Can you refuse to pay a credit card charge?

Can You Refuse to Pay a Credit Card Charge?

Facing an unexpected or incorrect charge on your credit card statement can be frustrating. Knowing your rights and how to navigate the dispute process can save you money and stress. So, can you simply refuse to pay a disputed charge? The short answer is: yes, under specific circumstances.

While you can’t just ignore any charge you don’t want to pay, federal law provides consumer protections when it comes to disputing credit card charges. The Fair Credit Billing Act (FCBA) outlines a process that allows you to temporarily withhold payment on a disputed amount while the credit card issuer investigates.

This crucial protection means you don’t have to immediately bear the financial burden of a potentially erroneous charge. However, initiating this process correctly is essential to avoid potential negative consequences for your credit score.

Here’s a breakdown of how to effectively dispute a credit card charge and temporarily withhold payment:

• Dispute in Writing: Verbal complaints are not sufficient. You must submit your dispute to the credit card issuer in writing. This letter should clearly state the amount you are disputing, the date of the transaction, the merchant involved, and a detailed explanation of why you believe the charge is incorrect. Keep a copy of this letter for your records.

• Timely Filing: The FCBA requires you to file your dispute within 60 days of the statement date on which the error appeared. Acting promptly increases your chances of a successful resolution.

• Issuer’s Obligations: Once the credit card issuer receives your written dispute, they are legally obligated to acknowledge your letter within 30 days. They then have two billing cycles (typically 90 days) to investigate the charge.

• Withholding Payment: During the investigation period, you are legally allowed to withhold payment on the disputed amount. However, you are still responsible for paying the undisputed portion of your credit card bill. Failure to pay the undisputed amount can lead to late fees and damage your credit score.

• Potential Outcomes: The investigation can result in several outcomes. The issuer may find in your favor and remove the charge. They might determine the charge is valid, in which case you will be required to pay the disputed amount. Or, they might require further information from you or the merchant.

• Credit Reporting: Importantly, while the investigation is ongoing, the credit card company generally cannot report the disputed amount as delinquent to the credit bureaus. This protects your credit score from being negatively impacted while the dispute is being resolved.

It’s important to note that this process applies to legitimate billing errors and unauthorized charges. Attempting to abuse this system by falsely disputing legitimate charges can have serious consequences.

By understanding your rights under the FCBA and following the proper dispute procedures, you can effectively challenge questionable charges and protect your finances while the credit card issuer investigates the matter. Remember to always communicate clearly and in writing with your credit card company to ensure a smooth and efficient resolution.