What Happens if You Falsely Dispute a Credit Card Charge?
EA
Summary:
Don’t initiate a credit card dispute until you’re sure that it can’t be resolved between you and the merchant. Disputes may be necessary in some cases, but if you try to initiate an illegitimate dispute you could, in some cases, face criminal charges.
Instances of false credit card disputes are increasing by 20% per year. This type of credit card fraud, known as “friendly fraud,” is a major crime that can earn you some serious consequences. If you see transactions on your credit accounts that you don’t recognize, you may need to file a credit card dispute. Just make sure your claim is legitimate so that you don’t accidentally end up committing fraud yourself.
Get Competing Personal Loan Offers In Minutes
Compare rates from multiple vetted lenders. Discover your lowest eligible rate.
It's quick, free and won’t hurt your credit score
Why dispute a credit card charge?
Credit card holders are bound to come across charges they don’t recognize once in a while. Sometimes the merchant description doesn’t clearly indicate where the charge came from, or the consumer just needs to jog their memory to remember the origin of the charges. Other times, there is a real case of credit card theft, fraud, or a mistake on behalf of the merchant. In these cases, disputing a charge may be the only way to resolve the issue.
What is an unauthorized charge?
An unauthorized charge is a credit card charge that a consumer either didn’t initiate or can’t explain. Unauthorized charges can lead to large balances on your account or even having your credit card denied. Unauthorized charges are usually a result of one of two scenarios:
- Someone stole your credit card information and is using it to make purchases.
- A merchant charged you more than you agreed upon or the same amount multiple times.
Either way, unauthorized charges warrant a credit card dispute so that you can get your money back.
What is a chargeback?
Often, the outcome you’re looking for from a credit card dispute is a chargeback. A chargeback is a refund on behalf of the credit card issuer or the merchant as a result of a dispute. Credit card chargebacks are regulated by the U.S. Truth in Lending Act.
If a consumer files a dispute, the credit card issuer may demand the merchant pay back the consumer on account of the fraudulent or disputed transaction. In cases when this isn’t possible, credit card companies can initiate a chargeback. Usually, either the merchant or issuing bank incurs a chargeback fee.
One of the great benefits of using a credit card is the liability protection that it comes with. This will protect you against fraud and can make it easier for you to get your money back. Keep in mind that different types of credit cards may have different terms, conditions, and protections.
The Fair Credit Billing Act
The Fair Credit Billing Act (FCBA) gives buyers the right to ask merchants for an explanation for transaction charges. If you do find unauthorized credit card charges in your account, the FCBA also gives you the right to file a dispute. Simply put, the FCBA grants you the right to dispute credit card transactions as long as you have a valid reason to do so.
When to dispute a credit card charge
Disputing a credit card charge shouldn’t be the first step you take if you see unfamiliar transactions on your statement. First, think hard about your recent purchases and try to remember if a transaction was indeed authorized. Consider if another authorized user on your account, like a spouse or child, could have made the credit card purchase.
If that doesn’t clear up the confusion, but you can identify the merchant that initiated the transaction, try to reach out to them. You can try to work together to resolve any discrepancies or get an explanation of the charges. If an attempt to contact the merchant isn’t possible or successful, your next step could be initiating the dispute process.
When you notice unfamiliar charges on your statement, take action to identify or dispute them as soon as possible. Under federal law, credit card issuers must offer chargebacks within 60 to 120 days of the billing date.
Pro Tip
Check your credit card billing statements regularly to monitor for unauthorized charges. The more often you review your statements, the fresher your memory, and the sooner you can identify suspicious charges.
Why not dispute a credit card charge?
Don’t mistake a chargeback for a refund. Sometimes, consumers will attempt to exercise their FCBA rights to get a refund because they think it’s easier. However, this is not a good idea, and it could come with serious consequences.
The best and easiest way to get a simple refund is to go through the merchant instead of getting the bank involved. If any of the following situations occur and the merchant doesn’t cooperate in giving a refund, then you may file a dispute.
Here are some common legitimate reasons under the FCBA to dispute credit card charges and get your bank involved:
- Fraud
- Credit card hacking
- Non-delivery
- Defective merchandise
- Item not as described
- Wrong order received
- Additional or incorrect charges
- Billing errors
- Bad service/service not rendered
Pro Tip
Virtual credit cards could help you avoid scams or instances of fraud. If you want to apply for a new credit card, check out SuperMoney’s guide on evaluating credit card offers.
How to dispute a credit card charge
Disputing a charge might be easier than you think. Once you decide that it’s necessary to dispute a charge, follow these steps:
How to dispute a credit card charge
- Gather information. To file a credit card dispute, you may need to present account information and documentation that proves you tried to resolve the issue directly with the merchant first.
- Contact your credit card company. Call, email, or send a credit card dispute letter to your credit card company within 60 days of receiving the statement containing the disputed charge.
- Follow your credit card issuer’s instructions. Once you get in contact with your financial institution, they will guide you through the dispute process.
- File a police report. It’s not required, but filing a police report can help the government track crimes and verify your claims.
- Follow up. Keep detailed records of the dispute process and follow up with the credit card company to check on the status of your dispute.
What happens if you falsely dispute a credit card charge?
Falsely disputing credit card charges is a crime. Whether to the merchant, the credit card issuer, the government, or all of the above, you’ll have to answer for your dishonesty.
What defines a false dispute?
A false dispute is any dispute not considered valid under the FCBA. For example, it is illegal to dispute a charge for the following reasons:
- To receive a refund and keep the purchased items for free
- To cause financial and emotional stress for the merchant
A dispute for these or any similar reasons constitutes a false dispute. Don’t expect to get away with a false dispute, as merchants may come back and dispute your claims. Credit card issuers will also investigate your dispute, and they almost always identify false disputes.
Consequences of falsely disputing a credit card charge
Falsely disputing a credit card charge is friendly fraud, which is a crime. This can come with serious consequences. The following are potential consequences of falsely disputing a credit card charge:
- Blacklisting: Falsely disputing a charge can prompt the merchant to blacklist you. This means you’ll never be allowed to shop with them again.
- Loss of banking privileges: A common consequence of false credit card disputes is the credit card issuer canceling your credit card account. You may never be able to have an account at that financial institution again.
- Damage to credit score: If you decide to falsely dispute credit card charges, expect to see a drop in your credit score.
- Fees: If a merchant disputes your claims and wins, you may be responsible for fines, administrative fees, and any other financial retaliation.
Could I go to jail for falsely disputing charges?
Falsely disputing a credit card charge is considered credit card fraud, and is therefore illegal. In some cases, it may constitute wire fraud. In extreme cases, you can face jail time for falsely disputing charges.
What if I disputed a charge by mistake?
If you dispute a charge and later realize it was a mistake, you may be able to fix it before facing consequences. Contact your credit card company and explain the situation. You may also want to notify the merchant if they are involved. In most cases, if you resolve the mistake promptly, you’ll walk away unscathed.
FAQ
Can I dispute a credit card charge that I willingly paid for?
You can dispute a credit card charge that you willingly paid for if you later find out that the product or service wasn’t delivered as described or there was a billing error.
What happens if I dispute a charge by mistake?
If you dispute a charge by mistake and do nothing about it, you may face consequences. However, if you contact your credit card issuer to resolve it, you will likely avoid any further issues.
Do banks investigate disputed charges?
Banks do investigate disputed charges, especially when merchants file counter-disputes.
What are valid reasons for disputing a credit card charge?
Valid reasons for disputing a credit card charge include fraud, non-delivery, defective merchandise, item not as described, wrong order received, additional or incorrect charges, billing errors, bad service, or service not rendered.
Can I get in trouble for disputing a charge?
You can get in trouble for disputing a charge if the dispute is not substantiated under the FCBA requirements.
How often are credit card disputes successful?
Credit card disputes have about a 65–75% success rate if a consumer does everything right. Providing thorough documentation can increase your odds of winning the dispute.
Key Takeaways
- Under the Fair Credit Billing Act, you have the right to question and dispute charges on your credit card. However, you should only do so after you’ve verified that you didn’t forget about a charge or make some other mistake on your end.
- In cases of fraud, billing errors, or bad service, you can dispute charges with your credit card company. It can be as simple as contacting the company and providing documentation to back up your claims. However, it’s always best to try to resolve any issues with the merchant before getting your bank involved.
- Falsely disputing credit card charges is a crime. If you commit this type of fraud, you’ll likely face consequences such as blacklisting, loss of banking privileges, damage to your credit score, and fees.
Did you know you can dispute charges on debit cards too? You may sometimes see unfamiliar charges or double charges on your debit card or find that your debit card has been denied. In these cases, you should know how to cancel a pending transaction and file a dispute. The time it takes to get a refund on a debit card depends on several factors, so be sure to read SuperMoney’s guide on debit card refunds to know what to expect.
Share this post: