With the growth in online commerce, and consumers increasingly buying goods sight unseen, there’s a lot of scope for product returns. Consumers may find that what they get is not quite what they ordered. This may impel them to try to get a refund from the merchant. They may even file a dispute with the card issuer asking for a chargeback from the merchant of the amount involved.
It’s all right for a consumer to initiate such disputes, and you do have certain rights under the Fair Credit Billing Act–but what if you dispute a card transaction by mistake?
Be sure before disputing a card charge
Before you pull the trigger and initiate a dispute with your card issuer, make sure that the transaction is indeed one you don’t recognize. For one, it could be that you don’t recognize a charge because the merchant’s name doesn’t ring a bell in your mind. That doesn’t mean it’s an unauthorized transaction. What might have happened is that the merchant has a different corporate identity that it bills under.
It may also be affiliated with a different company for billing purposes.
Another possibility is that an authorized user on your card rang up the charge and did not keep you informed. So you should also check with authorized users to see if they are responsible for this charge. And it could be that the charge relates to a subscription renewal that you’ve forgotten about.
It’s a good practice to hold on to your credit card receipts for a while so that you can verify any charges you don’t recognize.
Fallout from chargebacks
You will not escape unscathed if the charge is a legitimate one. If the merchant challenges your dispute and prevails, you will be forced to pay an administrative fee “or other consequences,” according to Chargebacks911, besides being charged for the original transaction. You would also owe any finance charges due on the disputed amount.
Merchants could also retaliate otherwise. For instance, Sony tends to close the accounts of PlayStation users who file for chargebacks in addition to banning them permanently, according to Chargebacks911.
Your actions could also impact the merchant involved. For instance, it will not receive funds related to the transaction from its bank until the matter is resolved. Merchants who have a lot of chargebacks filed against them could lose their rights to process credit card payments. That is likely to put them out of business, considering the heavy volume from credit card transactions, and your actions may have contributed to that outcome.
Another point to keep in mind is that merchants will likely take care of chargeback costs by raising prices for customers and passing them on.
Fair Credit Billing Act rights
If you don’t recognize a transaction, you do have the right, under the Fair Credit Billing Act, to ask for an explanation. That may help jog your memory, and you could realize that there is nothing to dispute.
In case it is indeed an unauthorized transaction, you can then exercise your FCBA rights and file a dispute. In any event, it doesn’t hurt to be vigilant if you don’t recognize a credit card charge.
Some consumers might try to resort to their FCBA rights if they want a refund from a merchant, after experiencing buyer’s remorse, for instance. They may think a chargeback will be an easier course to take. However, it’s better to contact the merchant directly and try to resolve the issue.
The bottom line
If you dispute a credit card charge by mistake, contact your card issuer and explain the situation. You could also follow up with the merchant if required. Before you initiate a dispute, be sure that it is indeed an unauthorized charge. You should contact the merchant first and see if you can resolve the matter with it.
Contact me at firstname.lastname@example.org with your credit card-related questions.