How To Dispute an Unauthorized Credit Card Charge
I opted out of paper billing statements about eight years ago and since then, I started to check my credit card statements online once or twice a month. I had to do this because of past experiences that I’ve had with fraudulent and suspicious charges that showed up on my statements a number of times.
Nowadays, when a strange debit shows up on my credit card statement. I usually spot it right away. The first thing I asked myself was, “Could this be a case of stolen identity?”
For over fifteen years now, I only owned three credit cards: two American Express cards (AMEX Platinum and Business) and a Capital One rewards card. I had two instances of fraudulent charges on my AMEX and one with Capital One, and fortunately for me, all my disputed credit card charges have been resolved quickly as both companies handled the problem exceptionally well.
Just so you know, some of these types of unauthorized charges are not always a case of fraud. Usually, a business gone wrong or a human error is more likely the reasons for the charge.
One incident of fraud that I can still remember clearly, happened about fourteen years ago. During that time, overseas calls were very expensive and everyone was using a prepaid phone card to save on their calls. For business purposes, I needed to call a business partner on a daily basis and I decided to give it a shot at using a phone card. I was spending an average of $125 a month on international calls, so why not use this phone card instead? According to their rates, I should be able to save more than half of my current bill.
Everything was good until the fourth month of using the phone card. I remember looking at my credit card statement and seeing these daily charges of $25 for nineteen consecutive days.
I called the company right away and questioned the charges. I was able to be connected to the manager. Unfortunately, I was told that there was nothing they can do. They even accused me of lying to get away with all the calls that they claimed I made. I asked them to check their records and sure enough, the card was used to call another country that I have never, ever called before.
They still would not believe me. What they said that I should do was to change the credit card that I have on their file if I want to continue using their service.
Long story short, I canceled my account with them and never dealt with the company again.
I then called my credit card company and they told me not to worry about it. They would report the problem to their fraud department and they would reverse all these fraudulent transactions on my account. Two days later, all the transactions were taken care of and I never had to pay for any of them.
Thank you, American Express.
Since this incident, I’ve had other instances of possible fraudulent transactions, but all of them were caught before the offender was able to use my credit cards.
Nowadays with better security and technology, my credit card companies would usually either text or email me if they think a fraudulent, or simply a questionable activity is about to happen.
When to Dispute a Credit Card Charge
The Fair Credit Billing Act (FCBA), protects cardholders against billing errors up to a maximum liability of $50. The first action when a consumer registers a dispute is to reverse the charge as erroneous with the onus being on the merchant to prove otherwise.
When you detect an unusual charge, carefully check the transaction to confirm it’s wrong.
You can then initiate a dispute if:
- The charge is more than what is reflected on the receipt: Someone could have incorrectly entered the figure or deliberately overcharged you. Contact the merchant first to contest the charge.
- The charge is from a vendor that you do not recognize: In that case, you must quickly start a dispute so as not to be held liable.
- You were charged twice or more: Double-charges occasionally occur and can be sorted out with a call to the merchant.
- Your order didn’t come as advertised, is damaged, returned or didn’t come at all: This also includes recurring billings which you may have forgotten to cancel or couldn’t cancel due to awkward opt-out processes. This usually happens when you provide card details for a free trial of some service and the merchant sets-up a recurring charge on your account which is legal. You may request that these charges be reversed with reasons that you never planned to subscribe to the service.
- You didn’t authorize the charge: This includes fraudulent charges made by criminals who have obtained your card details and even charges from legitimate merchants but which you didn’t authorize. This is what happened to me.
How to Dispute a Credit Card Charge
Always Check Your Statement
The earlier you detect an unauthorized charge, the quicker you can get it resolved. Check your statement online at least a couple of times a month or before your next billing statement, especially if you use your credit card often. If you need to return purchased merchandise, make sure that it’s credited to your account.
Determine If It’s Fraud
Confirm if the charge is a mistake or an outright fraud. This is because the two scenarios are treated differently. If you determine the charge was fraudulent, call your credit card company at once and report the charge. Your credit card company will then cancel the card and issue you another one. AMEX is very good at this. I noticed that in the past five years they have reissued me a new card even prior to the expiration date, with a new credit card number.
Contact the Merchant
This could be the fastest way to resolve a charge dispute especially when it involves human errors. Most merchants will readily correct a mistake when you’re able to show proof. Well, not in my case!
On the other hand, they will have to cough up a fee if the investigation is carried out by the credit card issuer. Therefore, it’s in their best interest to resolve the matter quickly and informally. Also, too many disputes could possibly cost a merchant his credit card privileges.
Assemble Your Evidence
If you’re sure of the validity of your claims, ensure to gather all relevant evidence. Clearly articulate your reasons why the charge should be reversed and gather all supporting documentation to back up your position.
Contact Your Credit Card Company
It’s time to call your card issuer if the merchant doesn’t resolve the issue timely.
You can also initiate the dispute online. Your credit card issuer will contact you for more details if necessary. Credit card companies are very helpful in resolving these types of transactions.
Put It in Writing
If the dispute has not been resolved, it may be time to pursue your case formally. According to the FCBA, you must write to the card issuer to claim your rights as covered under the act. This letter must be sent to the card issuer within sixty days of the date the bill with the questionable charge was sent to you.
Your bank or credit card issuer is mandated to acknowledge your complaint in writing within 30 days of receiving it. If your dispute is then deemed valid by the Bank or card issuer, they’ll initiate a reversal. If the bank confirms that the disputed amount is a correct charge, they will notify you through a letter within two billing cycles, or within ninety days of when your bank or issuer received your complaint.
Include all relevant details–your name, address, phone number, merchant, date, amount and why you feel the charge should be reversed.
Also, state all the measures you have previously taken to get the dispute resolved.
Attach all the documents–correspondences, receipts or any other relevant materials.
Send them to the card issuer after making a copy of every document for yourself.
Ensure you send them to the billing office of your card issuer through a method that will submit proof of delivery and receipt.
Continue Paying Your Bill
Unless the only outstanding charge is the disputed one, you will still be hit with late fees for not paying other portions of your bill.
You shouldn’t pay for the disputed charge, and your credit card issuer doesn’t have the right to demand it while the matter is still being investigated.
They also cannot close your account or flag you as delinquent. But when the dispute is finally resolved and against you, you’ll have to pay all the interest accrued during the dispute process.
The biggest problem nowadays is when companies have their security breached. This can expose credit and other private information of their customers. With regards to the credit card, dispute process shouldn’t be stressful. The key is to understand your right as a consumer under the FCBA, act quickly and keep your records.