explanation for transaction charges. If you do find unauthorized credit card charges in your account, the FCBA also gives you the right to file a dispute. Simply put, the FCBA grants you the right to dispute credit card transactions as long as you have a valid reason to do so.
When to dispute a credit card charge
Disputing a credit card charge shouldn’t be the first step you take if you see unfamiliar transactions on your statement. First, think hard about your recent purchases and try to remember if a transaction was indeed authorized. Consider if another authorized user on your account, like a spouse or child, could have made the credit card purchase.
If that doesn’t clear up the confusion, but you can identify the merchant that initiated the transaction, try to reach out to them. You can try to work together to resolve any discrepancies or get an explanation of the charges. If an attempt to contact the merchant isn’t possible or successful, your next step could be initiating the dispute process.
When you notice unfamiliar charges on your statement, take action to identify or dispute them as soon as possible. Under federal law, credit card issuers must offer chargebacks within 60 to 120 days of the billing date.
Check your credit cardbilling statementsregularly to monitor for unauthorized charges. The more often you review your statements, the fresher your memory, and the sooner you can identify suspicious charges.
Why not dispute a credit card charge?
Don’t mistake a chargeback for a refund. Sometimes, consumers will attempt to exercise their FCBA rights to get a refund because they think it’s easier. However, this is not a good idea, and it could come with serious consequences.
The best and easiest way to get a simple refund is to go through the merchant instead of getting the bank involved. If any of the following situations occur and the merchant doesn’t cooperate in giving a refund, then you may file a dispute.
Here are some common legitimate reasons under the FCBA to dispute credit card charges and get your bank involved:
- Credit card hacking
- Defective merchandise
- Item not as described
- Wrong order received
- Additional or incorrect charges
- Billing errors
- Bad service/service not rendered
Virtual credit cardscould help you avoid scams or instances of fraud. If you want to apply for a new credit card, check out SuperMoney’s guide on evaluatingcredit card offers.
How to dispute a credit card charge
Disputing a charge might be easier than you think. Once you decide that it’s necessary to dispute a charge, follow these steps:
How to dispute a credit card charge
- Gather information.To file a credit card dispute, you may need to present account information and documentation that proves you tried to resolve the issue directly with the merchant first.
- Contact your credit card company.Call, email, or send a credit card dispute letter to your credit card company within 60 days of receiving the statement containing the disputed charge.
- Follow your credit card issuer’s instructions.Once you get in contact with your financial institution, they will guide you through the dispute process.
- File a police report.It’s not required, but filing a police report can help the government track crimes and verify your claims.
- Follow up.Keep detailed records of the dispute process and follow up with the credit card company to check on the status of your dispute.
What happens if you falsely dispute a credit card charge?
Falsely disputing credit card charges is a crime. Whether to the merchant, the credit card issuer, the government, or all of the above, you’ll have to answer for your dishonesty.
What defines a false dispute?
A false dispute is any dispute not considered valid under the FCBA. For example, it is illegal to dispute a charge for the following reasons:
- To receive a refund and keep the purchased items for free
- To cause financial and emotional stress for the merchant
A dispute for these or any similar reasons constitutes a false dispute. Don’t expect to get away with a false dispute, as merchants may come back and dispute your claims. Credit card issuers will also investigate your dispute, and they almost always identify false disputes.
Consequences of falsely disputing a credit card charge
Falsely disputing a credit card charge is friendly fraud, which is a crime. This can come with serious consequences. The following are potential consequences of falsely disputing a credit card charge:
- Blacklisting:Falsely disputing a charge can prompt the merchant to blacklist you. This means you’ll never be allowed to shop with them again.
- Loss of banking privileges:A common consequence of false credit card disputes is the credit card issuer canceling your credit card account. You may never be able to have an account at that financial institution again.
- Damage to credit score:If you decide to falsely dispute credit card charges, expect to see a drop in your credit score.
- Fees:If a merchant disputes your claims and wins, you may be responsible for fines, administrative fees, and any other financial retaliation.
Could I go to jail for falsely disputing charges?
Falsely disputing a credit card charge is considered credit card fraud, and is therefore illegal. In some cases, it may constitute wire fraud. In extreme cases, you can face jail time for falsely disputing charges.
What if I disputed a charge by mistake?
If you dispute a charge and later realize it was a mistake, you may be able to fix it before facing consequences. Contact your credit card company and explain the situation. You may also want to notify the merchant if they are involved. In most cases, if you resolve the mistake promptly, you’ll walk away unscathed.
Can I dispute a credit card charge that I willingly paid for?
You can dispute a credit card charge that you willingly paid for if you later find out that the product or service wasn’t delivered as described or there was a billing error.
What happens if I dispute a charge by mistake?
If you dispute a charge by mistake and do nothing about it, you may face consequences. However, if you contact your credit card issuer to resolve it, you will likely avoid any further issues.
Do banks investigate disputed charges?
Banks do investigate disputed charges, especially when merchants file counter-disputes.
What are valid reasons for disputing a credit card charge?
Valid reasons for disputing a credit card charge include fraud, non-delivery, defective merchandise, item not as described, wrong order received, additional or incorrect charges, billing errors, bad service, or service not rendered.
Can I get in trouble for disputing a charge?
You can get in trouble for disputing a charge if the dispute is not substantiated under the FCBA requirements.
How often are credit card disputes successful?
Credit card disputes have about a 65–75% success rate if a consumer does everything right. Providing thorough documentation can increase your odds of winning the dispute.
- Under the Fair Credit Billing Act, you have the right to question and dispute charges on your credit card. However, you should only do so after you’ve verified that you didn’t forget about a charge or make some other mistake on your end.
- In cases of fraud, billing errors, or bad service, you can dispute charges with your credit card company. It can be as simple as contacting the company and providing documentation to back up your claims. However, it’s always best to try to resolve any issues with the merchant before getting your bank involved.
- Falsely disputing credit card charges is a crime. If you commit this type of fraud, you’ll likely face consequences such as blacklisting, loss of banking privileges, damage to your credit score, and fees.
Did you know you can dispute charges on debit cards too? You may sometimes see unfamiliar charges ordouble chargeson your debit card or find that your debit card has been denied. In these cases, you should know how tocancel a pending transactionand file a dispute. The time it takes to get arefund on a debit carddepends on several factors, so be sure to read SuperMoney’s guide on debit card refunds to know what to expect.
View Article Sources
- Truth in Lending Act – Federal Deposit Insurance Corporation
- Fair Credit Billing Act – Federal Trade Commission
- Disputing Credit Card Charges – Federal Trade Commission
- How do I dispute a charge on my credit card bill? – Consumer Financial Protection Bureau
- How can I get a refund on a product or service I purchased with my credit card? – Consumer Financial Protection Bureau
Can you get in trouble for falsely disputing credit? ›
Can you Get in Trouble for Disputing a Charge? Yes. Cardholders can face consequences for abusing the chargeback process.Do credit card companies actually investigate disputes? ›
As for how credit card companies investigate fraud, the issuer's internal investigation team will begin by gathering evidence about any disputed transactions. It may check for things like transaction timestamps, the IP address of the person who made the disputed purchase, and the purchaser's geographic location.What is a good excuse to dispute a charge? ›
We can divide all valid disputes into one of five basic categories: criminal fraud, authorization errors, processing errors, fulfillment errors, or merchant abuse.What happens if I dispute a charge by mistake? ›
If you dispute a credit card charge by mistake, contact your card issuer and explain the situation. You could also follow up with the merchant if required. Before you initiate a dispute, be sure that it is indeed an unauthorized charge.What if I falsely dispute a transaction? ›
If you falsely dispute a credit card charge, you may be subject to penalties from your credit card issuer. In some cases, you may even be reported to the credit bureau for fraud. If you're unsure whether a charge is legitimate, it's best to contact your credit card issuer directly to ask about it.What are the chances of winning a credit card dispute? ›
You might not always get a fair outcome when you dispute a chargeback, but you can increase your chances of winning by providing the right documents. Per our experience, if you do everything right, you can expect a 65% to 75% success rate.Do banks look into disputes? ›
In an effort to provide better service to customers, though, banks will generally move quickly on disputes. The bank initiates a payment fraud investigation, gathering information about the transaction from the cardholder.How are credit disputes investigated? ›
The credit bureau must review all of the information and documents received from you and then investigate your dispute within 30 days of receiving it. The credit bureau has to notify the business who provided the information—the "furnisher"—of the dispute within five business days of receiving it.Can a merchant sue you for disputing a charge? ›
Both parties can still file a lawsuit over the matter, and merchants have been successful at winning back high-value chargebacks by taking the cardholder to civil court. However, some chargeback fraudsters can and do end up facing serious legal consequences.What to do if a merchant refuses to refund? ›
If asking the merchant for a refund didn't work, request a chargeback with your credit card issuer. Many card issuers let you dispute transactions by phone, mail or online. You may also be able to submit a dispute directly through your card issuer's mobile app.
How many chargebacks is too many? ›
Standard: Merchant has at least 100 chargebacks and a chargeback ratio of at least 0.9%. High risk/excessive: Merchant has at least 1,000 chargebacks and a chargeback ratio of at least 1.8%.Do you need proof to dispute a charge? ›
To dispute a credit card charge, you may need to provide copies of receipts and any other supporting documents you have. If the bank agrees with your dispute, it will issue a reversal of the transaction.How do I dispute a charge on willingly paid? ›
File your dispute in a timely manner: You can do this online with some credit card issuers, or you can send a letter by mail. Be sure to put your story in writing and upload/provide copies of any supporting documentation.How often do credit card frauds get caught? ›
According to statistics, less than 1% of credit card thefts are solved yearly. So, if you are a credit card theft victim, your chances of getting your money back are almost negligible.What crime is false chargeback? ›
Chargeback fraud, often called friendly fraud, is when consumers fraudulently attempt to secure a refund using the chargeback process. Instead of contacting the merchant directly for a refund, consumers dispute the transaction with their bank, thus initiating the chargeback process.Does a failed dispute hurt your credit? ›
Filing a dispute has no impact on credit scores. But if certain information on your credit report changes as a result of your dispute, your credit score can change.Do credit card disputes get denied? ›
If your dispute is denied, then the charge will go back on your credit card. You're legally entitled to an explanation about why your dispute was denied and how you can appeal the decision. Your credit card company will likely send you both the explanation and instructions on how to appeal in writing.Do banks really investigate chargebacks? ›
Banks require merchants to refund disputed payments, such as unauthorized charges, undelivered goods or services, or charges due to errors. Then the bank charges a fee or chargeback to the merchant. Diligently investigating unauthorized transactions reduces these losses and supports solid business relationships.What do banks investigate when you dispute a charge? ›
The card-issuing bank or credit union is responsible for reviewing the transaction data and evaluating whether a customer's claim of fraud has any validity to it. The bank or credit union may contact the merchant and ask for proof that the debit card customer permitted the charge.How many days does a bank have to investigate a dispute? ›
The card issuer must send you a letter stating that it has received your billing dispute within 30 days of receiving it and complete its investigation within two complete billing cycles which generally means it cannot take longer than 90 days.
Do creditors usually respond to disputes? ›
Credit disputes with creditors
Once you submit a dispute, the creditor has a duty to investigate your claim, according to the Fair Credit Reporting Act. In most cases, the creditor is expected to respond to your claim within 30 to 45 days and to inform you of the results of its investigation within five business days.
Merchants should always respond to these inquiries promptly. Failing to do so will cause the issuing bank to escalate the dispute to a chargeback, resulting in fees and other consequences that the merchant could have avoided.What happens if a merchant never responds to a dispute? ›
If the merchant fails to submit a response by the deadline, the merchant will accept the chargeback by default. Merchants may decide to accept chargebacks for several reasons. Sometimes the chargeback is based on true fraud or some other valid and inarguable reason, and there is no point in trying to fight it.How often do merchants win chargeback disputes? ›
How often do customers win chargeback disputes? Your odds of successfully disputing a transaction are pretty decent. Businesses don't even bother fighting most chargebacks, contesting only 43 percent of disputes filed against them. Just 12 percent of chargebacks go their way.Do merchants respond to chargebacks? ›
The merchant can either accept the chargeback or fight it by resubmitting the charge along with a rebuttal letter and the necessary evidence to disprove the claim. This process is called representment. The issuing bank will review the new evidence and make a decision.Is refund scamming illegal? ›
Is “Return Fraud” a Crime in California? Return fraud can lead to theft charges. Return fraud is activity which can lead to the filing of theft or shoplifting charges in California. The most common return fraud schemes involve the return of stolen or altered merchandise for cash or store credit.How often do people win chargebacks? ›
The average merchant in 2021 had a chargeback win rate of 42%. However, they had a net recovery rate of just 12%, meaning they only recovered revenue from 1 in 8 disputes issued against them.Why do merchants hate chargebacks? ›
Chargebacks are considered a Cost of Doing Business
After all, if a buyer claims to be a victim of fraud, calling that individual a liar seems like a bad idea. Based on that, plenty of merchants view chargebacks as they would a tax or a churn rate, writing off disputes and filing it under cost of goods sold (COGS).
Your odds of successfully disputing a transaction are pretty decent. Businesses don't even bother fighting most chargebacks, contesting only 43 percent of disputes filed against them. Just 12 percent of chargebacks go their way.What happens if you lie about a dispute on your credit report? ›
Falsely disputing credit card charges is a crime. If you commit this type of fraud, you'll likely face consequences such as blacklisting, loss of banking privileges, damage to your credit score, and fees.
Is dispute Hard inquiries illegal? ›
If you find an unauthorized or inaccurate hard inquiry, you can file a dispute letter and request that the bureau remove it from your report. The consumer credit bureaus must investigate dispute requests unless they determine your dispute is frivolous.What can I do about a false credit report? ›
You can submit a dispute to the credit reporting company by phone, by mail, or online. Explain the error and what you want changed. Clearly identify each mistake separately, state the facts, explain why you are disputing the information, and request that it be removed or corrected.What damages can I get when I sue under the FCRA for false credit reporting? ›
If a credit bureau's violations of the Fair Credit Reporting Act are deemed “willful” (knowing or reckless) by a Court, consumers can recover damages ranging from $100 – $1,000 for each violation of the FCRA.