How to win any credit card dispute

The complete guide to chargebacks and winning a credit card dispute

Filing a credit card chargeback was the last thing on Amanda Dunlop’s mind when she booked a vacation rental on Airbnb. Nor could she imagine the trouble her credit card dispute would cause.

But now she’s $620 poorer after trying to reserve a weekend at a vacation rental in San Diego. And she wants her money back.

The problem? Dunlop booked the rental for the wrong dates. She clicked the third weekend of June instead of the third weekend in July.

“I immediately recognized the mistake and within two minutes had contacted the host,” she says. “But they have a strict no-cancellation policy and refused to refund me or change my dates to the third weekend of July.”

She spent more than five hours contacting Airbnb and the host, only to receive a message that denied her a refund. Airbnb returned $174 in fees. But that left her with a balance of $620.

And that’s when she disputed the entire charge on her credit card. Her case and its improbable resolution have more lessons than the obvious (look twice, book once). They show the importance of understanding credit card chargebacks, particularly timing.

What is a credit card dispute?

A credit card dispute, also called a credit card chargeback, is when you ask your bank or credit card company to remove a charge from your bill.

In the United States, a 1975 law called the Fair Credit Billing Act (FCBA) gives you 60 days from the time you receive your credit card bill to dispute a charge.

There are similar, though lesser known, protections for debit cards and money transfers. I’ll get to those in a moment.

What kinds of charges can I dispute?

The FCBA protects American consumers from unfair billing practices.

They include:

  • Charges you don’t authorize.
  • An incorrect charge.
  • Charges for goods or services not delivered.
  • A good or service that was not as described by the merchant.
  • Math errors or errors in calculating the total.
  • Credit card statements mailed to the wrong address.

Note: The FCBA only covers “open-end” credit accounts like credit cards or charge accounts. It does not protect debit cards or money wired through a service like Zelle or PayPal.

What if I made my purchase with a debit card?

The Electronic Fund Transfer Act (EFTA), also known as Regulation E, offers consumer protections for electronic fund transfers, including debit card transactions.

EFTA allows consumers to dispute errors related to their debit cards. The regulation defines an error as:

  • An unauthorized electronic funds transfer.
  • An incorrect transfer to or from the consumer’s account.
  • The omission of an EFT from a periodic statement.
  • An error made by the financial institution relating to the transfer.
  • Receiving an incorrect amount of money from an ATM.
  • A transfer not identified on an ATM receipt or periodic statement, or in connection
  • with a preauthorized transfer to your account.

The EFTA resolution process is less structured than the credit card resolution process. The law states that after a financial institution receives oral or written notice of an error from you, it must do the following:

  • Promptly investigate the oral or written allegation of error.
  • Complete its investigation within the time limits specified in the regulation.
  • Report the results of its investigation to the customer within three business days after completing its investigation.
  • Correct the error within one business day after determining that an error has occurred.

The protections under EFTA aren’t as broad as those afforded credit card holders. The law doesn’t include the right to dispute a transaction because of a problem with goods or services. It’s strictly limited to errors. Yet few debit card holders know about these consumer protections.

What are the requirements of a credit card dispute?

The law has some peculiarities that are worth noting:

The transaction must be over $50

The purchase must be more than $50. It has to be made in your home state or within 100 miles of your home address. This rule doesn’t apply if the merchant is affiliated with the bank that issued the card, or if you relied on an advertisement supplied by the issuing bank.

It has to be in writing

You have to initiate a dispute in writing. Some banks will accept disputes by telephone. But disputing by telephone does not preserve your rights under the FCBA. Once you dispute a charge, the bank must acknowledge the dispute within 30 calendar days, and it must resolve the dispute within 90 days.

You must give the merchant a chance to work it out

Under the FCBA, you must make a “good faith” effort to resolve the problem with the merchant before disputing the charge.

Pro tip: If no online form is provided to initiate your dispute, mail the dispute via certified mail or other trackable methods to provide proof of delivery. Remember, you must initiate the dispute within 60 days of the first statement in which the error or charge appeared. Some banks extend this deadline, but they don’t have to.

What if it takes longer than 60 days to dispute my charge?

It often takes longer than 60 days to initiate a credit card dispute. For example, say you book a cruise vacation for next year. The clock would start ticking when you completed the purchase, leaving you with no consumer protection during your vacation.

Or would it?

Fortunately, credit card agreements often extend the time you can have to file a dispute. But neither merchants nor credit card issuers are always aware of these provisions.

For example, American Express cardmembers have up to 120 days from the transaction date to dispute the charge, except for goods and services not received or returned goods.

MasterCard’s service agreement has a provision for failed travel service providers, such as airlines and cruise lines. Under certain circumstances, you have a maximum of 150 calendar days from the latest expected service date or up to 150 days after the service cessation date to file a claim.

Visa allows disputes for bankrupt providers up to 120 calendar days from the last date you expected to receive the merchandise or services, not to exceed 540 calendar days from the transaction processing date.

In other words, if your cruise doesn’t happen for another year and then the cruise line declares bankruptcy before you can set sail, you might be covered by your bank. But you would not have the same rights as you would under the FCBA. Your bank can go beyond its merchant agreement or the law to protect you if it wants. We have some cases where banks have allowed a dispute more than a year after a purchase — and sided with the customer.

If you feel your credit card company isn’t following the law, you can file a complaint with the Consumer Financial Protection Bureau. The best way to file a complaint is through its online form.

How do I dispute a charge on my credit card?

If you see a charge you want to dispute, the easiest way to file a chargeback is to visit your bank’s website. Most major banks will allow you to initiate a dispute online.

Your bank or credit card company will follow up with a request for documentation. So you’ll want to keep any supporting evidence, including invoices, receipts, and emails.

Your credit card issuer might hand off your request to Visa or MasterCard, depending on the type of dispute. The credit card network then makes the call on the validity of your chargeback after conferring with you, your issuer and the merchant.

How does a credit card chargeback work?

When you contact your bank to dispute the charge, your credit card company will forward the dispute to the merchant. The business then either accepts or rejects the dispute.

You’ll usually receive a provisional credit on your card while your bank reviews the dispute.

Note: This is only a provisional credit. It does not mean you’ve won the chargeback. The business will get the money if the credit card company or bank decides in the merchant’s favor.

Credit card networks impose a chargeback fee on merchants when there’s a dispute. The merchant’s credit card processor sets these fees. Generally, businesses in high-risk industries will pay higher chargeback fees.

Most credit card disputes take less than 30 days. After the bank makes a decision, it will inform you in writing and either credit or debit your account. You may appeal the decision by submitting a second chargeback request and submitting additional documentation. If you disagree with the bank’s decision, ask to file a dispute resolution with the card network. The bank or card network usually has an arbitration process.

How to ensure your credit card dispute is successful

Your odds of successfully disputing a transaction are pretty decent. Businesses don’t even bother fighting most chargebacks, contesting only 43 percent of disputes filed against them. Just 12 percent of chargebacks go their way. But there are ways you can increase your chances of success.

Don’t file a “friendly” fraud chargeback

Friendly fraud is when you don’t recognize a charge or when someone in your household uses your card to make a valid purchase. Do your due diligence before filing a chargeback. Friendly fraud costs businesses billions of dollars annually and wastes everyone’s time. So don’t do that.

Avoid frequent chargebacks

Your odds of prevailing in your first chargeback are excellent. But serial chargeback filers are less successful. One recent survey of American consumers found that almost 15 percent of cardholders admit to filing five or more disputes in the past year. Nearly 6 percent have initiated a more than 11 claims in the same time frame. These frequent chargebacks may lead to the termination of your credit card account.

Keep meticulous documentation

All bills, invoices or emails that you receive in connection with the disputed transaction will help resolve your dispute. Get receipts, particularly for a big-ticket item, always say yes and then take a picture of it. Keep all your documentation in an easily accessible format, like a Google Doc, that you can share with your bank or credit card company. Documentation will help win your dispute.

Find the credit memo

A credit memo is an email or letter from a business that promises you a refund. A text message from a representative promising you a refund is a de facto credit memo. That’s often enough for your bank or credit card company to side with you and close your dispute. If you can get something in writing that promises a refund, your chargeback will usually be a slam-dunk.

“As you know, we have a strict cancellation policy”

Dunlop wanted a quick resolution to this problem, which is understandable. Three minutes after making her reservation, she messaged Neil, her Airbnb host, explaining her error. Could she rebook for a month later?

Neil’s answer: “Amanda, as you know, we have a strict cancellation policy. Please reach out to Airbnb about this. Thank you.”

In other words, no.

“I just don’t understand how you can’t make an exception,” she wrote. “In the time you could’ve canceled my reservation someone else could book. I’m distraught.”

“We can’t cancel a reservation, Amanda,” Neil replied. “If you want, you may cancel on your end.”

Dunlop did that, but Airbnb only returned its fees. There was no way to fix her reservation.

Airbnb: We won’t be able to help you

After multiple appeals to Airbnb, Dunlop received her final answer.

I am sorry for the experience you had to go through. I totally understand how important it is for you to get your refund.

As much as I would like to, we won’t be able to help you as we need to uphold the host’s cancellation policy. I understand that the reservation has just been booked, but due to the host’s cancellation policy, a full refund cannot be granted.

In regard to the alteration of dates, it is up to the host’s discretion whether to approve the alteration request or not, or if they have terms they wanted to be met to approve the alteration.

I am so sorry, but this is something we cannot grant you. We won’t be able to provide a refund without impacting the host’s payout. I understand that there may have been delays with the responses of the previous representatives, but regardless if the responses were timely, this does not impact the outcome of the decision.

Dunlop was deeply unhappy.

So was I.

Enormous, well-funded vacation rental platforms like Airbnb and Vrbo should have a way to fix simple booking errors. A 24-hour refund policy like the airline industry has would do that. But as of now, if you push that “book” button, you’re stuck — even if it’s an honest error.

Dunlop contacted her bank and me. She asked me for help and disputed the $620 that Airbnb had kept. She didn’t tell me about the chargeback.

WARNING: Credit card disputes are the “nuclear” option

If you’re a regular reader of this site, you know that we refer to credit card chargebacks as the “nuclear” option. That’s because once a merchant wins a dispute, almost no amount of prodding from a consumer advocate will change the outcome. Your next course of action is to file a lawsuit against the business.

As a consumer, you always want to make a good-faith effort to resolve the problem. And I would underscore the “good” in good faith. Try everything before filing a dispute. Really.

Note: Even if you prevail in a credit card dispute, a company might still refer you to a collection agency or add you to its “do not rent” list. It could also sue you. Like I said, the chargeback is a nuclear option.

Dunlop had pushed her “launch” button too soon.

Strategies for a successful credit card dispute

Would Dunlop have won her dispute? Maybe. Her case was well documented, but Airbnb had the cancellation policy to which she’d agreed. And that cancellation policy clearly stated that once she made a reservation, she was on the hook for the entire amount.

I’ve seen a lot of successful — and unsuccessful — credit card disputes. Here’s what makes them work:

Getting everything in writing

I can’t overstate this. If you have receipts and messages showing this was an invalid charge, your credit card company’s dispute department will side with you. If you just have notes from a phone call, not so much.

A contract that says you’re right

If you can show the bank or credit card company a document that proves the company incorrectly charged you, then it’s an easy win. So always, always keep your contracts and end-user agreements, or take a screenshot of your terms of service.

Zero drama

One of the biggest mistakes that consumers make is amping up the drama. “You RUINED my vacation,” or “This appliance DESTROYED my kitchen.” That may play well with friends and family, but it lessens your credibility when dealing with a dispute department. Stick to the facts.

Dunlop, to her credit, had kept all of her messages and stuck to the facts — but the terms of her purchase did not support her claim.

A refund, and then not

I asked Airbnb to have a look at Dunlop’s credit card chargeback. It looked like her host was about to pocket her $620 because of an honest mistake, which felt wrong. The Airbnb policies that allowed the host to keep her money were wrong. The representatives should have helped her. How hard would it have been to move her dates by a month?

A few days later, good news from Dunlop.

I received an email today that I’ll get the remaining portion of my refund!

I don’t know how to thank you! Nothing has posted yet but according to my emails and the app I should have everything back by tomorrow.

But nothing posted the next day.

The reason? Her premature credit card dispute, which was ongoing.

Here’s the update from Airbnb:

Hey Christopher — turns out the host actually did authorize the refund when our team reached out to him. However, Amanda had already filed a chargeback.

Once chargebacks are filed and still unresolved, we cannot send any money. So effectively the refund money is frozen in space right now. As soon as she closes the chargeback dispute, it’ll come in. Our team is informing her directly of this as well.

A good lesson here for consumers is that chargebacks are typically best as the final lever when all else has failed. Pulling it too soon stops all the other processes in their tracks! We unfortunately see this a fair amount where guests legitimately are owed a refund but we can’t administer it because they resorted to the chargeback too soon!

Airbnb and I both asked her to drop the dispute. She did, and she received a full refund.

When to file a credit card chargeback

My Airbnb contact is right. Credit card disputes are the final lever, the nuclear option when all else has failed. Here’s when you should consider a chargeback in a customer-service dispute.

If it’s covered under the FCBA

If it’s a fraudulent charge or if you have documentation of a service paid for but not delivered, you have a green light to file a dispute. Remember first to give the merchant a chance to respond. You’ll need to let your bank know if you see an obviously fraudulent charge. It will close your account and reissue your credit card.

If you’ve worked your way up the chain and failed

I advise consumers with a problem to work their way up the chain — first to a manager, then a vice president, and finally the CEO. If you get to the end of the process and still don’t have a resolution, you can ask my team for help. And if we can’t? File a dispute.

If the merchant asks you to file a dispute

As strange as it sounds, we’ve had numerous cases where merchants have asked their customers to file a dispute. Why? Presumably, the dispute process is a faster way to refund, because the business will accept the dispute. This is one of the most inelegant ways of refunding a customer, and not at all what the system was designed to do. But it is what it is.

What if you lose your credit card dispute?

If your appeals fail and if arbitration is unsuccessful, consider filing a complaint with the CFPB. The bureau will share your complaint with the bank or credit card issuer, and it may reconsider its decision. If that doesn’t work, you might have the option of taking the merchant, bank or credit card company to small claims court to recover your loss.

Bottom line: If your credit card company can’t help you, cancel your card and find one that will side with you. Some banks are pushovers when it comes to disputes. They don’t deserve your business.

Sometimes, the best way to win a chargeback is not to file one

Credit card disputes are an unfortunate but necessary part of the business ecosystem. Things go wrong from time to time, and we need a way to fix them.

A closer look at how the system works reveals that your odds of prevailing in a credit card chargeback are excellent, whether you have a strong case or not. Still, a thorough understanding of the process will lead you to one inevitable conclusion: Sometimes, the best way to dispute a credit card purchase is not to dispute it at all, at least formally. Use the proven strategies at your disposal to work this out with the merchant.

Bottom line: Don’t go nuclear with a credit card dispute unless you absolutely have to.

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