How to Dispute a Credit Card Purchase

One of the more aggravating scenarios as a credit card holder is when an unauthorized, or incorrect charge finds its way on your billing statement. It can happen for a host of reasons, such as fraud, incorrect merchant batch processing, or simply an honest mistake keyed in by an employee. Regardless, the process of disputing a credit card purchase can seem futile with the number of rules, regulations and deadlines that must be followed. I worked in a fraud and disputes area for a major credit card processor for a couple years. During my time there I saw many legitimate claims rejected because cardholders did not follow instructions for disputing a charge. Below is a guide that should help guide credit card users through the maze of dispute procedures to ensure their cardholder rights are protected.

Contact the Merchant Immediately

If you find that a merchant has erroneously overcharged your account, or charged your account in error, contact them immediately and ask for credit. If the merchant refuses to take care of the situation, explain that you are preparing to dispute the charge with your card issuer. Merchant banks don’t like receiving tons of disputes against a merchant, so many times merchants are willing to cooperate to stay off their bank’s bad list. Don’t give them too much time, however, as the clock is ticking on your own deadline to submit a written dispute.

Get in Writing

Some issuers now allow disputes by telephone or website contact, but I would still advise cardholders to submit a written letter of dispute. This written letter protects your cardholder rights against an issuer claiming to have never received your phone call. It is worth the additional cost to send the letter certified mail, return receipt requested, so you have proof of submission and receipt.

Include Your Story

For straightforward disputes such as “Don’t recognize the charge,” or “Unauthorized purchase” it may be enough to simply complete the dispute form on the back of your billing statement, or via your online account. However, for more complex situations involving travel or entertainment, or quality of goods or services received, it is best to include a brief letter providing background. Be sure to include a timeline (to the best you can remember), and any names of agents from companies referenced in your letter. This letter will be attached to the dispute paperwork forwarded to the merchant’s bank, and is a requirement for these types of disputed charges.

Know Your Rights

Disputed credit card purchases are covered under Regulation Z of the Fair Credit Billing Act. Interest may not accrue on disputed charges, and you cannot be reported delinquent for refusing to pay a charge that has been properly disputed with the card issuer in writing. However, this does not mean you do not have to pay minimum payments for the remaining portion of your balance.

Things Move Slowly

Here are the most important deadlines to remember when submitting a dispute:

  • Cardholders have 60 days from the date of the statement in which the original transaction appears to submit in writing a formal letter of dispute
  • Issuers (banks, credit card companies, etc.) have 30 days from the day they receive your letter of dispute to place the item in dispute, charge the item back to the merchant and provide a temporary credit to your account (this is called a “chargeback”), or provide you with information proving it is your charge.
  • The merchant’s bank, upon receiving a chargeback, has 45 days to represent the item to the issuing bank with further proof that the charge is correct. At this point the cardholder’s bank can either issue a 2nd chargeback providing more details, or place the charge back on the customer’s account.
  • If the merchant’s bank is still in disagreement after receiving a second chargeback a case for arbitration is filed and both parties make their case to a 3rd party for resolution.
  • If your bank is unwilling to process a 2nd chargeback and places the representment back on your account you may have to pursue legal action against the merchant in a small claims setting. Depending on the amount of the charge this may or may not be worth the time and money required.


  1. We had an on-line company bill us for an “annual” subscription automatic renewal (that we never signed up for). The previous year we had signed up for a subscription for that year, but assumed it was done.

    We attempted to contact the on-line company (merchant) by phone, email, letters, etc. and never received a response. So we then disputed the charge (within 15 days) with Discover.

    We followed all of their rules, did everything in writing, talked to several representatives on the phone, also. But no luck. They claimed it was a “legitimate” charge even though they were never able to get a hold of the on-line company either.

    We closed the Discover card account shortly thereafter.

    Credit cards do NOT have your back when it comes to purchases no matter what their ads say.

    “When you play with snakes, you are going to get bitten” – Dave Ramsey referring to credit cards

  2. @Greg: Recurring subscription charges are the absolute worst to deal with. Unfortunately, in the world of credit cards there is a little thing called a “preauthorized debit” which basically gives the merchant the right to keep pushing through charges regardless of account status. Many times credit card companies simply write off small amounts because it isn’t cost effective to process chargebacks. This only makes the situation worse because merchants never receive a notice to stop sending through the charges.

  3. Had a fairly small charge show up on a statement for my Citi card a couple months ago. Some photo shop in Michigan I had never even heard of. Called Citi, explained and they issued a credit while I was on the phone.

  4. These are some great tips. With the proliferation of debit and credit cards, and the rise in identity theft, disputing charges will become a cottage industry…I predict! Just pay me a percentage of what you save–in cash.

  5. A few years ago I had to dispute about 15 charges on my CIBC card. All charges were for parking in the same lot on the same day. Since I don’t even own a car to park, I thought the whole situation weird. My card company quickly credited my account without issue. Perhaps reporting fraud on credit cards is easier in Canada?

  6. Fighting (and perhaps even detecting) credit card fraud can be a total pain. A few years ago, my wife and I spent ~8 months fighting some fraudulent activity on our accounts. When we finally got it all straightened out, we vowed to never allow ourselves to get into the same situation again.

    Today, we use an American Express Platinum charge card for all non-cash purchases – in the few times we’ve had some exposure, AmEx has either (1) called us first to verify a charge or (2) simply refunded the amount in question and fought the dispute on their own. For us, the piece of mind is definitely worth the yearly fees. (Bonus: They automatically extend warranties on purchased items, include 24/7/365 concierge services along with many other things – definitely worth checking out.)

  7. Our dispute with Discover card has been a learning experience. We purchased furniture (floor models) from a company that sells “custom made furniture only”. We refused delivery because the leather was not buffed on two of the pieces as stated by sales person. We asked for a refund and told “we don’t give refunds, you will have to reselect”. I called Discover and disputed the almost $2000 dollar charge ASAP. Told that the furniture store has the final say if they will refund our credit card. Also told that the furniture company can replace our order with another model of similar quality if they choose.
    The Discover rep told me that I can dispute the results of the first dispute. Like what good would that do!

  8. I rented a car 10 months ago fro Europcar. I returned the car full of gas, no damage, paid in full. I received a $25 charge on my credit card 10 months after doing business! I am now in the dispute process through Mastercard. Does anyone know how long companies can legally keep your credit card numbers after you do business with them?….Keep your receipts!!!!

  9. I also found a non profit that had lawyer style credit dispute letters. is a site ran by volunteer credit repair experts that offers credit dispute letters for credit inquires, late comments, collections, charge-offs, etc. They have examples on the website that show their letters work.

  10. What about the problem of consumers ordering goods on their credit card and then claiming they never received them?
    I imagine in large metropolitan areas filled with immigrants, gangs, hustlers, etc… these scams would occur with regularity.