Although credit cards offer convenience and security, occasionally, discrepancies may arise between you and the merchant. These disputes can be resolved through proper channels, but it is crucial to understand the line between legitimate disputes and instances of friendly fraud. Let’s explore when a credit card dispute becomes friendly fraud and discuss steps to dispute a charge on a credit card.

Understanding Credit Card Disputes

A credit card dispute occurs when a cardholder identifies an unauthorized or incorrect charge on their credit card statement. Not all disputes involve fraudulent activity. Many disputes arise due to billing errors, delivery issues, or misunderstandings between the cardholder and the merchant. In such cases, the cardholder can resolve the issue by initiating a dispute with their credit card issuer.

What Is Friendly Fraud?

Friendly fraud, also known as chargeback fraud, is a cardholder’s misuse of the dispute process. It typically occurs when a legitimate cardholder intentionally files a dispute or chargeback while fully aware that the charge is valid. This deceptive behavior leads to financial losses for the merchant and can result in increased costs for other consumers.

When Does a Dispute Become Friendly Fraud?

Differentiating between a genuine dispute and friendly fraud can sometimes be challenging but here are a few examples to consider:

  • Intentional Misrepresentation: If a cardholder knowingly provides false information or misrepresents the nature of the transaction during the dispute process, it can be considered friendly fraud.
  • Failure to cancel a credit card: Some cardholders may attempt to avoid paying for legitimate charges by canceling their credit card after making a purchase. This act should not absolve them of payment obligations on that card and therefore could be considered friendly fraud.
  • Disputing Valid Charges: Friendly fraud occurs when a cardholder disputes a charge they authorized and received the goods or services for, often resulting in a chargeback for the merchant.

Steps to Dispute a Charge on a Credit Card

When a cardholder identifies a genuine discrepancy or unauthorized charge on their credit card statement, they should take the following steps to initiate a legitimate dispute:

  • Review the Charge: Carefully examine your credit card statement and confirm the validity of the charge. Ensure it is not a simple misunderstanding or a billing error.
  • Contact the Merchant: Before escalating the issue, contact the merchant directly to discuss the problem and seek a resolution. Often, this direct communication can resolve the dispute amicably.
  • Contact the Credit Card Issuer: If the merchant fails to resolve the issue or the charge is unauthorized, promptly contact your credit card issuer. Provide them with all relevant details, including documentation and any communication with the merchant.
  • Follow the Issuer’s Process: Each credit card issuer has its dispute resolution process. Cooperate fully with your card issuer by providing any requested information or evidence as quickly as possible.
  • Stay Informed: Keep track of the dispute process and any updates from your credit card issuer. Be prepared to provide additional information if necessary.

Bottom line

Credit card disputes are necessary for consumer protection, as they enable cardholders to address unauthorized charges or billing errors. When you intentionally misrepresent a transaction, you are engaging in friendly fraud, which not only causes financial harm to merchants but is also illegal and unethical. To maintain a fair and secure financial ecosystem, cardholders must follow the proper steps to dispute a charge on a credit card and ensure their claims are valid and justified.

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Contact Information:

Name: Carolina d’Arbelles-Valle
Email: [email protected]
Job Title: Senior Digital PR Specialist
(201) 633-2125

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