A dispute or complaint over a charge with a debit or credit card company can be a potent weapon.

Robert Neubecker, New York Times

So you want to dispute a credit card charge...

  • Article by: RON LIEBER
  • New York Times
  • February 2, 2013 - 4:22 PM

If you ever have disputed a charge with your debit or credit card company, you know what a potent weapon this type of complaint can be.

The card issuer generally takes your word against the merchant or service provider at the outset, restores the money to your bank account temporarily or issues a credit and then goes about its investigation. It essentially demands that the merchant or service provider who supposedly did you wrong prove that it did no wrong at all.

But if you never have wielded this power tool of consumerism, there are a few things you should know first. The cat-and-mouse game that goes on behind the scenes can be tilted much more -- or much less -- in your favor, depending on which charges you dispute and how you go about disputing them.

Chances are you will need to use the dispute process sooner or later. We live in a world where you often cannot use cash to buy cocktails on an airplane and any individual can attach a card reader to a smartphone and accept card payments from anyone else. Mistakes inevitably will be made.

Meanwhile, all sorts of online businesses depend on recurring subscription revenue. Oops, we somehow forgot to honor your request to cancel your subscription. Oops, we forgot again. Oh, but now it will take until the next billing cycle. Sorry!

You have had the legal right to correct these mistakes ever since 1975, when the Fair Credit Billing Act went into effect. The law dictates that there be a process by which you can question unauthorized charges, billing errors and transactions involving goods or services you never received.

This creates problems for merchants. Plenty of people pretend that they never received products that were supposed to arrive by mail and then dispute the charge, hoping their card company won't be able to figure out that they are liars and thieves.

Even legitimate beefs create problems. In the 12 months ending Sept. 30, 2012, Visa processed $2.07 trillion in transactions in the United States. While cardholders disputed just 0.037 percent of that amount, that adds up to $765.9 million.

The true cost per dispute to the banks ranges from $10 to $40, according to a 2010 estimate by the consultants at First Annapolis. Given that cost, said Scott Reaser, a principal there, many banks simply absorb the disputed charge and never contact the merchant if it is below a certain threshold.

That number will differ for every bank, though it probably averages around $25. It is tempting to conclude that you can get away with disputing any old thing under $25 and not have to worry about tangling with the merchant again. But given that frequent disputes can lead to higher costs down the road, some merchants vow to fight every one.

Or they have consultants who make them fight as a condition of offering their assistance. That's how Monica Eaton-Cardone, the co-founder of, works with her merchant clients.

Why does she operate that way? The answer begins with her own painful experience in the direct-response business, selling things to people who sometimes didn't like what they received.

Faced with the threat of losing her ability to accept cards, she realized there was a very basic problem with the process: She concluded that over 70 percent of the people disputing charges with their bank never called her, the merchant, to complain first.

"When you go to a bank's website and you see a button that says, 'Dispute This Transaction,' it doesn't say that this is going to hurt the merchant,'' she said. "It just tells you that there's a quick and easy way to cancel your subscription right here. And you can get a refund!''

She is not blaming consumers. They are just doing what their banks prompt them to do. "But not fighting back is sending the wrong message to consumers and card companies," she said.

Fighting back

The proprietors at Enchanted Attire, an online clothing retailer, wish to inform you that "you agree not to file a credit card or debit card chargeback with regard to any purchase" and that "in the event that a chargeback is placed or threatened on a purchase, we also reserve the right to report the incident for inclusion in chargeback abuser database(s) of our choosing." Oh, and by the way, "being listed on such databases may make it more difficult or even impossible for you to use (any of) your credit card(s) on future purchases with us or other merchants."

Movers have been known to do this, too. This violates Visa's and MasterCard's rules, for starters, and none of the experts I spoke with knew of anyone keeping a database for this purpose that merchants could contribute to and that other merchants could gain access to.

And no one from Enchanted Attire returned my messages to shed light on this.

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