Travelers are turning to credit-card disputes when other routes to a refund have failed

Could disputing a credit-card charge solve your next travel problem?

For better or worse, travelers are turning to a last-ditch tactic to resolve their disagreements with airlines, car-rental companies or hotels: instigating credit-card disputes.

Chargebacks are on the rise in travel. A chargeback voids a credit-card transaction by withdrawing funds that were previously deposited into a merchant’s bank account and applying credit back to your card. And even though experts caution against using this tack because you don’t enjoy a vacation or disagree with an unfair policy, the odds are in your favor.

Consider what happened to Edward Margolis, a Indianapolis financial consultant who called off his plans to fly from Tel Aviv to Las Vegas earlier this year. An airline agent assured him that since he’d canceled his ticket within 24 hours he would “very likely” receive a refund, he says.

When he didn’t, Margolis contacted me and called his credit-card company to reverse the payment. Under the Fair Credit Billing Act, you can dispute a charge for goods and services you didn’t accept or that weren’t delivered as agreed upon. If your bank sides with you, the money is almost instantly refunded.

The travel industry’s chargeback rate is more than twice the average of other industries, according to a working paper published earlier this year by the Federal Reserve Bank of Kansas City. Travel also has the highest-value disputes — an average of about $18. Disputes in the next-highest category, department stores, average roughly $8.

Your chances of succeeding in a travel-related dispute are better than average. The industry-wide “win” rate for merchants is only about 41 percent, according to the latest CyberSource benchmarking report. But since the top dispute category in travel is “card not present” — which means you didn’t swipe your credit card but made a charge by phone or online — your odds may be even better. Banks tend to favor customers in a disagreement when a card isn’t physically present.

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“High levels of fraud within travel can be found especially online,” says Nick Clements, a banker-turned-consumer advocate and founder of the money management website Websites offering hotel deals, vacation packages and cruise tours can be dispute free-for-alls.

Having a strong case helps, of course. When Seth Elsen checked out of a La Quinta Inn and Suites, he found a $250 “cleaning” charge on his bill.

“I talked with an assistant manager and was told that it was a smoking charge,” says Elsen, a program manager for a Seattle nonprofit organization.

Elsen doesn’t smoke, but the negotiations to remove the fee quickly stalled. He turned to me for help and simultaneously asked his credit-card company to reverse the charges. After I spoke with the hotel, it agreed not to fight the dispute and he received a $250 refund.

In Margolis’s case, I contacted American Airlines to ask about his complaint, but his refund was already in progress.

Chargebacks are generally thought of as a last resort. There’s a reason for that, says Monica Eaton-Cardone, the co-founder of eConsumerServices, a company dedicated to resolving transaction disputes between merchants and cardholders.

“Filing a chargeback without proper justification is a practice known within the industry as ‘friendly fraud,’ ” she says. “This refers to the fact that the sale appears valid at first, but then the merchant is hit by a dispute much later.”

For example, if you didn’t like a cruise and decided to simply dispute the charge on your card after your vacation, it could cost you. Your bank could cancel your credit card or bank account if it determines that you have committed friendly fraud. And the company could take action. Car-rental companies have a well-deserved reputation for blacklisting customers who win credit-card disputes against them, adding them to their “do not rent” list.

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And timing is important. You don’t want to file a dispute too early because it could disrupt your trip, says Matthew Coan, who runs the credit-card-comparison website

“Disputing the charge before your trip is over could lead to whatever legs of the trip you have left to be canceled by the merchant, leaving you stranded,” he says. But wait longer than 60 days after the charge, and the law no longer protects you. Your bank may still review a chargeback, but it isn’t legally obligated to help.

The actual process is shrouded in mystery. I asked Brian Penny, a former Bank of America operations-manager-turned-whistleblower, to explain how disputes work. He said chargebacks at his bank were handled by a call center within an electronic claims unit. Phoning the bank with a dispute connected you to a representative, who asked a scripted set of questions.

“Our first step was to advise customers to attempt a resolution with the merchant,” he says. If a traveler could show proof that they tried but failed to fix the problem, a dedicated resolution team would contact the merchant and request a response. The entire process took between six and eight weeks. In the meantime, the customer would receive a temporary credit.

If the bank decided in a customer’s favor, it filed a claim with Visa or MasterCard to recover the funds, and the credit would be permanent. But how does a bank actually decide who wins? No one except the banks knows.

Chargebacks can work. I’ve lost count of the number of times a traveler has emailed me for help and then sent a “never mind” message after initiating a chargeback. The more interesting question is: When do they not work?

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Although many chargebacks are legitimate — the business didn’t deliver the service it promised — not all of them are. Increasingly, credit-card holders are turning to the dispute to retaliate against what they see as a company’s unfair policies, says John Monarch, chief executive of Direct Outbound, a company that offers chargeback and call-center services to businesses.

“More customers are disputing airline charges specifically, seeing it as a sort of check or balance on the restrictions of nonrefundable tickets,” Monarch says. He points to blog posts on travel hack sites that explain how to increase your likelihood of winning a dispute, even when a ticket-refund policy is clearly spelled out and agreed to by the customer.

Monarch and others frown upon bad-faith chargebacks, noting that over the long term, they increase the cost of processing credit cards. Instead, they recommend only contesting charges when you’re at a genuine impasse with your travel company, and when the usual customer-service channels have been exhausted.

Christopher Elliott

Christopher Elliott is an author, journalist and consumer advocate. You can read more about him on his personal website or check out his adventures on his family adventure travel site. Contact him at Read more of Christopher's articles here.

  • PsyGuy

    My biggest issue is that customers don’t have any input into those terms and conditions. They are written by company lawyers to protect the business and provide little more than what is required by law. They aren’t fair, and while a cruise is certainly optional, flying really isn’t

  • Rebecca

    How do they decide who “wins”? It’s all metric based. You’re correct that having a card not present tips in the consumer’s favor. This is because the merchant agreements allow automatic chargebacks for a specified amount of time (ie the bank isn’t out any money). For other chargebacks, the bank has agreements with visa/mc and the merchants. The people making the decisions have the goal to not give away the banks money. With good consumer proof, the bank won’t eat the loss, the merchant will. But you also have to factor in the time fighting the merchant. Some companies/industries are notorious about not accepting chargebacks that aren’t automatic.

    In short, if the bank isn’t out the money, you will almost certainly win. The people doing the actual processing of these claims, their job first and foremost is to not let the bank eat the money. A lot of bad disputes are won by the consumer because it’s automatic the bank gets the funds back. A lot of good disputes are lost. You CAN push it, as there are federal regulations covering it. But a lot of times it simply comes down to whether the merchant fights it.

  • Stephen0118

    I may get slammed for this, but you’re right, Chris. Chargebacks should be the last resort after all avenues of contact have been exhausted. Did Margolis even try to contact American Airlines to see why he didn’t get a refund?

  • The Original Joe S

    Scroo ’em! They shoudda refunded within 24 hours, and promised they would, and didn’t. So, hit ’em with the chargeback because they DIDN’T LISTEN the first time! Ha ha ha ha ha!

  • MF

    TOJS – if you read the article carefully, the telephone representative used the term ‘very likely’ with respect to a refund. There was no ‘promise’. And yes, if the 24 hour rule applied then $$$ should have been refunded. More to the point, your comment seems to be dripping with arrogance & snark, not a way to encourage anyone to help.

  • AAGK

    My experience is just the opposite. Travel disputes are the hardest to win. However, I would never file a travel dispute bc of a bad experience or fine print I missed. I have been successful with a couple of travel disputes but bc I was correct in my interpretation of the relevant Agreement. A cardholder that authorizes a charge with no signature present yet receives the goods/services commits fraud. I would never select that dispute category. If I ordered an item and it doesn’t arrive, I would dispute goods not received, etc.

    If a dispute with a merchant falls into a legitimate dispute category and attempts to resolve directly have failed, then it is step 2 and appropriate. Folks who consider this step a big deal know that the circumstances aren’t properly within dispute territory or they are unfamiliar with their rights and Agreements.

  • AAGK

    What do you mean all avenues of contact? A cardholder contacts the merchant. The merchant doesn’t reply in a reasonable time or denies the request. There’s nothing to exhaust and I imagine the potential avenues of making contact could be limitless.

  • Pedro Thomson

    Flying not optional? How about ground transportation ie. train, bus or car.

  • Stephen0118

    I meant he should’ve contacted AA through the contact list on our site like we always ask them to do.

  • jsn55

    I’m very glad to see this article. People need to know “the rules” about filing a credit card dispute. I’ve filed disputes several times over the years when I could not work out the problem with a merchant. It’s good to point up that a credit card dispute is the FINAL step. The consumer has to make a valiant effort to settle with the merchant first. I’ve never ‘lost’ a dispute. If consumers file cc disputes without trying to settle the issue first, soon the banks will not allow disputes, and we will be left with no assistance when a merchant is obviously trying to cheat the customer.

  • BubbaJoe123

    Why waste his time? AA owes him money. He requests that they pay him the money they owe him. They don’t. Charge back. Done.

  • The Original Joe S

    I read it. Prevarication and dissembling by dirtbag. Law is 24 hours, so “likely” is hogwash and the statements are an attempt to dissuade the OP from filing for a refund within 24 hours, so that they can keep his money. Thieves. Chargeback.

    It doesn’t seem to be dripping with arrogance and snark – it EXUDES arrogance and snark. Is there anything wrong with that? When dirtbags try to hornswaggle, you call them out. Since I’m retired, collecting, I don’t have to shuck and jive and kiss up to anyone. I can call it like it see it, and if anyone doesn’t like it, well they can go do a Hermann Göring….

    Strong message to follow…….

  • PsyGuy

    Train’s aren’t really available for many business travelers outside the east coast corridor, and none of them can beat a plane for shear time efficiency.

  • michael anthony

    I agree, it should be last resort, especially in travel. Who wants to end up on a blacklist?

    I’ve done it once, on a non travel related order. When the merchant refused to even produce a tracking order, and a reasonable amount of time had passed for item to arrive and it didnt, I did a charge back and won. The bank was stonewalled by the company also, so it was justified, in their words.

  • AAGK

    You are conflating 2 scenarios: when a consumer exercises his rights against a credit issuer pursuant to the Fair Credit Billing Act and when a consumer has a cause of action against a merchant. There is an area of overlap.

  • AAGK

    I agree air travel is necessary but deregulation has created significantly increased travel at better prices so the current state of affairs advances your goal. If an airline’s restrictions are too onerous, or the airline’s customer service lacks respect for exceptions then the consumer may opt for a better carrier.

  • AAGK

    Sometimes the one phone call to a business and hold time then transfer to a Sup and dropped call would be valiant enough.

  • wilcoxon

    In a lot of cities that is simply not true. If you live where an airline has a hub, they likely control 80%+ of the flights. I live near MSP and fly Sun Country whenever possible but they have far fewer flights and destinations than Delta. Alaska is an option when flying to the west coast. American has some flights but I refuse to fly them anymore (their complaint rates are well deserved). The only other option is driving 7 hours to Chicago (and paying high parking fees and dealing with the hassle of O’Hare).

  • Tricia K

    I asked for a chargeback when I felt I was being overcharged for damages to a rental car in Ireland. My credit card company told me no (on the phone) as I had signed the statement “allowing” the charges to go on my card and that they had to side with the merchant as a result. The catch 22 was that if I didn’t sign the form, I wasn’t going to be allowed to leave the country.

  • I filed a pair of chargebacks against a minibus company in the south of England, who had done some maintenance and repairs on my own minibus.

    First they grossly overcharged me, and gave me a hand written receipt on a scrap of paper without any company information.

    Then they charged for parts while I was hundreds of miles away in France that they claimed they had ordered.

    After many emails and being ignored by said rip-off merchants, I filed a chargeback for the ‘parts’, and adjusted the other chargeback to take into account the work they HAD done on the vehicle.

    I was successful, so in other words, don’t be a doormat for unscrupulous companies because they’ll walk all over you.

  • Good on yer Joe.

    There are times when we need to tell it like it is, and throw polite diplomacy out of the window because the thieving perpetrator doesn’t deserve it.

  • AAGK

    That’s a good a point. I live in NY and took that for granted. You are right that on many routes there is one game in town.

  • The Original Joe S

    Yup. Now that the Führer is about to become chancellor, there will be no more PC.. Ha ha ha ha!

  • Maria K. Telegdy

    I made a Hotel reservation in May 2015 on a website by the name of As soon my reservation was confirmed, I closed the site, but not before I made note of the reservation number. I do not carry a cell phone or tablet when I travel(every Hotel has a computer I can use)…Anyway, by the time I arrived to Hotel I in Zagreb at 11 PM., I was told I have no reservation. The Hotel was almost empty, so I was able to get a room at an even lower price, than the website advertised it. The next morning I sent e-mail home and asked mu son (has power of attorney) to go to the Bank and cancell the charges. After I notified the website that I’m asking for a refund, because for some reason after my booking was confirmed, I did not had a reservation. The website immediately answered back, to “Please check your Bank Account”, which I should have done before complaining. My refund (all of it) was already credited back into my account. I had many problems during my lifetime travels over the world, but this is one I will be happy to relate over and over. I did not expect such a service from an internet company…yet it is true. I can’t say a word about how they are doing today. but this is how it happened in my case. I also use and I was very fortunate to had a very good luck with them as well. On the other hand I also have horror stories about other travel related situations.

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