Reasons To Dispute a Charge on Your Credit or Debit Card
Payment disputes are an invaluable protection measure in cases of billing errors, misleading or unfair merchant practices, and fraud. They allow you to challenge unexpected or excessive charges and work towards getting your funds back.
Still, you can win a dispute only if your claim is valid. In this guide, we’ll go over some of the reasons to dispute a charge on your credit card or debit card. We’ll also show you an effective way to avoid situations that would lead to payment disputes in the first place.
What Are Transaction Disputes and How Do They Work?
Disputing a charge is the first step in the payment dispute resolution process. It’s the point where you inform the financial institution that issued your debit or credit card—bank, credit union, or fintech company—of an unauthorized or incorrect charge.
When contacting your card issuer to dispute a charge, you should provide them with the necessary information to investigate the charge, including:
- Proof of purchase
- Communication with the merchant
- Description of the charge (and the reason you believe it to be incorrect or unauthorized)
The card issuer will review the evidence and determine whether you have valid grounds for the dispute. If you do, the issuer will start a chargeback process against the merchant to recuperate your funds. You might be issued with provisional credit while the process is ongoing.
When you successfully dispute a charge, it’s reversed, and your account is credited for the disputed sum. In case you were issued with provisional credit, a successful dispute means you can keep it.
If the dispute isn’t resolved in your favor, you won’t receive a chargeback, and any provisional credit will be deducted from your account. The whole process can take up to 90 days or even longer.
Payment disputes aren’t your only course of action if you’re having issues with a charge or a merchant’s product or service. You can first try to resolve the issue directly with the merchant, who might issue you a refund instead of going through the more expensive chargeback process.
6 Valid Reasons To Dispute A Charge
In the United States, the Fair Credit Billing Act (FCBA)[1] and the Electronic Funds Transfer Act (EFTA)[2] offer you protection as a credit card or debit card holder, respectively. Banks and card networks might also have policies that extend the protections beyond the minimum required by the acts.
Under these protections, you have a valid reason to dispute a charge if you encounter:
- Fraudulent transactions
- Damaged/defective or undelivered goods
- Billing errors
- Charges for already canceled subscriptions
- Inaccurate service or product descriptions
- A refund that was never processed
Fraudulent Transactions
A fraudulent transaction is an unauthorized charge made on your account without your knowledge or consent. It could result from identity theft, a data breach where your credit card information was compromised, or loss or theft of your payment card. In such cases, you should immediately contact your financial institution and report the fraudulent charge.
Your liability for fraudulent charges is capped to a maximum of $50 for credit cards[3]. For debit cards, you should report a stolen or lost card within two days to limit your liability to $50[2].
However, your bank might have a zero-liability policy, meaning you won't be held responsible for unauthorized charges on your account.
Damaged, Defective, or Undelivered Goods
Damaged or defective merchandise might be a good reason to dispute a charge on your debit or credit card if the merchant is unwilling to provide a refund or exchange. You should provide evidence and documentation of the damage or defect, along with proof of your attempt to resolve the issue with the merchant.
For undelivered goods, contact the merchant to see whether there was a scheduling error, a delivery delay, or the item was lost in transit. To fix the issue, the merchant may:
- Redeliver the item at no extra charge
- Provide a refund or exchange
- Compensate you with store credit
If the merchant fails to take any action, you should proceed to dispute the charge with your financial institution.
Billing Errors
Billing errors are among the most common reasons for payment disputes. They can happen due to a human error, technical glitch, or poor communication of fees and surcharges on the merchant’s part. Find more details about common billing errors in the table below:
Charges for Canceled Subscriptions
Canceling a subscription should stop any future charges, but sometimes, the merchant might keep charging your account even after you discontinue your membership. In most cases, the charges could be due to a technical glitch or an issue with the cancellation process.
Before disputing a subscription charge, consider taking the following steps:
- Review the merchant's cancellation policy to understand their terms and conditions.
- Confirm that you’ve canceled your subscription according to the merchant's instructions.
- Contact the merchant to inquire about the charge.
- Gather evidence, such as cancellation confirmation emails from the merchant and your bank statements showing the recurring charges.
Inaccurate Service or Product Descriptions
The truth-in-advertising laws enforced by the Federal Trade Commission (FTC) require merchants to provide accurate, truthful, and non-deceptive information about their products or services[4]. If you feel that the merchant has misrepresented their product or service, leading to an unsatisfactory experience, you can dispute the charge.
Examples of inaccurate descriptions include:
- Claims about a product's performance, ingredients, or benefits that are not true
- Misleading photos, illustrations, or testimonials
- False scientific claims, endorsements, or expert opinions
- Inaccurate descriptions of a product's condition or quality
For instance, if you ordered a dress advertised as "100% silk" but received a polyester one instead, you can submit a dispute on the grounds of misrepresentation if the merchant refuses to accept your complaints.
A Refund That Was Never Processed
Refunds usually take a few business days to reflect on your account, making them a much quicker way to get your funds back than a dispute. However, if the processing time has passed, and the merchant still hasn’t provided your refund and is unresponsive to your inquiries, you can consider disputing the payment.
How To Improve Your Chances in a Payment Dispute
According to a survey by LendingTree, 50% of Americans have disputed a payment, with 96% of them winning their most recent dispute[5]. Still, a successful result requires preparation and understanding of the process and your rights.
To increase your chances of winning a dispute, you should:
- Dispute charges only if you have valid grounds—You shouldn’t dispute a payment just because you have buyer's remorse or you’ve missed a merchant’s return window.
- File the dispute timely—Your bank might offer a more generous window for filing payment disputes than legally required, but make sure you check it to avoid being late or increasing your liability cap.
- Keep detailed records—You should keep transaction records that might help you establish your claim, including proof of the transaction, communication records with the merchant, tracking numbers showing no delivery, or any other record relevant to your case.
Even if you follow all of these steps, payment dispute resolution can take weeks or months—and there’s still no guarantee you’ll win. That’s why it’s best to avoid having to file a dispute in the first place, and one way to do so is by using virtual cards.
Virtual cards act as a substitute for your actual financial information for online transactions, helping protect you from fraudulent charges. While banks such as Citi and Capital One offer these cards, opting for an independent card provider like Privacy gives you advanced card controls to help avoid other reasons for disputes.
Avoid Chargeback Headaches With Privacy Virtual Cards
Privacy Virtual Cards come with unique 16-digit card numbers with a CVV and expiration date you can use instead of your actual payment card information. After connecting your bank account or debit card to your Privacy account, you can generate three types of cards with different types of protection against unauthorized charges:
With Privacy, you can set custom spending limits and pause or close your cards without affecting the underlying funding source. Privacy will decline charges that exceed the limit you set and any charges on a paused or closed card, helping protect you against hidden fees, overcharging, and accidental charges.
Privacy also offers fraud protection. After reporting a fraudulent transaction through your Privacy Dashboard, the company will review your case and initiate a chargeback if your claim is valid.
Additional Convenience Features
Privacy offers multiple features that make managing your online purchases more convenient:
- Browser extension—The Privacy Browser Extension integrates seamlessly with your browser, letting you generate virtual cards and autofill their details at checkout. It's available for Edge, Firefox, Chrome, Safari, and Safari for iOS.
- Mobile app—The Privacy App, compatible with iOS and Android, allows you to generate and manage virtual cards, set spending limits, and monitor transactions directly from your smartphone.
- Integration with 1Password—You can use 1Password’s browser extension to securely store and autofill card details and passwords, saving you from memorizing and manually entering information.
- Shared Card—With Privacy, you can securely share Privacy Card details with trusted friends or family members to share your budget without revealing your actual payment card information.
How To Sign Up for Privacy—Steps and Plans
To join Privacy’s 250,000+ users, here's what you need to do:
- Register your account
- Fill out the required KYC details to verify your identity
- Connect a funding source—debit card or bank account
- Request your first Privacy Virtual Card
Privacy offers four plans to choose from. The Personal plan, which is free for domestic transactions, allows you to:
- Generate up to 12 new Merchant-Locked and Single-Use Cards
- Set spending limits
- Pause and close virtual cards
- Access the mobile app and browser extension
You can opt for one of the paid plans—Plus ($5/month), Pro ($10/month), or Premium ($25/month)—if you want to generate up to 60 new virtual cards per month and access additional features, such as Category-Locked Cards, fee-free foreign transactions, Shared Cards, and Priority support.
