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The only thing worse than facing a large credit card bill is facing a large bill for a purchase you didn’t make.
Disputing a charge—whether you were double-billed, overcharged or hit with credit card fraud—is one of your rights under the Fair Credit Billing Act. And while it should be (and often is) fairly simple, the process varies widely by credit card, card issuer, the merchant and your situation.
If you need to dispute a charge, here’s how to report the problem, follow through and have that erroneous item removed from your bill—along with a few tips for resolving the situation when things don’t go exactly as planned.
How to dispute a credit card charge
You typically have 60 days to dispute an issue to your credit card company, but it is always best to challenge the charges immediately upon discovering an issue.
During the pandemic, credit card use has gone down and so have reports of erroneous charges, says Syed Ejaz, financial policy analyst for Consumer Reports. Consumer complaints about credit cards—including billing errors—decreased 2 percent in 2020, according to numbers from the Consumer Financial Protection Bureau (CFPB) database.
“Because of the COVID situation, people are becoming more keen to monitor their finances and make sure everything is accurate,” says Edward Kroub, partner and head of litigation for Consumer Attorneys LLP. “That alone is raising awareness of the issue.”
Let’s take a look at the steps you should take in order to dispute a credit card charge:
Review the charges
Before you dispute a charge with your credit card company, review the transaction details on your account. In the case of charge errors, for example, contact the merchant involved and see if the problem can be resolved before getting your credit card issuer involved.
If you decide to go this route, document the date you contact the merchant, who you speak with and their response to your problem. The bank may ask for this information later on. If reaching out to the merchant involved ends in a stalemate, call your credit card company.
Pick up the phone
Charge errors are not the only thing consumers can dispute. You may want to dispute an unsatisfactory service or a fraudulent charge. Regardless of the nature of your dispute, call the card company immediately once you discover a problem that can not be resolved on your end of things. Report the disputed charge and find out what the issuer requires to get that item removed from your bill.
Want to operate from a place of strength? Brush up on your rights on the Federal Trade Commission’s website, says Ejaz. “That should be home-base for anyone who wants to make sure they’re not getting snubbed in the process,” he adds.
The Fair Credit Billing Act sets out “a procedure that must be followed,” says Kroub. “Any deviation can be a fatal flaw to your claim and it could be dismissed,” he adds. “I’ve seen that happen.”
When it comes to disputing charges, the more time you have on your side, the better. So don’t wait to get a statement in the mail.
Instead, set aside one day each week to look at your financial accounts online, says Ira Rheingold, executive director of the National Association of Consumer Advocates. That way, the minute an unrecognized charge appears, you can take action.
Respond promptly to any alerts your card issuer sends you, says Andrew Milz, a consumer protection attorney for Flitter Milz P.C. in Philadelphia. That way, you can spot fraud or errors as they occur. And when you dispute a charge based on the issuer’s own alert, that strengthens your case to have the item removed from your bill.
Reporting disputed charges: Rights vs. convenience
Many card issuers have a place on their website or within their app where you can dispute charges. But you may want to think twice about using it, says Kroub.
The reason: it may mean you’re signing away some of your dispute rights. That’s because some issuers include arbitration clauses and other binding language in a site or app’s fine print.
And while you’ve likely already agreed to some form of arbitration just by using the card, “Why solidify their defense?” Kroub says.
His advice: After you report the disputed charge by phone, follow up in writing—either a letter with a return receipt or an email.
When you call, state that you’re lodging a dispute, he says. “Most big card companies will have procedures. Often a phone call won’t be enough—you’ll want to follow it up with a letter. A letter will preserve your rights under the Fair Credit Billing Act.”
Want a shortcut? The FTC (which enforces the Fair Credit Billing Act) has a sample letter you can use.
5 elements of an effective dispute letter
1. The basics
First, make sure you’ve got the basics: name, account number, address and which charge you’re disputing.
2. The reason the charge is erroneous
Whether you’ve been the victim of identity theft, your merchandise never arrived or you were billed twice for one purchase, do your best to connect the dots for the card company. Tell them exactly why this charge should not be on your bill.
With your letter (or email), include any documentation that helps prove your point. If the bogus charge was made at a Target store in Texas, and you have a work time card or gas receipt showing you were in Philadelphia that day, send copies of those documents, says Milz.
What if the merchandise was incorrect or damaged? Take a picture and submit that with your dispute, says Rheingold.
If your disputed charge was the result of identity theft, you can download and complete an identity theft affidavit through the FTC. Print it out and file it with a police report at your local police department, says Milz. Be sure to get a copy of the police report (with a case number). That’s one more piece of evidence you can show your card issuer to make the case for removing the charge from your bill.
4. The correct address
The card company will have a specific address for billing disputes, along with a few other addresses for other matters. And, in this case, one size definitely does not fit all.
Sending a great letter to the wrong address can be the same as not sending it at all, says Kroub.
5. The time frame
You have 60 days from when the disputed charge appears in your monthly statement to dispute it. So dispute the charge as soon as you discover it.
Just because you’ve sent the letter doesn’t mean you’re done. Keep copies of your letter, your documentation and proof it was sent.
Follow up with the company to make sure it received your letter and find out what action it’s taking, says Kroub.
Keep a log with detailed notes every time you contact the company. Get the time, date, employee’s name and their company ID number. Jot down a short summary of what was said.
If you do end up in court, “the more that you can show that you were diligent, the better off you’ll be,” says Kroub.
What happens next
The company has one month to acknowledge your dispute and another two months (or billing cycles) to investigate, according to the terms laid out in the Fair Credit Billing Act.
When the company completes its investigation, it must notify you in writing of its decision. And if the company elects not to remove the charge, it must give you an explanation of why it made that decision, says Milz.
If the company decides not to remove the charge from your bill, you have 10 days to respond, says Milz. And you may wish to consult with a consumer protection attorney, he adds.
Look for one “who is fluent in the Fair Credit Billing Act and who regularly appears on behalf of consumers in federal court,” says Kroub. You can find a list of consumer attorneys in your state through the National Association of Consumer Advocates. And often the representation will end up being free, as many consumer protection statutes are fee-shifting statutes, he says.
Another consideration: Depending on the arbitration agreement in your credit card agreement, you may not be able to sue, says Rheingold.
The FTC enforces the Fair Credit Billing Act, and the Consumer Financial Protection Bureau investigates companies accused of financially harming consumers. So if you’re disputing a charge and not getting any traction, it can be helpful to file complaints with both, says Kroub. “The more you can put this on other people’s radar, the more successful you’ll be.”
To pay or not to pay
So do you have to pay a charge while it’s being disputed? Technically no, says Milz.
If you’ve officially disputed a charge, the Fair Credit Billing Act gives you the right to withhold payment for that one item until the card issuer’s investigation is complete. And the issuer isn’t allowed to send you to collections, sue you or report your action on the disputed item to the credit bureaus as a late or missed payment, he says.
Practically speaking, though, it can be smart to pay the charge and accept an account credit later, says Milz. Because if the account is reported to the credit bureaus, correcting that record can be much more difficult than rectifying a card billing error.
And it can cost you big money in terms of a diminished credit score resulting in higher interest rates on a car or home. (If there are errors on your credit report, you should dispute them with the credit bureaus and consult a consumer attorney, he says.)
This is one more area where it can really help to spot an erroneous charge early. “You want to get it before you get billed, ideally,” says Rheingold. That gives you time to clear up the dispute before payment’s due.
The bottom line
In the era of COVID-19, many consumers are walking a financial tightrope. “Now’s the time a lot of folks are making careful decisions about their money and their credit,” says Ejaz. “It’s never been more important for folks to understand where they stand with these companies.”
Disputing erroneous charges is a crucial tool for consumers. But the process can also require diligence and tenacity, he says.
When done correctly, the charge disappears from your bill as if it never existed. But, if not handled properly, Ejaz says, that charge “can end up on [your] credit report and can damage credit.”