How to Dispute a Credit Card Charge - art by Jonan Everett

Art by Jonan Everett

How to Dispute a Credit Card Charge

•  4 minute read

Make sure you contact your credit card company and dispute an incorrect charge within the time limit, or else you may be stuck paying it, even if it's wrong.

If you have ever noticed an incorrect charge on your credit card statement, you aren’t alone. Whether someone used your account fraudulently or a merchant simply charged you the wrong amount, billing errors pop up from time to time.

I’ve experienced this problem more than once, and each case involved someone fraudulently using my credit card information. Thankfully, I’ve never had to pay a penny for these charges. If you follow the correct procedures, you won’t have to, either.

Further Reading: Learn how to protect yourself against identity theft.

The Best Way to Dispute Billing Errors

There are a few ways to dispute a credit card charge, but there is only one way to properly do so, according to the Fair Credit Billing Act (FCBA). In practice, most people contest billing errors through credit card websites or by calling their credit card company.

I called my credit card company each time I saw an error, and everything turned out fine. I didn’t have to pay anything. However, I now know that I was incorrectly disputing the errors. If things had not gone my way, this could have affected my options for my next steps.

Which Errors Can You Contest?

Before we get into the proper procedures for how to dispute a credit card charge, you should know which errors they apply to. The FCBA allows for you to contest the following types:

  •     Unauthorized charges
  •     Charges with incorrect dates or amounts
  •     Charges for purchases you didn’t accept or that were not delivered as agreed upon
  •     Math errors
  •     Failure to post payments and credits, such as returns

In the worst-case scenario for a case of unauthorized charges, federal law limits your responsibility to $50. However, if a charge was truly unauthorized, most credit card companies — if they agree that they were in error — will waive the charge completely, including the $50 limit.

Further Reading: Check out these tips for what to do if you have a bill incorrectly sent to collections.

How to Dispute a Credit Card Charge

If you want the full protection of the FCBA, you have to contact your creditor in writing. In your letter, you must include your name, address, and account number. You also need to describe the billing error that you have found on your credit card statement. The Federal Trade Commission has a sample letter that you can use as an outline for your own letter.

For you to gain protection, the creditor must receive the letter within 60 days after the first statement with the billing error was mailed to you. Include copies of any materials you may have, such as receipts, that back up your claim.

Also make sure to mail the letter to your creditor’s billing inquiries address, not the address you send your payments to. You should send your letter by certified mail and get a return receipt to prove that the creditor received it within the time period required by law. You’ll also want to keep a copy for your records.

After you send the letter, it’s time to wait for a response from the creditor. While the charge is under investigation, you don’t have to make payments on the disputed amount or any related charges, including finance charges. That said, the contested amount can still be counted against your credit limit during this time.

Further Reading: “How I Won My War Against Credit Card Debt”

Your dispute may take longer than you’d like, but according to law, it must be resolved within two billing cycles after receipt of your letter. This can’t be more than 90 days. Plus, your creditor must let you know it received your complaint in writing within 30 days, unless it has already resolved the problem prior to that time period.

If your creditor determines there was indeed an error on your statement, it has to explain that to you in writing and share the corrections that will be made to your account. The creditor must also remove finance charges, late fees, and any other charges related to the error.

It is possible, though, that the creditor will determine you owe a portion or the full disputed amount. In that case, you’ll receive a written explanation of what you owe and why. You can request documents that prove you owe the amount.

If the creditor makes this determination, you’ll still owe the money, as well as any finance charges that would have accumulated while the charge was being contested.

You may also have to make minimum payments that you had missed on the disputed amount.

What Happens If You Disagree With the Determination?

If the creditor determines you still owe the money on the charge and you don’t agree, here’s what you need to do:

First, you need to write another letter to the creditor within 10 days after receiving the explanation of why you owe the money. In the letter, you can note that you refuse to pay the disputed amount, but at that point the creditor can send the owed amount to collections. This will damage your credit score. However, the creditor has to report that you don’t think you owe the money when notating your account as delinquent. If there is a resolution to the dispute after your account is marked delinquent or sent to collections, the creditor must contact everyone who was originally notified of the delinquency.

Further Reading: “Steps to Take When a Debt Collector Contacts You”

What Happens If a Creditor Doesn’t Follow the Rules?

Let’s say a creditor doesn’t mail you a response within the allotted time frame. In that case, the creditor cannot collect the amount in dispute or related finances charges up to $50, even if the disputed amount turns out to be a valid charge. This applies if a creditor misses any of the deadlines required in the law.

Other Ways to Dispute a Credit Card Charge

If you want the protections of the law, you have to mail the letters as described above. But if you trust credit card companies to do the right thing, you can just call or contact them through their websites. But then, if things don’t work to your advantage, you won’t have any legal recourse.

What happens if you aren’t satisfied with the resolution and you still want it corrected? Unfortunately, going to court may be your only answer. You can try to appeal the decision with your creditor. However, there doesn’t appear to be any requirement in the FCBA for creditors to allow appeals. However, a credit card company may be willing to take a second look if it means keeping a customer. It never hurts to ask if the company will reconsider the charge, especially if you find new evidence to help your case. The worst that can happen is that your request is denied.