How to Dispute a Credit Card Charge
If you see a questionable charge on your credit card bill, it's important to act fast. Learn what you can dispute and the process of filing a dispute.
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| Infographics: Credit Card Dispute Process © CreditDonkey |
Know what you can dispute
Federal law outlines that consumers with “open end” credit accounts (revolving credit like department store cards and credit cards) are able to dispute billing errors. Less common “closed-end” installment accounts that are paid with fixed payments are not included in this law.
According to the Los Angeles County Department of Consumer Affairs, billing errors include the following:
- A purchase you did not make or did not authorize
- Charges for goods or services that you did not receive or refused to accept
- Payments you made that were not credited to your account
- Bills that contain mathematical errors
The Federal Trade Commission (FTC) reminds consumers that the cardholder is responsible for unauthorized charges up to $50. However, many credit card issuers will not make the cardholder pay for this first $50. Just remember, it is up to the issuer’s discretion.
Consumers can dispute a bill when it is not delivered to the correct billing address, as long as you have notified them in writing of a change of address at least 20 days before the billing period ends.
Once you have identified an error, it’s time to start the dispute process so that you do not have to make a payment due to someone else’s mistake.
How to dispute
Once you have identified an error, you need to contact your creditor. The creditor must receive your written notification within 60 days of the first bill containing the error. The FTC instructs consumers to notify the creditor in writing at the “billing inquiries” address supplied on the bill. Be sure that you are sending your notification to the correct address, which is often not the same as the one you would use for payments or address changes.
In your written notification, include the following pertinent information:
- Cardholder name
- Address
- Account number
- Description of the error
- Copies of receipts or other documentation that support your dispute
The FTC recommends mailing the letter via certified mail with return receipt requested, which will provide proof that the creditor received your dispute. Save the receipt in a safe place so that you have it for your records. In your file, you will also want to include a copy of the mailed letter and supporting documentation.
Federal law states that the credit card issuer must respond to a dispute in writing within 30 days. This response is an acknowledgement of your complaint and is not required if the dispute has already been resolved within the 30 day window. The dispute must be resolved within two billing cycles (but not more than 90 days); this time frame starts from the date that the creditor receives your dispute letter.
Cardholder responsibilities
Consumers who dispute charges with their creditors are often uncertain about whether or not they are supposed to pay the bill that is in question. The FTC says that cardholders can withhold payment on the questioned amount while it is under investigation; however, you must still pay the remaining portion of the bill that is not under dispute. If you withhold all payment, your creditor will have the right to charge you interest and fees on the charges not related to your dispute.
If the credit card issuer’s investigation shows that your bill is correct, you will be responsible for making the payment along with any finance charges that accrued during the dispute period.
If you disagree with the outcome of the investigation, you are able to contact the creditor again. The FTC says you must do so in writing within 10 days of receiving the creditor’s explanation of their investigation. After you send this notification, the creditor is able to start the collections process.
Creditor responsibilities
As mentioned previously, creditors have a very specific timeline they must follow when investigating a billing error dispute.
Federal law also outlines that credit card issuers are not allowed to take any legal actions or try to collect the questioned amount while the dispute is under investigation. In addition they also are not allowed to close or restrict your account; however, they are able to apply the questioned charge against your credit limit. If a large sum is in question, your available credit will be reduced until the investigation closes. This is a good reason to have at least two credit cards; you don’t want to be left without credit simply because someone else made a mistake!
Catch errors immediately
Because the law outlines a very specific timeline for the dispute process, it is important that you catch and report errors right away.
To help you with this process, the Pennsylvania Attorney General’s office has put together an easy checklist that cardholders can follow. Following this advice will help ensure you aren’t paying unfair charges.
- Check each and every credit card statement the day you receive it in the mail.
- Place a call to your credit card company regarding any charges you don’t recognize. Sometimes merchants use a different name for billing purposes than they do for advertising and selling. This can cause confusion and you don’t want to end up paying interest on a legitimate charge.
- Be sure to make disputes in writing; utilize the sample letter located at the FTC’s website at www.ftc.gov to ensure you have all the required information.
- Double and triple check that your dispute letter is addressed to the “billing inquiries” address.
- Check your calendar to see when you should receive acknowledgement from your credit card company.
Report violations
If you suspect your credit card company is violating your right to dispute billing errors, you can contact the FTC. They help prevent unfair business practices so other consumers don’t run into the same problems in the future. You can file a complaint by visiting their website (www.ftc.gov) or calling toll-free at 1-877-FTC-HELP (1-877-382-4357).
