What you need to know to dispute a credit card charge

Disputing a charge on your credit card may seem like a monumental undertaking, but it's a lot easier than you may think (of course, the credit card companies don't want you to know that.) The key is to know your rights and the rules governing your card.

There are three types of disputes consumers can use to seek to reverse charges: unauthorized use (typically as a result of credit card or identity theft), billing errors or substandard services or goods (this is referred to as the right to withhold payment.)

WalletPop asked Chi Chi Wu, staff attorney at the National Consumer Law Center, what consumers need to know when they dispute a charge and how to navigate the process. Here's what she had to say:

Act quickly if you notice a billing error, says Wu. Requests to investigate billing errors must be made within 60 days of receiving your bill with the charge in question, and they must be made in writing. (It's good to communicate all disputes in writing so you have a paper trail, but it's not required by law for the other two types of disputes, says Wu.)

To most effectively dispute a charge due to a billing error, call and write your card issuer the instant you notice something amiss on your bill (we don't need to tell you to read your statements when you get them, do we?) You should provide them with your name and account number, a description of the amount of the charge that is in dispute and the reason you're disputing it. This document from the National Consumer Law Center spells out which types of charges you can dispute under billing errors, including a merchant that charges you twice for a purchase or that fails to give you credit if you return a defective product. Keep a copy of any written correspondence for your records and keep track of the names or ID numbers of customer service reps with whom you speak on the phone.

Once you file a dispute, the credit card issuer must respond within 90 days. Keep in mind, that just because you filed a dispute, it doesn't mean you're off the hook for paying for the item if the credit card company decides you're in the wrong. And don't forget, you do still have to pay the rest of your bill -- less the disputed amount -- on time.

According to the Fair Credit Billing Act, if someone steals your credit card and runs up a big bill, you're only responsible for $50 (and some issuers waive that). Thankfully, there's no time limit on this for credit cards, but there is one for debit cards, so it's a good idea to keep an eye on all your statements. If you discover that one of your credit cards is missing, call the card issuer immediately to cancel the account; if a thief hasn't used the card yet, you won't even be responsible for that $50.

Wu says it can be helpful for you to ask the card issuer for certain documents. For instance, if someone steals your credit card, send a copy of your signature and ask the card company to track down the signature on the fraudulent charge so they can see that they don't match. If you're disputing something you ordered from a merchant that never arrived (a complaint which falls under the billing error category here), ask your card company to demand proof of delivery from the merchant. While you won't get these documents, pressuring your card issuer to track them down will make them realize that the signatures in question don't match, or the delivery proof doesn't exist.

When it comes to withholding payment for goods or services that don't pass muster, the law gets a little tricky. For starters, the details regarding purchases made online vary by state; for other types of purchases, they generally have to be more than $50 and made within 100 miles of your home.

First, try to resolve the issue with the store or merchant that you bought the product from. If that fails, you must notify the card issuer that you want to withhold payment. If you don't do so, then the card issuer can claim you are delinquent on your account. In other words, you can't just decide to withhold payment on your own.

Wu says if your credit card company gives you the runaround - say they try to tell you that an unauthorized transaction is really a billing error, for instance - you have the right to contact their regulator and complain. (For most credit card companies, this will be the Office of the Comptroller of the Currency.)
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