How Do Credit Card Disputes Work?

How Do Credit Card Disputes Work? article image.

A credit card dispute is when a consumer requests that their credit card company remove an incorrect or fraudulent charge from their bill. That might happen if you bought an item online but never got it in the mail, or if a charge appeared on your account that you never made.

If the dispute is related to the quality of a purchased item, or has to do with a merchant's delivery or customer service process, it's best to try to work out the issue first with the seller. But if the problem isn't resolved, or if the issue is likely due to fraud or an account billing error on the credit card issuer's side, then it might be time to pursue a credit card dispute. Here's how to do it.

What Is a Credit Card Dispute?

When you dispute a credit card charge, you make a claim to the credit card company explaining that you are not responsible for paying for a particular purchase and why.

Credit card disputes aren't meant to resolve general customer service complaints—that you don't like the item you received, for example, and don't want to pay for it. But they can protect you from unscrupulous behavior by a merchant: if you didn't receive an item you ordered and paid for or weren't reimbursed after returning an item, for example.

Disputes are also important for resolving billing issues with your credit card company. A company could, for example, incorrectly post a payment you made or send a bill to a previous address after you provided a new one. Or you may see a charge you didn't make, alerting you to the possibility that you were the victim of fraud.

In these circumstances, you can dispute a charge or bill and request your credit card issuer complete an investigation into the matter. The Fair Credit Billing Act (FCBA) gives you the right to receive a quick response from your credit card company if you dispute a charge and protects your credit score from negative effects during a dispute investigation.

When Should You Dispute a Credit Card Charge?

There are several circumstances when it makes sense to dispute a credit card charge with your issuer. You may also dispute other aspects of your credit card bill if they were made in error. Consider a dispute if:

  • You were charged for a payment you didn't make.
  • You didn't receive a refund when you returned an item you purchased.
  • You never received an item you purchased.
  • You did not accept delivery of an item you purchased, but you were charged anyway.
  • A charge on your credit card bill lists the wrong date or purchase amount.
  • Your credit card bill was sent to the wrong address, keeping you from being able to pay it on time.
  • Your credit card bill did not accurately credit a payment you made.
  • Your credit card bill includes math errors, such as incorrect totaling of your charges for the month.
  • You have asked for proof of purchase or explanation of a charge, and you do not want to make payment until you receive it.

How to Submit a Credit Card Dispute

The method for disputing a credit card charge depends on the type of issue you're having. But in all cases, to have your dispute protected by federal law, you must file the request within 60 days of the date when you received the bill that includes the error.

  • Billing errors: If your concern is considered a billing error, which includes all of the bullet points listed above, then the dispute process is regulated by the FCBA. Follow these steps:
    • Use the Federal Trade Commission's (FTC) sample letter to write to the credit card issuer's billing inquiries department describing the problem.
    • Send along copies of supporting documentation, and keep a copy of your own letter for your records.
    • Make sure the letter reaches the credit card company within 60 days of the error's appearance on your statement.
  • Fraudulent charges: The FCBA limits your liability to $50 for unauthorized transactions, but some credit card companies cut that down to $0. Plus, the law prevents you from being liable for charges if you report a stolen or lost credit card before it's used. If you see a charge you didn't make on your credit card bill, here's how to dispute it:
    • Contact your credit card company right away. You can use the FTC's sample letter for disputing unauthorized charges.
    • The company may request a police report or other documentation if your card was lost or stolen.
  • Issues with purchase quality or service: Some credit card disputes are more directly related to a problem with the seller, such as undelivered goods. In this case, check with the merchant first to get a refund or resolve the problem. If they do not respond or are unwilling to work with you, you can initiate a process known as a chargeback directly with the credit card company. You'll be protected under the FCBA if the charge was for more than $50 at a seller within 100 miles of your billing address and you tried to sort out the issue with the merchant first. Here's how to request a chargeback:
    • File a dispute via phone, mail or online through your credit card's customer service portal.
    • Include supporting evidence of the issue, such as emails, invoices or receipts, if you have them.
    • The credit card issuer might refund you at this point, or pass the request on to the credit card network (such as Visa or MasterCard). The network will then determine whether the chargeback will be completed, which may require discussions with your credit card company and the seller. If the network decides in your favor, the card issuer will reverse the charge.

After you file a dispute, the credit card company must send you a letter acknowledging the dispute within 30 days. The dispute must be settled no longer than 90 days after the company received your letter.

You do not have to pay the disputed charge while it's under investigation, but you are responsible for paying other portions of your bill, including interest. Your credit score cannot be negatively affected during the investigation, and your bill cannot be reported as late, but the dispute can show up on your credit report.

If the company acknowledges it made an error, you must get your money back plus any interest charges or late fees related to it. But if it turns out you do owe the money, you must receive a written letter explaining why, and you'll have to pay the amount in dispute plus any interest. You can refuse to pay, but you'll have to indicate that within 10 days, and the credit card company could put your account into collections.

Does Disputing a Charge Impact Credit?

A credit card dispute in and of itself won't impact your credit directly. The fact that you've disputed a charge may appear on your credit report, and potential lenders will see it—but according to the FCBA, it is illegal for lenders to deny you credit merely because you have disputed a charge or bill.

You are not required to pay for charges that are in dispute while they're under investigation, but you do have to pay the rest of your credit card bill. If you don't do so, your payment could be marked as late or missed, negatively affecting your credit. Plus, if the result of your dispute shows that you are, in fact, responsible for the charge, you'll have to pay—and refusing to do so can also have a negative credit impact.

If your credit card balance is high due to charges that are in dispute, that will affect your credit utilization ratio, which makes up 30% of your FICO® Score . The credit card issuer must promptly refund any money you're owed as a result of the dispute resolution, but you may find your credit is affected in the meantime.

What to Do if You're a Victim of Credit Card Fraud

Finding a fraudulent transaction on your credit card bill can feel stressful and disruptive. But you can take back control after credit card fraud using the following steps:

  • Let your credit card issuer know right away. Call the customer service number immediately, but certainly within 60 days of noticing the transaction.
  • Consider adding a fraud alert to your credit report, which asks potential new creditors to take an extra step to verify your identity during the credit application process. This can help prevent a fraudster from opening an account in your name if they have your personal information.
  • Check your credit reports to see if any fraudulent accounts have been added. You may receive a free copy of your credit report when you place a fraud alert on it. If you see anything suspicious, you can dispute the inaccurate information directly with each credit bureau (Experian, TransUnion or Equifax) on whose credit report it appears.
  • Keep close track of all your credit card and bank activity to make sure additional unauthorized charges haven't been made.
  • Report identity theft to the FTC and take steps to recover from fraud using the agency's personalized recovery plan for you.

Resolving a Credit Card Dispute

Disputing a credit card charge is an important way to protect yourself from fraud and from unfair or inaccurate information on your credit report. To help ensure you notice errors, regularly monitor your accounts. And if you do find suspicious activity, follow up to resolve it as soon as possible.

The purpose of this question submission tool is to provide general education on credit reporting. The Ask Experian team cannot respond to each question individually. However, if your question is of interest to a wide audience of consumers, the Experian team may include it in a future post and may also share responses in its social media outreach. If you have a question, others likely have the same question, too. By sharing your questions and our answers, we can help others as well.

Personal credit report disputes cannot be submitted through Ask Experian. To dispute information in your personal credit report, simply follow the instructions provided with it. Your personal credit report includes appropriate contact information including a website address, toll-free telephone number and mailing address.

To submit a dispute online visit Experian's Dispute Center. If you have a current copy of your personal credit report, simply enter the report number where indicated, and follow the instructions provided. If you do not have a current personal report, Experian will provide a free copy when you submit the information requested. Additionally, you may obtain a free copy of your report once a week through April 2022 at AnnualCreditReport.