A dispute transaction is a charge to a credit or debit card that a cardholder claims is illegitimate in some way. The process for disputing a transaction includes you, your bank, and, sometimes, the merchant involved in the transaction. The process for disputing a transaction is straightforward, and in most cases, you need only contact your bank to get it sorted out. How quickly and what parties you need to contact in the dispute process depends on the details of your situation.
Nobody likes making the dreaded call to their bank when they need to dispute a transaction. The process could be lengthy or confusing, and being directed to a call center is a nightmare. Fortunately, there is a good chance that it will be easier to resolve than you fear, and the dispute will go your way. This article will help guide you through the process of deciding when to dispute a transaction, who to contact, and what happens after you file a claim.
A dispute transaction occurs when a debit or credit card holder claims that a purchase made using their card was not legitimate. Both credit card customers and debit card customers would then need to request that their bank or card issuer return the money used in the purchase to their account. The cardholder may allege that the purchase was fraudulent, that they did not receive the product or service they paid for, or that the amount they paid was incorrect.
Why might I dispute a transaction?
Here are some reasons you might contact your bank or credit card issuer about a disputable debit or credit card transaction:
- You lost your card and believe someone used it
- You don’t recognize a transaction on your statement
- Your statement shows a higher payment than you intended to make for something
- Your identity was stolen online
- You did not receive what you bought
In any event, the process of disputing a charge is fairly straightforward and usually works out in the cardholder’s favor.
How do I know if I need to dispute a transaction?
You should always check your credit or debit card statements regularly to make sure there are no unauthorized purchases charged to your account. That way, you can quickly catch problems like:
- Incorrect amount charged
- Fraudulent transactions
- Undelivered goods or services
- Billing errors
- Cards arrived damaged
- Unaccounted-for charges
- Double charges
In any of these instances, you should contact your bank as quickly as possible to make sure that your account balance is up to date and correct.
Additionally, if you lose your card or are worried that your identity has been stolen, you should check your account and contact your bank. The best way to deal with unauthorized purchases and/or suspected criminal fraud is to cancel your debit and credit cards at once.
Is it bad to dispute a transaction?
Filing a claim for debit or credit card disputes is the responsible thing to do if you are genuinely concerned that a charge is incorrect or unauthorized. However, you should keep in mind that frivolous claims of incorrect charges or stolen identity may be frowned upon by your bank or even illegal. You may face consequences with some merchants if you tarnish your reputation as a customer.
The good news is, banks have a big incentive to protect cardholders. Not only does a bank’s reputation stay good in the eyes of future potential customers, but they want to keep as many existing cardholders as possible. When you file dispute transactions, your bank is likely to take them seriously so as to keep you happy and maintain a solid reputation for protecting cardholders’ identities.
What happens when you dispute a transaction?
Often, a disputed charge can be handled between you and your bank or credit card issuer. Your bank usually contacts the merchant, so you may not have to deal with them at all. If you bring the disputed charge to the merchant instead of your bank, however, the chain of communication is different. You will likely have to work with the merchant alone or with your bank as well, depending on the scale and details of the dispute. Here is how the dispute process usually works.
Contact your bank
The first step in the dispute process, or chargeback process, is to contact your bank. You might do this for one of several reasons, depending on the facts of the situation. If you have lost a card and see an unauthorized charge on your account, you should contact your bank and have them cancel your credit or debit cards immediately to prevent future theft.
Additionally, you may not know who the merchant on the other end of the unauthorized charge is, so you can really only deal with your bank in this scenario. The same steps apply if you believe that someone has stolen your identity online.
Most banks allow you to complete the dispute process from your phone using the bank’s app. If your bank does not have an app, you can call the bank’s customer service line.
Let the bank know what happened
Make sure you give your bank all relevant information so they can investigate your claim as efficiently as possible. Once you have spoken to your bank, you will have to wait for a certain period while your claim is processed.
If you request to cancel a card, that will happen immediately to prevent future theft. But, if you believe you were charged the wrong amount for a purchase, it will take several days for your bank to investigate the claim and respond to you.
Your bank may follow up with questions or request further information about the charge in order to get the full picture and find the best solution. In between reporting the claim and your bank finding a solution, your bank may temporarily limit access to your money.
Whether or not your bank will cancel a transaction depends on the details of your situation. But keep in mind that pending transactions usually cannot be canceled. If you want to cancel a transaction, you must wait until it has been completed (usually in three to five business days).
You may want to contact the merchant directly
If you dispute a charge with the merchant directly, the dispute process may move slightly faster. For instance, the merchant might be able to cancel the charge for you without involvement from your bank. With this faster chargeback process, the merchant can refund your money on the spot and you will see it back in your account three to five business days later. This step bypasses the investigation period your bank needs.
If you did not receive the goods or services that you paid for, it makes the most sense to try working with the merchant before going to your bank. That way, you may be able to get your money back for the unreceived item right then and there. Again, it depends on the facts of each scenario and the scale of the disputed charge.
What if my bank denies a transaction dispute?
Your bank will likely deny a disputed transaction if the purchase is still pending. After it has posted, usually three to five business days after the purchase, your bank will be able to investigate and possibly cancel the transaction. If your bank investigates a completed transaction and denies it, you have some options:
- Appeal the decision, if the bank provides that option
- Work with the merchant directly if you have not tried that yet
- File a complaint with the bank’s regulator or the Consumer Financial Protection Bureau
Make sure your bank protects you in the case of fraudulent charges or theft. These checking accounts offer fraud protection.
What is a good reason to dispute a transaction?
Some common reasons to dispute a transaction include fraudulent transactions or identity theft, double charges, undelivered items, or incorrect amounts. The Fair Credit Billing Act gives you the right to dispute credit card transactions as long as you have a valid reason to do so.
Is disputing a transaction bad?
It is only bad if you don’t have a legitimate reason to dispute the charge, or worse, you are trying to get money by making false claims, which is illegal.
How do you effectively dispute a charge?
Contact your bank and explain the situation. You may need to cancel your cards to prevent future thefts. Give the bank time to investigate the claim and respond to you. You may also need to contact the merchant or deal with them directly to request a refund.
Can a bank deny a dispute?
If the transaction is still pending or the bank believes you did not provide enough information to prove your case, they could deny your dispute. In that case, you can appeal or file a claim with another regulator.
- Keep a close eye on your credit and debit card statements so you can quickly catch any mistakes and report them to your bank.
- You can work with your bank or with the merchant directly about a dispute transaction, it just depends on the circumstances of your claim.
- Frivolous claims are frowned upon, but your bank is very interested in keeping its customers happy, so don’t hesitate to bring genuine concerns about your statement to your card issuer.