Credit Card Disputes – How to win them

credit card disputes, what are they?

A chargeback, or credit card dispute as they are commonly known, is when you request your bank or credit card company remove/reverse a charge from your bill. This is possible thanks to the Fair Credit Billing Act (FCBA) which provides you with 60 days from the time you receive your credit card bill to dispute a charge.

There are similar, though lesser known, protections for debit cards and money transfers.

What charges can I dispute?

The FCBA was enacted to protect Americans from unfair billing practices.

They include:

  • Charges you didn’t/dodon’t authorize.
  • An incorrect charge.
  • Charges for goods or services not received or delivered.
  • Good or services not as described by the merchant.
    • An important note is that unauthorized or approved changes in contracts would use this dispute code. Examples are when hotels or rental car companies change your rate or tack on additional charges/fees which should be included as part of a rewards program.
  • Math or calculation errors on your bill.
  • Statements mailed to the wrong address.

Note: These protections are only provided for “open-end” credit accounts (credit cards or charge accounts). Debit cards or money wired through a service like Zelle or PayPal is not protected by the FCBA.

What are the requirements of a credit card dispute?

The transaction must be over $50

The purchase must be more than $50. It has to be made in your home state or within 100 miles of your home address. This rule doesn’t apply if the merchant is affiliated with the bank that issued the card, or if you relied on an advertisement supplied by the issuing bank.

It has to be in writing

You have to initiate a dispute in writing. Some banks will accept disputes by telephone. But disputing by telephone does not preserve your rights under the FCBA. Once you dispute a charge, the bank must acknowledge the dispute within 30 calendar days, and it must resolve the dispute within 90 days.

You must give the merchant a chance to work it out

Under the FCBA, you must make a “good faith” effort to resolve the problem with the merchant before disputing the charge.

Pro tip: If no online form is provided to initiate your dispute, mail the dispute via certified mail or other trackable methods to provide proof of delivery. Remember, you must initiate the dispute within 60 days of the first statement in which the error or charge appeared. Some banks extend this deadline, but they don’t have to.

What if it takes longer than 60 days to dispute my charge?

It often takes longer than 60 days to initiate a credit card dispute. For example, say you book a cruise vacation for next year. The clock would start ticking when you completed the purchase, leaving you with no consumer protection during your vacation.

Or would it?

Fortunately, credit card agreements often extend the time you can have to file a dispute. But neither merchants nor credit card issuers are always aware of these provisions.

AMEX cardmembers have up to 120 days from the transaction date to dispute the charge, except for goods and services not received or returned goods.

MasterCard has a provision for failed travel service providers, such as airlines and cruise lines. You potentially have up to 150 calendar days from the latest expected service date or up to 150 days after the service cessation date to file a claim.

Visa allows disputes for bankrupt providers up to 120 calendar days from the last date you expected to receive the merchandise or services, not to exceed 540 calendar days from the transaction processing date.

In other words, if your cruise doesn’t happen for another year and then the cruise line declares bankruptcy before you can set sail, you might be covered by your bank. But you would not have the same rights as you would under the FCBA. Your bank can go beyond its merchant agreement or the law to protect you if it wants. We have some cases where banks have allowed a dispute more than a year after purchase — and sided with the customer.

If you feel your credit card company isn’t following the law, you can file a complaint with the Consumer Financial Protection Bureau. The best way to file a complaint is through its online form.

How do I dispute a charge on my credit card?

If you see a charge you want to dispute, the easiest way to file a chargeback is to visit your bank’s website. Most major banks will allow you to initiate a dispute online.

Your bank or credit card company will follow up with a request for documentation. So you’ll want to keep any supporting evidence, including invoices, receipts, and emails.

Your credit card issuer might hand off your request to Visa or MasterCard, depending on the type of dispute. The credit card network then makes the call on the validity of your chargeback after conferring with you, your issuer, and the merchant.

How does a credit card chargeback work?

When you contact your bank to dispute the charge, your credit card company will forward the dispute to the merchant. The business then either accepts or rejects the chargeback.

You’ll usually receive a provisional credit on your card while your bank reviews the dispute.

Note: This is only a provisional credit. It does not mean you’ve won the chargeback. The business will get the money if the credit card company or bank decides in the merchant’s favor.

Credit card networks impose a chargeback fee on merchants when there’s a dispute. The merchant’s credit card processor sets these fees. Generally, businesses in high-risk industries will pay higher chargeback fees.

Most credit card disputes take less than 30 days. After the bank makes a decision, it will inform you in writing and either credit or debit your account. You may appeal the decision by submitting a second chargeback request and submitting additional documentation. If you disagree with the bank’s decision, ask to file a dispute resolution with the card network. The bank or card network usually has an arbitration process.

How to ensure your credit card dispute is successful

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. But there are ways you can increase your chances of success.

Don’t file a “friendly” fraud chargeback

Friendly fraud is when you don’t recognize a charge or when someone in your household uses your card to make a valid purchase. Do your due diligence before filing a chargeback. Friendly fraud costs businesses billions of dollars annually and wastes everyone’s time. So don’t do that.

Avoid frequent chargebacks

Your odds of prevailing in your first chargeback are excellent. But serial chargeback filers are less successful. One recent survey of American consumers found that almost 15 percent of cardholders admit to filing five or more disputes in the past year. Nearly 6 percent have initiated a more than 11 claims in the same time frame. These frequent chargebacks may lead to the termination of your credit card account.

Keep meticulous documentation

All bills, invoices or emails that you receive in connection with the disputed transaction will help resolve your dispute. Get receipts, particularly for a big-ticket item, always say yes and then take a picture of it. Keep all your documentation in an easily accessible format, like a Google Doc, that you can share with your bank or credit card company. Documentation will help win your dispute.

Find the credit memo

A credit memo is an email or letter from a business that promises you a refund. A text message from a representative promising you a refund is a de facto credit memo. That’s often enough for your bank or credit card company to side with you and close your dispute. If you can get something in writing that promises a refund, your chargeback will usually be a slam-dunk.

WARNING. ChARGEBACKS ARE THE “nuclear” option

If you’re a regular reader of this site, you know that we refer to credit card chargebacks as the “nuclear” option. That’s because once a merchant wins a dispute, almost no amount of prodding from a consumer advocate will change the outcome. Your next course of action is to file a lawsuit against the business.

As a consumer, you always want to make a good-faith effort to resolve the problem. And I would underscore the “good” in good faith. Try everything before filing a dispute. Really.

Note: Even if you prevail in a credit card dispute, a company might still refer you to a collection agency or add you to its “do not rent” list. It could also sue you.

Strategies for a successful credit card dispute

Would Dunlop have won her dispute? Maybe. Her case was well documented, but Airbnb had the cancellation policy to which she’d agreed. And that cancellation policy clearly stated that once she made a reservation, she was on the hook for the entire amount.

I’ve seen a lot of successful — and unsuccessful — credit card disputes. Here’s what makes them work:

Getting everything in writing

I can’t overstate this. If you have receipts and messages showing this was an invalid charge, your credit card company’s dispute department will side with you. If you just have notes from a phone call, not so much.

A contract that says you’re right

If you can show the bank or credit card company a document that proves the company incorrectly charged you, then it’s an easy win. So always, always keep your contracts and end-user agreements, or take a screenshot of your terms of service.

Zero drama

One of the biggest mistakes that consumers make is amping up the drama. “You RUINED my vacation,” or “This appliance DESTROYED my kitchen.” That may play well with friends and family, but it lessens your credibility when dealing with a dispute department. Stick to the facts.

Dunlop, to her credit, had kept all of her messages and stuck to the facts — but the terms of her purchase did not support her claim.

When to file a credit card chargeback

Here’s when you should consider a chargeback in a customer-service dispute.

If it’s covered under the FCBA

If it’s a fraudulent charge or if you have documentation of a service paid for but not delivered, you have a green light to file a dispute. Remember first to give the merchant a chance to respond. You’ll need to let your bank know if you see an obviously fraudulent charge. It will close your account and reissue your credit card.

If you’ve worked your way up the chain and failed

I advise consumers with a problem to work their way up the chain — first to a manager, then a vice president, and finally the CEO. If you get to the end of the process and still don’t have a resolution, you can ask my team for help. And if we can’t? File a dispute.

If the merchant asks you to file a dispute

As strange as it sounds, we’ve had numerous cases where merchants have asked their customers to file a dispute. Why? Presumably, the dispute process is a faster way to refund, because the business will accept the dispute. This is one of the most inelegant ways of refunding a customer, which is not what the system was designed to do. But it is what it is.

What if you lose your credit card dispute?

If your appeals fail and arbitration is unsuccessful, consider filing a complaint with the CFPB. The bureau will share your complaint with the bank or credit card issuer, and it may reconsider its decision. If that doesn’t work, you might have the option of taking the merchant, bank, or credit card company to small claims court to recover your loss.

Bottom line: If your credit card company can’t help you, cancel your card and find one that will side with you. Some banks are pushovers when it comes to disputes. They don’t deserve your business.

Sometimes, the best way to win a chargeback is not to file one

Credit card disputes are an unfortunate but necessary part of the business ecosystem. Things go wrong from time to time, and we need a way to fix them.

A closer look at how the system works reveals that your odds of prevailing in a credit card chargeback are excellent, whether you have a strong case or not. Still, a thorough understanding of the process will lead you to one inevitable conclusion: Sometimes, the best way to dispute a credit card purchase is not to dispute it at all, at least formally. Use the proven strategies at your disposal to work this out with the merchant.

Bottom line: Don’t go nuclear with a credit card dispute unless you absolutely have to.

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