Disputing a Credit Card Charge: Know Your Rights

Ever wanted to dispute a charge on your credit card bill that you don’t agree with? Well, thanks to the Fair Credit Billing Act (FCBA), you have the right to do so.

“Many people don’t know about the FCBA, period,” Dr. Barbara O’Neil, a specialist in financial resource management at Rutgers Cooperative Extension, said. “If they do, they may not know the time limits that apply or that they have to send their dispute letter and documentation to their creditor’s address for billing inquiries and not the address that they would normally send payments to.”

O’Neil said the process has a learning curve and filing your dispute can take time and effort, but it is possible and within your right to do so.

Charges You Can Dispute

The FCBA covers open-ended accounts, like credit cards. (Note: The law does not apply to installment loans, like auto loans or mortgages.)

“Common disputes involve being charged twice for an item, being charged the wrong amount, or being unsatisfied with the product or service you bought — for instance, receiving damaged goods that you want to return,” Beverly Harzog, consumer credit expert and author of “Confessions of a Credit Junkie,” said.

Other errors on a credit card bill you can dispute include:

Unauthorized charges
Charges with the wrong date
Charges for goods and services you didn’t receive
Accounting errors
Unposted payments and other credits, like returns
Sending bills to the wrong address — assuming the creditor has any change of address, in writing, at least 20 days before the billing period ends

When it comes to fraudulent charges on your credit card, if you report them in a timely manner, your liability is likely capped at $50, per the FCBA, but this is often waved. If your credit card number was stolen but not the actual card, and you dispute the charges within a certain timeframe, you likely won’t be liable for any of the unauthorized charges.

Filing a Dispute

If you are reporting fraud, most credit card issuers have a phone number you can call to report the charges, as the issuer will generally close your account so more unauthorized charges don’t get racked up.

That said, there is a process in place to file a dispute for other types of charges you don’t agree with.

“Generally, the first step in the credit card dispute process is to make a good faith attempt to settle the dispute with the merchant,” O’Neil said.

“I think most of us don’t enjoy a situation that involves potential conflict,” Harzog said. “But most merchants want their customers to be satisfied. In the cases where the merchant refuses to refund your purchase or fix a billing error, you can go directly to your credit card company to ask for help.”

In order to do this, you write the credit card company at their billing address (typically not the same address where you mail payments). In the letter, you’ll want to include your name, address, account number and a description of the error.

“The correspondence should explain the error and provide copies of relevant documentation (receipts, photos, etc.) to support their claim,” O’Neil said. To avoid additional problems, billing error letters must be received within 60 days of the postmark of the credit card statement with the error on it. The creditor must acknowledge, in writing, the dispute within 30 days of receiving it.

The Investigation

Per the FCBA, while a bill is in dispute, you do not have to pay the contested charges and shouldn’t be penalized for it. However, you must still pay on any undisputed charges. It’s important to do so on time to avoid credit score damage. (You can see how your payment history is affecting your credit by viewing two of your credit scores for free, updated every 14 days, on Credit.com.)

When the creditor has completed their investigation (which isn’t supposed to take longer than two billing cycles), they will notify you in writing. If the issuer agrees that there was a billing error, they must remove the amount along with any charges related to the error from your account. If the investigation determines that there was no error, you will receive a written explanation of why the bill was correct. You may also request documents pertaining to the investigation outcome if you wish.

If you disagree with the results of the investigation, you may write the creditor again within 10 days. Be aware, however, you may be required to pay the charges to avoid having them sent to collections, depending on the dispute situation.

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