Finding an unfamiliar charge on your credit card can be stressful, but disputes are often easy and simple. In fact, 96% of credit cardholders who've filed a dispute had a successful resolution the most recent time, according to the latest LendingTree survey of nearly 2,000 U.S. consumers.
Disputing credit report inaccuracies doesn't affect your credit, but some changes made in response to disputes can help your credit scores. The removal of inaccurate late payments, new-credit inquiries or bankruptcies could result in credit score increases.
Overall, while there isn't a universal success rate for credit card disputes, many estimates suggest that a substantial percentage--often cited around 50-70%--of disputes can be resolved in favor of the customer, particularly when the customer has a strong case.
While the FCRA does not explicitly state that creditors have 30 days to respond, this timeframe is generally understood to align with the 30-day period that consumer reporting agencies have to complete their investigations.
2) What is the 609 loophole? The “609 loophole” is a misconception. Section 609 of the Fair Credit Reporting Act (FCRA) allows consumers to request their credit file information. It does not guarantee the removal of negative items but requires credit bureaus to verify the accuracy of disputed information.
You should dispute a debt if you believe you don't owe it or the information and amount is incorrect. While you can submit your dispute at any time, sending it in writing within 30 days of receiving a validation notice, which can be your initial communication with the debt collector.
What does the credit card company have to do? They must acknowledge receipt of your letter within 30 days. Within 90 days or two billing cycles, they must investigate your dispute.
If your dispute is denied, the charge will go back to your credit card. You should receive an explanation from the credit card issuer detailing the reason the dispute was denied. If you refuse to pay, they can put your account in collections or seek legal action.
If the issuer does not believe that the merchant's evidence disproves the cardholder's claim, the chargeback will stand. While merchants can appeal the case by requesting arbitration from the card network, it isn't usually a good idea to do so.
Debt consolidation is better if you have solid credit, can afford your debt and can get a lower APR on a personal loan. Debt settlement could be worth considering if you are behind on payments, have bad credit, can't afford your debt and don't want to file for bankruptcy.
A 623 dispute letter is a written communication submitted to a credit bureau, typically by a consumer, to dispute inaccuracies or discrepancies in their credit report.
Disputing a charge on your credit does not directly impact your credit score. However, if your credit report changes due to the dispute, your score may change accordingly. For example, resolving an inaccurate credit utilization error might increase your score.
On average, merchants win approximately 32 out of every 100 chargebacks they decide to contest. This means that if you're a merchant dealing with 100 chargebacks, you can typically expect to successfully recover funds from around 32 of those disputes.
Most companies are willing to settle for 30 to 50 percent of the total debt. I was able to settle on the mid-to-upper end of that range. Be aware that settling a debt for less than the full amount can negatively impact your credit score, but that's temporary—it will begin rebounding after six months to two years.
If you falsely dispute a bank charge, you may be held liable for the entirety of the transaction. Your bank may also lower your credit limit, close your account, or blacklist you from being a customer again.
You might not always get a fair outcome when you dispute a chargeback, but you can increase your chances of winning by providing the right documents. Per our experience, if you do everything right, you can expect a 65% to 75% success rate.
Key takeaways
If the credit card issuer denies the dispute, the customer can request supporting documents and can also appeal the decision or file a complaint with consumer protection agencies. If the dispute is still not resolved, customers can seek legal advice and file a case.
Who pays when you dispute a charge? Your issuing bank will cover the cost initially by providing you with a provisional credit for the original transaction amount. After filing the dispute, though, they will immediately recover those funds (plus fees) from the merchant's account.
According to the Consumer Financial Protection Bureau (CFPB), credit card companies sue their customers about 12% of the time. On average, credit card companies sue to recover balances over $2,700—this isn't a set amount, but an average. Credit card companies can and do sue on debts both larger and smaller than $2,700.
In a Nutshell
The cardholder can face consequences for chargeback abuse, including account freezes, losing one's bank account, damage to one's credit score, and even legal consequences.
Your Rights and the Investigation. While the issuer is investigating your complaint, you can withhold payment on the disputed amount and any finance and related charges. But you're expected to pay any part of the bill not in question, including finance charges on the undisputed amount.
It is usually worth the effort to dispute the debt. At the very least, it will buy you some time. Best case scenario: you find out you do not owe the debt at all!
If you are struggling with debt and debt collectors, Farmer & Morris Law, PLLC can help. As soon as you use the 11-word phrase “please cease and desist all calls and contact with me immediately” to stop the harassment, call us for a free consultation about what you can do to resolve your debt problems for good.
However, disputing a debt also forces the collector to restart the clock on when they can sue you.