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Is disputing charges illegal?

Disputing charges with your credit card company or bank is not illegal. In fact, it is a consumer right that is protected by law. There are legitimate reasons why you may need to dispute a charge, such as if you were billed for something you didn’t buy, if you were overcharged, or if you did not receive the goods or services you paid for.

When to Dispute Charges

Here are some common situations when you should dispute a charge on your credit card or bank statement:

  • You don’t recognize the charge – There is a charge from a merchant you have never done business with.
  • You were charged twice – You were billed multiple times for only one transaction.
  • You were billed the wrong amount – The amount on your statement does not match the actual total of your purchase.
  • Your account was compromised – Fraudulent charges were made by someone who had access to your card without authorization.
  • You did not receive your order – You paid for a product or service but never received it.
  • You received a defective or damaged product – The item you received was broken or not as advertised.
  • You requested a refund but have not received it – You returned an item per the merchant’s instructions but have not been issued a credit.
  • The merchant went out of business – You pre-paid for something from a company that has since closed down.

Basically, any time there is an unauthorized, inaccurate or invalid charge on your statement, you have the right to initiate a dispute.

How the Dispute Process Works

The dispute process involves contacting your bank or credit card company to report the error. Here is a general overview of what to expect:

  1. Review your statement – Identify any suspicious, incorrect or fraudulent charges. Make note of the merchant name, date, and amount.
  2. Contact your bank or card issuer – Call the customer service number and explain that you would like to dispute a charge. They will provide instructions on how to submit the request.
  3. Provide documentation – You will need to provide a written summary of the dispute along with any supporting evidence, like receipts or proof of returns. The more information you can offer, the better.
  4. Wait for investigation – Your bank or the card network will contact the merchant and launch an investigation into the disputed amount.
  5. Get a resolution – The inquiry will result in a decision to either remove the charge or deny your claim. This should take no more than 90 days.

Throughout the process, continue paying your undisputed charges so you do not fall behind on your account. Do not stop making payments unless directed otherwise by your card issuer.

Time Limits to Dispute

Disputes need to be initiated in a timely manner. Here are the time limits imposed by law:

  • Credit cards – You have 60 days from the statement date to contest a charge. After that the bank may deny your claim.
  • Debit cards – You typically have just 60 days as well, but requirements can vary by bank.
  • ACH transfers – For electronic payments directly from your bank account, disputes must be filed within 15 days.

The sooner you can report the erroneous charge, the better chances you have of getting it reversed. Do not procrastinate beyond the allowed window.

Illegal Practices

While disputing legitimate problematic charges is perfectly legal, there are some unethical practices to avoid:

  • Disputing transactions you authorized – Do not file disputes just because you changed your mind, are unhappy with your purchase or made a spending error. These disputes are often denied.
  • Failing to right a dispute that was denied – If your claim was investigated and ruled invalid, you should cease disputing the charge and make arrangements to pay the amount due.
  • Repeatedly disputing the same charge – Once a merchant has provided evidence that a transaction is valid, do not continue filing dispute after dispute.
  • Disputing to avoid paying your balance – Do not dispute transactions solely to delay or avoid making payments on your account.
  • Disputing without cause – Submitting baseless disputes taxes the system and diminishes resources.

Intentionally disputing charges under false pretenses constitutes fraud, which can result in penalties, account suspension, cancellation of your card and even legal prosecution in some cases.

Tips for Disputing Charges

Follow these tips to effectively and lawfully dispute problem charges:

  • Review statements regularly – Catch errors promptly before dispute rights expire.
  • Move quickly – Initiate the dispute ASAP for best results.
  • Gather documentation – Having receipts, emails, photos or other proof bolsters your case.
  • Take good notes – Maintain detailed records of your purchases and all communications.
  • Follow up – Check that your bank received your dispute and request status updates.
  • Be persistent – Keep trying if your initial disputes are denied and you still believe the charges are incorrect.
  • Provide feedback – If some merchants consistently bill you incorrectly, notify your card issuer.

The Dispute Process (Table)

Here is a summary of the typical dispute process in table form:

Step Description
1. Identify dispute Review your credit card or bank statement for any incorrect, fraudulent, or unauthorized charges.
2. Contact issuer Call your credit card company or bank to report the charge you wish to dispute.
3. Submit dispute Provide a written explanation and documentation to back up your dispute claim.
4. Investigation Your card issuer will contact the merchant to verify the disputed transaction.
5. Resolution You will receive a notification of whether the dispute was approved and the charge reversed or denied.

Possible Outcomes of Disputes

There are a few potential results of the dispute process:

  • Reversal – The charge will be removed and your account credited if your dispute was validated.
  • Denial – The charge will remain on your account if adequate evidence was provided by the merchant that the transaction was legitimate.
  • Partial reversal – A portion of the amount may be credited back to you if you were overcharged but still owed part of the transaction cost.
  • Vendor credit – Rather than a charge reversal, the merchant may opt to issue you a credit for future business as compensation.

Make sure to review the dispute determination letter carefully to understand if a credit is permanent or temporary. If you disagree with the outcome, you may be able to submit an appeal.

Success Rates of Disputes

According to the Consumer Financial Protection Bureau, debit and credit card users win their disputes around 21% of the time. Here is a table showing some statistics on dispute rates:

Dispute Type Approval Rate
Fraudulent charge 51%
Never received product 37%
Charge for wrong amount 34%
Multiple charges 26%
Quality of goods or services 19%
Non-fraud unauthorized charge 17%

As you can see, dispute success depends on the specific circumstances. Fraudulent transactions have about a 50/50 chance, while disputes over quality face longer odds. Provide as much supporting details as possible.

Tips to Improve Your Dispute Odds

Follow these tips to boost your chances of successfully disputing a charge:

  • Act immediately – The sooner you dispute the better.
  • Be thorough – Include documentation and clearly describe the situation.
  • Follow up – Check on status and provide additional information if requested.
  • Be persistent – Re-submit the dispute if your claim is initially denied but you believe you are in the right.
  • Dispute with merchant first – Your bank may require you to try to work it out with the seller before they will step in.
  • Watch for time limits – Dispute within 60 days or as required by your card issuer.

Consequences of Disputing

While disputing valid charges is your consumer right, it is not without some potential drawbacks in certain cases:

  • Temporary loss of funds – Disputed amounts may be unavailable until the dispute concludes.
  • Interest and fees – You may accrue charges if dispute delays cause your balance to remain unpaid.
  • Merchant blocks – Sellers may refuse to accept your card if you dispute often or without cause.
  • Account closure – Your bank can suspend or cancel accounts with excessive disputes.
  • Credit damage – Your credit score could drop if disputes lead to late or missed payments.
  • Legal action – Retailers may pursue civil suits or press charges for fraudulent disputes.

To avoid complications, only dispute legitimate, defensible charges and comply with all cardholder account terms and responsibilities.

Preventing Disputes

The easiest way to avoid the need to file disputes is to take steps to prevent questionable charges in the first place:

  • Review statements carefully each billing cycle and report discrepancies right away.
  • Track all your purchases closely so you recognize what you did and did not buy.
  • Save receipts, shipping notifications, digital order confirmations, and any documentation related to your transactions.
  • Take care in protecting your account information and watch for signs of fraud.
  • Make online purchases only through secure sites and on trusted networks.
  • Set up transaction alerts and monitor your accounts frequently.
  • Avoid using debit cards for purchases whenever possible, using credit cards instead for the extra protection.
  • Report lost or stolen cards immediately.

Stay vigilant and you can minimize the chances of errors that lead to the need for disputes. But rest assured that if legitimate issues do arise, you have every right to contest problem charges through your card issuer.


Disputing credit card and bank charges is perfectly legal when there are true inaccuracies, billing errors or fraudulent transactions on your statements. The dispute process is a simple procedure instituted to protect consumers from unauthorized, invalid or incorrect charges. Exercising your dispute rights through proper channels provides a way to hold merchants accountable for their billing practices and reverse unjustified debits from your accounts.