How Do Credit Card Purchase Disputes Work?

How Do Credit Card Purchase Disputes Work?
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Credit cards provide a convenient way to make payments without carrying cash. When something goes wrong with the transaction, though, credit cards can also offer a measure of protection not available with cash or even debit cards. If you need to file a purchase dispute, your credit card company will work with the merchant, assess the issue and, if necessary, credit your account.

The Process

If you notice a suspicious or unauthorized transaction on your credit card, you can typically start the purchase dispute process by contacting the card issuer. The card issuer will begin an investigation process, during which you may not be required to pay the charge in dispute. As part of the investigation, the card issuer will contact the merchant and ask for information on the transaction. This may include details about return or refund policies, signed receipts or even video footage. Once the merchant provides the requested information, the issuer reviews the data and makes a final decision on the purchase dispute.


During the dispute process, the credit card issuer puts a temporary hold on payment of the disputed amount to the merchant. If the issuer finds in favor of the merchant, it will release this hold and add the disputed amount to your credit card balance. If the issuer finds that the transaction does not comply with the Fair Credit Billing Act or with the issuer’s own policies, it will permanently withhold payment of the disputed charge to the merchant and remove the amount from your balance due. In many cases, the issuer will also assess a chargeback fee to the merchant’s account. Merchants that accumulate a large number of disputes may be required to pay higher fees or lose the ability to process credit card payments altogether.


Your credit card issuer may require you to begin the dispute process within some period of time after the transaction takes place. Discover, for example, requires cardholders to begin any dispute within 180 days after the disputed charge.

Fair Credit Billing Act

All credit card issuers allow cardholders to dispute transactions if certain conditions, defined in the Fair Credit Billing Act, exist. These conditions include unauthorized or fraudulent charges, transactions with the wrong date or amount, calculation errors, transactions related to merchandise that was never delivered, unprocessed returns, unprocessed payments and charges for which you request some type of clarification.

Purchase Protection

Some credit card issuers offer purchase protection in addition to the protections afforded under the Fair Credit Billing Act. Card issuers that offer this additional protection may offer to extend the retailer’s return period, issue credits for damaged merchandise, refund charges for defective products and even pay to replace stolen items. These purchase protection programs typically don't involve an investigation with the merchant, though, and may follow a different process specific to the card issuer’s cardholder agreement.