The ABCs of Credit Card Disputes

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According to a U.S. Bureau of Justice Statistics study that was released at the end of last year, 11.7 million Americans were victims of identity theft during the past two years and more than half of those cases involved credit card fraud of some sort.

Disputing unauthorized charges on your credit card due to identity theft is a relatively straightforward process. However, things aren’t so clear cut when you are disputing the quality of a purchase you actually made (for goods or services). But whether it’s blatant fraud or a problem with quality, make sure you know these ABCs of credit card disputes…

A for Always know the rules

First and foremost, the most important step to successfully winning is knowing the credit card dispute rules. According to a U.S. Bureau of Justice Statistics study that was released at the end of last year, 11.7 million Americans were victims of identity theft during the past two years and more than half of those cases involved credit card fraud of some sort.

Disputing unauthorized charges on your credit card due to identity theft is a relatively straightforward process. However, things aren’t so clear cut when you are disputing the quality of a purchase you actually made (for goods or services). But whether it’s blatant fraud or a problem with quality, make sure you know these ABCs of credit card disputes…

A for Always know the rules

First and foremost, the most important step to successfully winning is knowing the credit card dispute rules.

For “unauthorized charges” there is a federal law which limits a consumer’s liability to no more than $50. If your card was physically stolen (or just the account numbers) and purchases were made, those would be considered unauthorized charges. If the purchases were made using your account information and not the card itself, then the $50 won’t apply and you will have $0 of liability.  Either way, most banks nowadays completely waive the $50 cap because it looks better for marketing to say their cards come with “no liability for unauthorized purchases.”

There is a law called the Fair Credit Billing Act, which also gives you additional rights for disputing credit card charges. It applies various types of credit card billing errors, including unauthorized charges. Here is what the FTC website says it covers:

  • unauthorized charges. Federal law limits your responsibility for unauthorized charges to $50;
  • charges that list the wrong date or amount; 
  • charges for goods and services you didn’t accept or weren’t delivered as agreed; 
  • math errors; 
  • failure to post payments and other credits, such as returns; 
  • failure to send bills to your current address – provided the creditor receives your change of address, in writing, at least 20 days before the billing period ends; and 
  • charges for which you ask for an explanation or written proof of purchase along with a claimed error or request for clarification.

In order to be eligible for dispute rights under the Fair Credit Billing Act, there are strict guidelines you follow which you can read about on the FTC website. You should also consult this link for information on disputing the quality of goods and services, which are not “billing errors” and therefore different rules and rights apply. Examples of disputes about quality would be if you paid a contractor to remodel your bathroom and he didn’t deliver as promised, or if you purchased a product that you don’t feel was as advertised.

B for Be careful how you file

How you file your dispute may determine whether or not you win. Let me give you an example…
A couple years ago there was an article in USA Today about credit card disputes. It told a story of two different customers who shared a similar problem with the same interior designer. One customer filed her dispute as an “unauthorized charge” and the other didn’t. The outcome? The customer who filed her complaint as an unauthorized charge got her money back, but the other guy only received a partial refund. The article states “reporting a charge as unauthorized may have made a difference in getting her money back.”

Now this doesn’t mean you should mis-classify your dispute. However there are some disputes where classification is a gray area because it could legitimately fit into different categories. If that’s the case, you should definitely opt for the “unauthorized charge” category if that’s one of the options.

If your dispute is not an “unauthorized charge” then technically, you should be filing your complaint in writing, according to what is set forth in the Fair Credit Billing Act. To find out more, here is a credit card dispute letter sample.

C for Consistent follow-up

After you file your dispute, it doesn’t mean you can just forget about it. If the card issuer or merchant disagrees with the merit, then it could turn into a back-and-forth battle — your bank will mail a response with their ruling in favor of the merchant. If you don’t respond to that letter within a certain amount of time, then the book will be closed on that case.

This is why consistent communication after you file is so important. I would recommend calling to check the status at least once per week. Why so often? Because I have heard stories where the bank’s response got “lost in the mail” and therefore, the customer was never aware that the case had been closed. By the time they found out, it was too late to do anything. This is why I recommend calling to regularly check the status; that way if an update has been mailed out, you will know to expect it.

This post was written by Michael who is the founder of CreditCardForum.com, a portal for the best credit card deals as well as a place to discuss all things credit card related.

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  1. Susan.Yoo-Lee

    4 years ago

    Thank you for this information. I agree with the whole follow- up idea because if you don’t, you could put yourself in serious trouble.

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  2. CreditCardForum

    4 years ago

    @SavingsMommie – You’re welcome! Indeed the followup is crucial.

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