What to Know When Disputing Credit Card Charges

By Jason Marshall , last updated September 27, 2011

Most who use credit cards have or will come across a circumstance where they want to dispute a charge. You make a purchase and get home to find the item is damaged or faulty and then the merchant refuses to refund your money. Don’t think that disputing charges will be too difficult or time consuming. One of the perks of using a credit card is the ability to cancel payment if you are unhappy with your product or service. There are laws in place to protect credit card customers and knowing how to take advantage of them will ensure a smoother process and raise your chances of getting the charge credited back to you.

The Fair Credit Billing Act allows consumers to withhold payment on faulty or damaged merchandise, but there are some limitations on what can be refunded. Purchases must be more than $50 and the purchase must have taken place in your home state or within a 100-mile radius of your home. This can get tricky with online purchases, but few credit card companies enforce these rules. Be aware, though, that they can at any time in the process.

The first step is to make sure you try to return the merchandise or complain about the service with the merchant, not the credit card company. If they won’t take it back, make a record of all your conversations with names, dates, and times. A paper trail can be invaluable later. If you still fail to get the company to refund your money, it is time to write short letter outlining your complaint and send it to the company by certified mail. Be sure to make copies of the letter so you can send a copy to your credit card company as proof that you tried to resolve the situation.

If all this fails, it is then time to contact your credit card company and request a charge-back. According to law, this needs to be done within 60 days after the charge appears on your bill. And to ensure that you remain protected by law, you must dispute the charge in writing, preferably by certified mail. In the letter, be sure to include your account number, the closing date of the bill, a description of the item, and why you are disputing payment. Also enclose a copy of the letter you sent to the company and any other documents that might support your position. This material should not be sent to the address you send your payments, but the address for billing inquiries.

Your credit card company will then remove the item from your account while they investigate, meaning interest will not accrue. At the end of their investigation either they will agree with you and remove the charge permanently or they will agree with the merchant and put it back. Credit card companies are increasingly turning into advocates for their customers, eager to build goodwill with their clients, so this process shouldn’t be onerous. Just be sure to get going with the dispute as soon as possible. The more time that passes, the harder the process will be.

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