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If you see an incorrect charge on your credit card bill, it's natural to feel panicked or confused. Whether it was caused by a simple merchant error, or is a result of fraud, you don't have to pay for a purchase you didn't make. Instead, you can get the charge undone by contacting the vendor or requesting a chargeback from your credit card issuer.
What Is a Chargeback?
The term chargeback refers to the process of a credit card company reversing a transaction if it resulted in an incorrect charge. You can request a chargeback if you've been overcharged, were charged for a purchase you didn't make at all, or if the merchant didn't live up to their end of the bargain (undelivered goods, for instance).
When you file a request, the creditor has up to 90 days to investigate. During that time you don't have to pay for the charge you're disputing, but you'll still need to pay the rest of your bill as usual.
There's no guarantee that you'll get the result you want from a chargeback request, but if you include documents, like a copy of your receipt from the transaction, you'll increase your chance of success.
The Fair Credit Billing Act (FCBA) grants cardholders the right to dispute incorrect charges. Disputing an incorrect bill and requesting a chargeback is fairly straightforward, but each creditor may have a slightly different process. Generally, you'll take the following steps:
- Contact the credit card company. Depending on the creditor, you may be able to do this online, by phone or by mail.
- Explain the error. Be sure to include your contact information, the account number and any documentation you have that supports your claim.
- Wait for your card issuer to investigate. This could take up to 90 days. In the meantime, continue to pay your credit card bill as scheduled and respond to any communication you receive from the creditor. Your card issuer may remove the transaction in question from your bill while the chargeback is investigated.
When Does It Make Sense to Request a Chargeback?
An incorrect charge can happen for a number of reasons, from a simple calculation error to an identity thief committing an intentional act of fraud. The best response depends on some of the details, specific to your situation.
Here's how to navigate each of the most common scenarios:
- An unfamiliar charge: If you see a transaction you don't recognize, look at the merchant's name and date. Searching for the merchant online or reviewing your calendar may help jog your memory of the purchase. If it's still unfamiliar, you may be the victim of fraud and you should take action to protect yourself immediately, including by filing a chargeback request.
- An incorrect charge amount: Perhaps a server calculated your tip incorrectly or accidentally charged you twice. To resolve the error, start by looking for your receipt, and then contact the merchant. If the merchant won't correct the charge, your next step is to request a chargeback.
- A product or service you never received: Did you order a package that was never delivered, or cancel a membership fee and still got charged? Prepare phone records or documents to support your case, and then contact the vendor to get the charge reversed or otherwise made good. If you're unsuccessful, you can request a chargeback from your credit card issuer.
In some circumstances, a chargeback isn't an option you should consider. If you have trouble paying for a purchase, or simply don't feel like it, you should not request a chargeback—abusing the system could be considered an act of criminal fraud.
If you received a damaged or broken product, skip the chargeback request and reach out directly to the merchant for a refund or a replacement.
Will Requesting a Chargeback Impact Credit?
The outcome of chargeback can affect your credit if it changes the amount of credit you're using relative to your credit limit—your credit utilization ratio.
Your credit card balances are a big factor in calculating your credit scores, which means a high-dollar purchase could cause scores to dip. If the charge is inaccurate or fraudulent and ends up being removed, you should see your scores come back up. On the other hand, if your chargeback request is unsuccessful and causes your balance to stay elevated, a credit utilization ratio above 30% can start to harm your credit scores.
While the chargeback request is being sorted out by the card issuer, a notation may be added to the account on your credit report to indicate that the account is in dispute. These notations don't directly affect your creditworthiness, but a creditor may ask about it or require it to be resolved before moving forward with your credit application.
How to Protect Your Credit Card
Most credit cards come with fraud protection features, but creditors can't always catch incorrect or suspicious charges. Your best defense is to practice good financial habits, which include reviewing your credit card statements on a weekly basis.
You can also catch signs of fraud by regularly monitoring your credit reports. Make sure to look for unfamiliar credit accounts and evidence of applications for new accounts (hard inquiries). For some added peace of mind, sign up for identity theft monitoring and security alerts so you can respond to suspicious activity as soon as it takes place.