If you have used a credit card before, you may be aware of all the things that may go wrong. Credit card information can easily be stolen, there can be duplicate charges, there may be a balance on there that doesn’t make sense, etc.
Thanks to the fair credit billing act, credit card companies are required to provide protection for their users by offering the ability to dispute a credit card charge. Some people out there may try and take advantage of this, while others may file a false dispute unknowingly.
You should know that there are dire consequences to falsely disputing credit card charges, especially on purpose, which is plain and simple fraud. Needless to say that you should not ever falsely dispute a credit card charge.
Continue reading to learn more about what counts as a false credit card dispute and what doesn’t. Along with that, you’ll find more detail on the consequences of falsely disputing a credit card charge.
When Is It Okay to Dispute a Credit Card Charge?
There are some circumstances that allow you to rightfully file a dispute with your credit card company:
When Someone Else Steals Your Credit Card Information and Charges It
A thief may be able to steal your card physically or get the credit card’s information through several different avenues. For example, sometimes thieves will rig credit card machines. Regardless of how someone steals your credit card information and commits credit card fraud, if they use it to make a purchase or several, you can dispute the charges. These purchases will fall under the unauthorized purchase category for disputes.
Filing a Dispute Because of Identity Theft
Another reason to rightfully dispute a credit charge with your credit card issuer can be due to identity theft. When someone steals your identity, they can use it to open up credit card accounts in your name, or they may be able to access existing accounts for unauthorized credit card charges. If this happens, your first step should be to freeze your credit with all three bureaus, and let your creditors for any loans (quick cash loans, student loans, mortgage, credit cards, etc.) know. When it comes to identity theft and fraudulent credit cards, you should be able to dispute this without any significant issues.
A Billing Error
Billing errors are a common problem that many people face. These errors can include anything from duplicate charges, the wrong amount charged to the card, math errors, etc. If you find any of these types of errors, you can dispute them. Learn more about what errors fall under billing mistakes.
Scenarios Where You Should Not Dispute Credit Card Charges
Here are some circumstances in which you should not dispute credit card charges:
Faulty/Non-Existing Items from a Seller or Services
Lastly, faulty items you pay for and don’t get will not be legitimate credit card disputes (at first). A few different scenarios can fall under this category, the most common being receiving a broken item or not receiving anything at all. You may find these issues more when shopping online or getting something shipped.
The right step here is to contact the seller and work that out first, which you should do with a letter. If things don’t go as needed, you should contact your credit card issuer for the next steps, which can mean filing a dispute. Your credit card company will ask for proof of a good-faith effort to work things out.
An Authorized User’s Charges Do Not Qualify for Credit Card Disputes
An authorized user can be added to a credit card account if they are trying to build their credit. With this title, that person will be able to that credit card just like the primary account holder can. If your credit card account has an authorized user and that person uses the card, you will not be able to dispute that charge, no matter how significant. And so, it is imperative to ensure that you can trust a person before you add them to your credit card account.
Anytime You Have Buyer’s Remorse
Let’s say you paid for a service or item with your credit card, but you feel like the price was not worth it. In this case, you will not be able to file a dispute. Instead, look into contacting the place of business and letting them know your concerns. In most cases, you will be able to return an item or may get some kind of store credit for a service.
Now that you know about the different scenarios that count and do not count as a dispute, you should have no issue figuring out the right step for specific credit card circumstances!
Consequences of a False Dispute
There can definitely be consequences if you file a false dispute. If you do it by accident, you first need to contact your credit card issuer and let them know about the mistake. By doing so, you can be assured that things will usually not escalate. However, if you purposefully file a false dispute and therefore commit credit card fraud, these are some of the things that can happen:
Depending on the state you live in, you could be charged up to thousands of dollars for a false dispute. This is because credit card fraud counts as a felony in many states.
Court Appearances and Court Costs
Depending on the action that a financial institution takes, you may have to go to court and pay for court costs that can be extremely expensive.
A common thing financial institutions do for people who file fake credit card disputes is close their current accounts and not let them borrow money from the company ever again.
Loss of Banking Privileges
If you file a fake credit card dispute with the same company that you bank with, well, chances are that in addition to losing your credit card use, you won’t be able to use your bank account. You also won’t be able to access any other products/services you have with them.
The worst case scenario would be jail time for falsely disputing your credit card. The state you live in will determine prison time. For example, credit card fraud in Illinois comes with up to three years and a $25,000 fine.
How The Credit Card Dispute Process Works
If you haven’t filed a credit card dispute before, you may be curious about how the process works. Here are the steps it will take from beginning to end:
Step 1: Write and Send the Dispute Letter
The first step you will need to take is to draft a dispute letter. You will want to include your personal details (name, phone number, address, email) and the details on the fraudulent charges, including the amount and the circumstances surrounding why you are filing this dispute. If you are unsure how to get started, there are tons of free sample letters you can use.
For most credit card disputes, you have 60 days from receiving your credit card statement to send a letter. Your creditor will have to respond in 30 days, and they must make a decision in two billing cycles.
Step 2: Follow Up
Once you have sent your letter, it will be a good idea to check up by contacting your creditor, especially if they haven’t said anything to you. Remember, they do have 30 days to respond, but that doesn’t mean you can’t ask about your dispute before then.
Step 3: Wait for the Response
Once your creditor has your dispute letter and any other documents with it, they will make a decision. In most situations, as long as you have proof, your dispute should go smoothly. If the company does not accept the dispute, you’ll have 10 days after getting that final response to argue it a second time. A creditor may ask for more proof with documents, additional information, etc.
Things To Keep In Mind With a Credit Card Dispute
If you do need to file a legitimate dispute with your credit card company, you should keep some things in mind:
- In some cases, you may be responsible for paying up to $50 for a fraudulent credit card charge.
- There are time limits on when you can file a dispute. For fraudulent charges, there is no limit, while billing errors and faulty product issues have a time limit of 60 days from the date you received your credit card statement.
- It is a good idea to send your dispute letter via certified mail to ensure that your credit card company received it.
- Filing a police report can help strengthen your case with the dispute process.
- When filing a dispute, gather all the documents you can to prove your case.
- You can file a complaint against a creditor with the federal trade commission if they are not fair or follow the rules they are supposed to.
- Sometimes a credit card dispute can hurt your credit scores. For example, when you file a dispute against a merchant, there will be chargebacks. These will be reported to the three major credit bureaus and sometimes these will hurt your credit score.
The Bottom Line With False Credit Card Disputes
Filing a false credit card dispute should never be done; it is credit card fraud and can have consequences like fines, court fees, jail time, blacklisting, and hurt your credit scores. The good news is that you can avoid making the mistake of unknowingly filing a dispute in situations that don’t require it simply by knowing what scenarios warrant the dispute process.
To learn more about how to write a dispute letter, check out the blogs in the CreditNinja Dojo!
Disputing Credit Card Charges | Consumer Advice
How can I get a refund on a product or service I purchased with my credit card? | Consumer Financial Protection Bureau
How do I dispute a charge on my credit card bill? | Consumer Financial Protection Bureau
Credit Card Fraud | Chicago Criminal Defense Lawyer David L. Freidberg