Do Credit Card Companies Really Investigate a Disputed Charge?

The credit card business is the most lucrative area of commercial banking. Credit card companies make the bulk of their money charging customers interest on balances carried over from month to month. They also collect assorted fees for late payments, exceeding credit limits, balance transfers and cash withdrawals. Finally, card issuers profit from transaction fees charged to merchants who accept their cards. Ultimately, however, the customer is king, and both the card companies and their merchants have every incentive to protect their reputations by acting quickly to resolve disputed charges.

The error dispute process is fairly straightforward. Simply gather the information on the date, amount and location of the charge, as well as the reason why you are disputing it, and notify your card issuer by phone or in writing within 60 days. Most companies will credit your account immediately while they investigate the charge or charges. The burden of proof is then on the merchant or service provider to challenge your claim.

Credit card companies are required by law to investigate disputed charges. The Fair Credit Billing Act of 1975 provides a process for both consumers and creditors to manage disputes regarding unauthorized or inaccurate charges that appear on your billing statement. If you think you've been billed in error, the last thing you want to do is ignore it. The law stipulates that, in the event a card issuer refuses to remove a disputed charge from your billing statement, the card issuer needs to respond in writing, with the necessary substantiation, within 30 days.

Of course, there are always people who will seek to take advantage of the system to squeeze money out of an honest merchant. Because fraud has costs that are eventually passed on to all cardholders, savvy consumers respect the right of a merchant to challenge those who might wish to perpetrate a scam. Due to the time and expense involved in responding to a disputed charge, some merchants only fight those that exceed $25. But citing principle, many others vow to investigate and, if necessary, fight every potentially fraudulent claim.

It seems there are stories about identity theft in the news all the time these days. If someone steals your card -- or worse, steals your personal information and opens an account in your name without your knowledge, immediately contact the card issuer, the merchants who accepted the stolen card and the three main credit-reporting companies -- Experian, Equifax and TransUnion. While your personal liability is limited by law to $50, getting out in front of such a situation can spare you many headaches down the road.