What Is a Dispute?

A dispute is a request you submit to your credit card issuer when you and a merchant disagree about a charge or transaction. For example, you buy an item in a store with your credit card, the price at checkout is $100, but you are charged $200. Or you buy something online, the quality is seriously unacceptable, and the merchant refuses to accept a return or exchange. In these situations, you can contact your credit card company and dispute the transaction. The card issuer will then step in on your behalf and contact the merchant to investigate and resolve the issue.

A disputed charge is a credit card charge that you have a question, claim or complaint about. Types of disputes include claims of a billing error or complaints about the quality of the goods or services you paid forA disputed charge is a credit card charge that you have a question, claim or complaint about. Types of disputes include claims of a billing error or complaints about the quality of the goods or services you paid for.

One important thing to understand is that a dispute is something of a big move. In most cases, you should try to work things out with the merchant first. Larger merchants will often negotiate with you when there is a problem, and a good merchant may simply agree to your request. But if the merchant refuses to communicate, keeps passing you around, or does not respond at all, going straight to a dispute can save a lot of time. After all, the credit card company is ultimately the one paying the merchant. If the issuer contacts the merchant and the merchant still does not respond, the issuer may simply refuse to pay. So after you file a dispute, you generally just wait for the card issuer to step in. They act as an arbitrator, contact both you and the merchant, collect supporting information, and determine whether the transaction is valid. Once the issuer determines the merchant is at fault, the money will be fully refunded to you. The general process looks like this:

  • A transaction dispute arises
  • You try to resolve it with the merchant
  • You file a dispute with the credit card company
  • The card issuer contacts both you and the merchant and collects relevant documentation
  • The issuer makes a decision on the transaction
  • If you are satisfied, the case ends; if not, you may be able to submit more documentation and reopen the case

Besides disputes with merchants, you can also dispute certain charges and payments involving the credit card company itself. For example, the payment shown may differ from what you actually owe, it may not match the withdrawal from your checking account, or an unknown payment may appear in your account.

In addition, disputes can also cover unauthorized charges or fraud, since those also involve a transaction problem. However, if you know for sure that it is fraud, I do not recommend using the dispute process because it can be slower. Call the bank directly and report fraud instead. The bank will usually handle that request right away. In many cases, the charge will be removed, and the bank will also replace your card, expiration date, CVV, card number, and so on, so the person who used your information can no longer use the original card details.

The Official Basis for Disputes

The dispute process is tied to the Fair Credit Billing Act, a law passed in 1974 (an amendment to the Truth in Landing Act).

Some of the timelines in the law are especially important:

  • You need to submit a dispute within 60 days after the statement
  • The credit card company must acknowledge receipt of your dispute within 30 days
  • The dispute must be resolved within 90 days

While a dispute is in progress, you may temporarily not have to pay that charge in full. The issuer is required to explain to the three major credit bureaus that this portion of the balance is being challenged.

When Can You File a Dispute?

We have already gone over the general situations where a dispute may apply. Here, using AMEX's dispute submission screen as an example, are some common reasons:

  • You do not recognize the charge
  • You disagree with the amount or were overcharged
  • You were charged multiple times for the same purchase
  • You already canceled or returned the item
  • You continued to be charged for a monthly subscription after canceling the service
  • You never received the item, or the merchant canceled the order but still charged you
  • The item you received was not as described
  • You paid using another payment method, but this card was still charged
  • You do not recognize this series of merchants
  • You have a question about an order through AMEX Travel

As you can see, most merchant-related issues are covered here. Just choose the reason that best matches your situation.

AMEX also provides a payment dispute feature:

  • A payment disappeared
  • A payment is incorrect or unrecognized
  • You have a negative balance (you can use this option to have the negative balance converted into a check mailed to you)

How the Dispute Process Works

We will continue to use AMEX as the example here, though other banks are similar. If you cannot find the dispute option online, the easiest thing to do is call the customer service number on the back of your card. Tell them the date, amount, and merchant for the charge, and the representative will guide you through the reason selection or document submission process.

One important thing to note: you can dispute a charge only after it has officially posted to your account. If it is still pending, you cannot submit a dispute yet. Sometimes a merchant's pending amount may differ from the posted amount, and an incorrect charge may even disappear on its own before posting, so there is no need to rush.

  • Find the dispute page under account services
  • Select open a billing dispute in statement, which will take you to your transaction page. Then select dispute this charge
  • AMEX will first suggest that you contact the merchant, since its investigation takes some time once it steps in
  • Continue and you will be taken to the reason selection page; just choose the appropriate option
  • Then you simply wait for the result. Here I am including an example of the outcome of another dispute case; it will generally tell you how the matter was resolved.

Sometimes the merchant will submit evidence showing that the transaction was legitimate. If you cannot provide stronger evidence at that point, the credit card company may rule against you. If you are not satisfied with that outcome, you can file a complaint with the CFPB. If the amount is large enough to justify the effort, you can even sue in small claims court.

Are There Any Downsides to Filing a Dispute?

The first thing to be clear about is that filing a dispute is your right. If there is a legitimate problem that cannot be resolved, you should feel free to use it.

There is a rumor online that disputes can hurt your credit report. That is completely wrong. A dispute is about a disagreement between you and a merchant, while your credit report concerns your debt with the bank and what is reported to the credit bureaus. The two are generally unrelated. The only situation where there could be an effect is if your dispute fails and you do not pay the amount in time, and the credit card company then reports the delinquent balance to the credit bureaus. So my suggestion is that, whether the dispute succeeds or not, pay the amount first. If you later win, the refund will show up in your account as a statement credit.

I have also seen people say that filing too many disputes can get you blacklisted by a bank or merchant. That can happen, but usually because someone is abusing the process. For example, some people repeatedly shop online with major merchants, receive the item, then falsely claim it never arrived and file a dispute. If you do that enough times, the merchant may notice the pattern and blacklist your address. Similarly, a bank may shut down your credit card account if it thinks you are abusing this right. Under normal use, though, disputes are generally not a problem.

My Own Dispute Examples

Thinking back over all my years of using credit cards, I have probably filed only three or four disputes. I cannot find the screenshots now, but I can briefly share the stories.

Disputing Fraudulent Charges

>I previously had two fraudulent charges appear on my AMEX card. Both were small-dollar charges from some random website. In a situation like this, the best move is usually to contact the credit card company and report a fraud charge so they can replace the card, rather than waiting for a dispute investigation. But I did not feel like replacing the card, and the amounts were only a few dollars, so I disputed them first and watched what happened. In one case, AMEX contacted the merchant, and the merchant produced an online payment record claiming that I had made the payment myself. AMEX ruled against me. I got frustrated, resubmitted the dispute, and explained that this was fraud, and that a payment record alone could not prove that I personally made the payment. I also said that if they did not investigate properly, I would file a case with the CFPB. This time, AMEX approved the dispute.

Disputing a Duplicate Charge

Previously, I used multiple AMEX cards at Lowe's to buy gift cards. While one card was being processed, the printer jammed, so the payment did not go through, and the cashier asked me to swipe the card again. When I got home, I discovered that the card had actually been charged twice. I assumed the first pending charge would disappear automatically, but a few days later both charges posted. I first went back to the store to try to sort it out, but the manager never really understood what happened, and after a lot of back-and-forth nothing was resolved. I did not want to keep wasting time, so I went home and disputed the charge directly. Although AMEX received the merchant's billing records for the payment, I repeatedly emphasized that this was the second charge and that the first charge had not actually completed successfully. In the end, AMEX still ruled in my favor.

Disputing Gas Gift Cards That Never Arrived

This one happened on a Discover card. During a Groupon promotion, I used Discover to buy several Shell gas gift cards at 50% off. One of the orders never arrived. I contacted Groupon, but they insisted it had already been mailed by regular post and refused to issue a refund. With no other option, I filed a dispute with Discover. I did not provide much extra documentation beyond screenshots of the order and the statement. A few weeks later, the money was refunded.