According to the Fair Credit Billing Act (FCBA), a 1974 amendment to the Truth in Lending Act (TILA) which was passed in 1968, consumers have the right to dispute certain credit card debt relief solutions transactions. These include the unauthorized use of your credit card, billing errors, and chargebacks for faulty merchandise.
Disputable transactions are often discovered when preparing to execute debt payoff plans, like the debt avalanche method, which prioritizes balances with the highest interest rates. They can be detected sooner if the consumer is vigilant about checking statements regularly. Before filing a dispute, you should do the following:
1. Document the issue in writing
The FCBA was written in the early 1970s, long before the internet. Its guidelines require that you submit your dispute in writing, so spend some time documenting the issue in detail. You’ll need this written documentation for your dispute to be considered legally valid. There is currently no option to submit a dispute electronically.
2. Contact your credit card provider before filing your dispute
Sometimes an error is just an honest mistake. It can be resolved with a simple phone call. An example of this is when a merchant charges your account twice for the same purchase. You may be able to avoid the written submission process by calling your credit card company and pointing out the mistake. They may just remove it.
3. Double check “unauthorized” purchases
A transaction that you don’t recognize at first glance may turn out to be a purchase that a friend or family member made. Double check on this with the people close to you before disputing a charge with the merchant or your credit card company. Not doing so could be embarrassing down the road and be an unnecessary cost to the merchant.
4. Review the FCBA guidelines on disputes
Read the law so you know what your rights are. It’s important information for you to know after you’ve completed the preliminary steps before filing a dispute. The FCBA clearly explains what can be disputed and what the procedure is for doing so. This includes fraudulent charges, chargebacks, and withholding merchant payments.
Return policies and friendly fraud
One of the differentiators that merchants use to set themselves apart from their competitors is the “consumer-friendly” return policy. These essentially tell customers that their concerns are always valid, and the company will honor requests for repayment or merchandise returns, no questions asked.
Consumer-friendly return policies add an additional level of security for customers. Buyer’s remorse is minimized because they can simply return their item or get their money back if they’re not satisfied. Unfortunately, some consumers take advantage of these policies by initiating chargebacks and keeping the merchandise, aka “friendly fraud.”
Friendly fraud costs merchants millions of dollars every year. According to a 2016 LexisNexis report, merchants with in-store sales reported that 31% of all fraud losses were from friendly fraud. Don’t add to that burden. Make sure your dispute is legitimate.
Kevin is a former fintech coach and financial services professional. When not on the golf course, he can be found traveling with his wife or spending time with their eight wonderful grandchildren and two cats.