Can you go to jail for disputing charges?
You can go to jail for fraudulent chargebacks. Better be careful. Merchants may take consumers to court over fraudulent chargebacks, and other jurisdictions will shadow criminal charges for chargeback-related fraud.
Many customers commit friendly frauds. They already know what they are doing is illegal and are more concerned about whether or not they will get away with it.
Consequently, merchants should always fight friendly fraud chargebacks, not only to gain back their revenue but to withhold this lousy behavior. Suppose a customer files a fraudulent chargeback and gets away with it. In that case, they are likely to do so again. They do it either with the same merchant if they haven’t been delisted or with another.
What happens if you falsely dispute a charge?
In a courtroom environment, there are consequences for falsifying testimony. Many people make false claims under oath. They could face fines or even jail time, depending on the severity of the case. Consumers who file frivolous chargebacks don’t typically get hit with those kinds of penalties.
Suppose cardholders fall victim to fraud or abuse. They can manage the chargeback process to recover their funds. Precisely what happens when consumers begin abusing the system by filing false credit card dispute claims? Are there any consequences for submitting frivolous chargebacks?
Litigation-Based Dispute Process
Chargebacks are settled through what is called a “litigation-based” process. Initially, a customer files a claim with the credit card issuing bank, alleging wrongdoing. That could be a case of card fraud—a criminal practices the customer’s credit or debit card without authorization. Or, the buyer might claim that the merchant made false promises and the goods or service rendered didn’t live up to the seller’s description.
Suppose they think a customer’s claim is invalid. Suppose the claim seems logical, the bank examines the cardholder’s claim. It issues a chargeback to undo the transaction and recover the cardholder’s dollars. Merchants may fight back using a method known as representment.
Using the representment process, the merchant gathers evidence and resubmits the transaction to the bank. The issuer then explores this testimony and issues a ruling, either upholding the trade or filing a second chargeback.
Consumer Consequences for Friendly Fraud
Friendly fraud carries prominent outgrowths for merchants. However, there are negative repercussions for banks and consumers, too. Within a courtroom setting, there are consequences for falsifying testimony. Those who make false claims under oath could face fines or even jail time, depending on the severity of the case.
Consumers who file frivolous chargebacks don’t typically get hit with those kinds of penalties. One wouldn’t end up behind bars for committing friendly fraud (unless it’s a remarkably audacious and sustained case). However, buyers could see some consequences for filing false chargebacks, even with a low-dollar value.
If they file a dispute, consumers might face the followings:
Consumers who file a dispute may get added to a black chargeback list, prohibiting that customer from conducting future purchases. That will be a problem if the customer is a regular user of the merchant’s services. Sony, for example, bans users from the Playstation Network if they file a chargeback. The rationale is that the account is either:
- Compromised by identity theft and should be closed to prevent more fraudulent purchases
- It belongs to a friendly fraudster with whom the company doesn’t want to do future business.
What happens if you falsely dispute a credit card charge?
If you dispute a charge, it’s doubtful the credit card company will merely strike it from the record. They will want you to give a formal statement that you didn’t authorize it. Then they will approach the merchant for evidence that you did approve it and conclude whether it should stand or not.
If you make a false statement, you may get something for free. You’re not going to get to do it very many times before things catch up with you. Maybe it will catch up with you on your first attempt. Either way, it won’t end well for you. Initially, you’re going to be looking at fraud charges. Depending on the sums involved, you could be watching at something more sarcastic. At best, you will damage your credit rating and get a criminal record. It will work against you if you’re trying to get work or rent an apartment, or even lend money again, for that matter. At worst, you go to jail.
What is the time limit for credit card disputes?
You usually have 60 days from the date a charge appears on your credit card statement to dispute it. The Fair Credit Billing Act establishes this time limit. It applies whether you’re arguing a fraudulent payment or a purchase that didn’t turn out as expected.
The dispute process varies depending on the credit card company. Still, with most, there are two acceptable ways to dispute a credit card charge:
- Call the phone number on the back of your credit card and demonstrate that you want to dispute a charge. A delegate will get the necessary data from you and file the dispute.
- Mark up and dispute the charge by your online credit card account. You will need to include information on why you are disputing the charge through the online form.
Your credit card company may ask for documentation substantiating your dispute right away. Or it may wait for the merchant’s response before requesting evidence from you. Suppose you can. Assume evidence first to have it ready should you need it. It applies especially when your dispute is related to issues with a product or service.
The law for consumer rights with credit card disputes is called Fair Credit Billing Act. It specifies that consumers must make a good-faith effort to handle purchase problems with the merchant before filing a dispute. Note that if the dispute is due to an issue with a bargain you made, you must contact the merchant first and resolve the matter.
Your credit card company will likely remove the charge from your statement during the dispute process. You won’t need to pay it until a decision is reached regarding the dispute, and if you win, you won’t need to pay it at all.
How long do you have to dispute a charge?
You have 60 days from the date a charge appears on your credit card statement to dispute it. The Fair Credit Billing Act establishes this time limit. It applies whether you’re disputing a fraudulent charge or a purchase that didn’t turn out as expected.
To confirm how much time you have to dispute a charge on your credit card, check your cardmember agreement. After opening a credit card, you should have received this in the mail, but it’s also typically available online. Information on dispute time limits should be in the billing rights section.
If you don’t commence your dispute within the allotted time frame, you may be stuck paying that money. That’s one reason you should read your credit card statement every month and check for unauthorized charges.
Reasons to dispute a credit card charge
While there are many possible reasons to dispute a credit card charge, they all fall into one of three categories:
- The charge was unauthorized
- Billing error
- Problem with the purchase.
Let us take a closer look at each section and go over a few examples.
If someone uses your credit card for a purchase that you didn’t authorize, that’s fraud. Under the Fair Credit Billing Act, the maximum amount a cardholder can be liable for unauthorized credit card use is $50. Most credit cards go above and beyond with zero-liability policies, which state that cardholders aren’t responsible for paying anything in cases of unauthorized credit card use.
You can protect yourself from credit card fraud by notifying your card issuer immediately if your card is lost or stolen. But if an unauthorized charge occurs before you do this, then you can dispute it. Unauthorized charges can also arise while your card is still in your possession if a criminal gets hold of the card information but not the card itself. You can dispute these types of charges, as well.
A billing error is any charge that a merchant made by mistake. The most common examples are multiple charges for one purchase or a charge for a subscription service after you’ve canceled. If you can’t get a merchant to refund a billing error, then you can dispute it.
Problems with a purchase
When you have an issue with a product or service you’ve purchased, a dispute could help you get your money back. Remember that the Fair Credit Billing Act requires that you make a good-faith effort to resolve the issue with the merchant first.
Reasons for this type of dispute include:
- Undelivered product
- The merchant didn’t complete a service you paid for.
- There was a quality issue with your purchase.
Does disputing a charge impact your credit?
Disputing a charge does not have an impact on your credit. You don’t need to worry about a dispute causing your credit score to drop.
You must keep paying your credit card bill like normal during the dispute process. As mentioned previously, card issuers usually remove disputed charges from the account until the dispute is resolved. However, you’re still responsible for paying the rest of the bill.
Suppose a dispute is denied. what happens next?
If your dispute is denied, then the charge will go back to your credit card. You’re legally entitled to an explanation about why your dispute was rejected and how you can appeal the decision. Your credit card company will likely send you both the description and instructions to appeal in writing.
An appeal gives you another opportunity to provide evidence and win the dispute. If that doesn’t work, you can also try filing a complaint with the Consumer Financial Protection Bureau. As a last resort, you can hire a lawyer, although the cost involved means this option won’t be worth it for most disputes.
A valuable consumer protection
The ability to dispute charges is an excellent protection for consumers, and it’s also one of many reasons why credit cards are such an intelligent way to pay.
That isn’t protection you should misuse, though. Before you dispute a charge, make sure that you have a legitimate reason. If it’s a problem with a product or service, contact the merchant and do your best to handle it yourself first.
If you need to dispute a charge, have your evidence ready and be as thorough as possible when filing the dispute with the card issuer. Respond promptly if the card issuer requests any additional information. Assuming you have a valid reason for your dispute, the odds are that you won’t need to pay the charge.
Can you dispute a credit card charge after 90 days?
You have 60 days to dispute a credit card charge, per the Fair Credit Billing Act of 1974. You can typically start the dispute process online or by giving the card’s issuer a call. The issuer must acknowledge your dispute within 30 days of receiving it and resolve the matter within 90.
Can you dispute a credit card charge after 180 days?
A customer commonly has up to 180 days or six months to open a dispute to receive a chargeback. The exact limit may vary depending on the bank.
A credit card chargeback is a dispute related to a credit card charge. In some cases, the chargeback is a result of fraudulent activity on the credit card account. When a dispute is issued, and the credit card company requests a chargeback on behalf of the customer, the merchant stands to lose the sale and chargeback fees that can exceed $20 per instance. Chargebacks are expected when the customer is not physically present using his card, such as online sales. In short, the customer is dissatisfied in some way with the merchant’s charge to his card and chooses to seek recourse directly from his credit card company.
Time Limit for Credit Card disputes
A customer commonly has up to 180 days or six months to open a dispute to receive a chargeback. The exact limit may vary depending on the bank. Suppose the time limit is up. One must accept the charge permanently or seek other methods of getting his money back. It can be done by appealing directly to the merchant for a refund or pursuing a small claims case.
For the Customer
As a customer, it is essential to attempt to receive a refund directly from the merchant first. “Did you contact the merchant?” is one of the first questions the credit card company asks when you open a dispute to receive a chargeback. Also, it is against bank policies to habitually accept products and services and then seek a chargeback to get the item for free. It is called “friendly fraud” and could cause problems with the card account.
For the Merchant
Since, as a merchant, you know that customers have up to 180 days to submit for a chargeback, you should keep all records of the transaction on file for at least that time. Keep all evidence you have of the sale, including signed receipts (if available), proof of delivery in the case of an online shopping, and written communications from the customer. It is often difficult to fight chargebacks. However, many vendors consider it a cost of doing business and enact preventative measures. The purpose is to minimize the occurrence of chargebacks. Some services also offer merchants searchable databases of individuals who have a history of excessive chargebacks.