credit card chargebacks & bank disputes
Oh no -- you've been scammed or hacked.
Now you're wondering if you can get the lost money back, and prevent future charges.
Here are the steps that give you the best possible chance of success.
Immediately notify the banks that you are a fraud victim, and that future transactions are unauthorized.
The first thing you must do is notify every financial institution involved that you were scammed or hacked.
You must also notify your bank, and any other bank involved, that future transactions by the same merchant, scammer, or lender are unauthorized.
For example, suppose you were scammed into taking out a loan for an illusory product or service.
You must notify the lender that the loan is a product of fraud, and notify your bank or credit card where the loan payments are posting that any future charges by that lender are unauthorized. It’s ok to do this by phone if there is no other way to get a hold of the banks quickly, but best if you can follow up writing so you have a record that it has been done — and limit the bank’s ability to put words in your mouth or try to talk you out of your dispute “because you signed a contract” or some other rationale.
Then, if you are charged again and the bank or credit card permits the charge to go through, you could have claims under the Fair Credit Billing Act or Electronic Fund Transfer Act, and possibly also state law.
Notify local law enforcement, the FTC and the FBI that you are a fraud victim.
This can be the hardest step, but it’s important.
You might be embarrassed that you “fell for it,” or kicking yourself for not using two-factor authentication or a stronger password.
Just because this is unlikely to ever happen again to you based on what you now know, does NOT automatically make it 100% your fault that it happened to you the first time.
In the case of hacking and identity theft, your local law enforcement is probably too busy dealing with other crimes to do anything on your behalf, but your willingness to tell your story to the police under threat of prosecution for making a false report is important to trigger certain rights when you dispute to the credit reporting agencies.
And, you might be still thinking that maybe it is all your fault that you signed up for some program that turned out to be a a scam, but the FTC and FBI won’t take action unless they know that a lot of people are getting hurt.
Enclosing copies of reports to law enforcement and regulators can also help support your dispute letters, so save copies of everything you submit.
Dispute the charges in writing, via certified mail.
Dispute in writing to the lender, the merchant, and your bank or credit card where the charges posted.
Make sure you are sending your dispute letters to the addresses for disputes or “errors,” not the mailing address for payments. Frequently, this mailing address for billing inquiries and disputes appears on the back of your statement, or is buried somewhere on the bank’s website.
Print out your letter physically on paper. Sign it, keep a PDF scan of the signed dispute letters (not just the Word documents on your computer!) and mail the letter via certified mail. Save your mail receipt too.
If your bank wants to follow up by email or phone to get additional information from you, cooperate with them, but early in your process you must do a detailed written dispute so you control the conversation.
Any attempt to resolve with the merchant first can be short and sweet.
This can be very simple: an email or letter to the merchant describing how the product or service was not as advertised and promised, and that you want a refund. Then proceed with your bank disputes and chargeback.
If their response is anything other than an unequivocal yes, or they want to move the conversation to phone or Zoom, be VERY careful.
I do not recommend ever getting on the phone or engaging in extensive written back-and-forth with any merchant who has scammed you.
You do not want to risk further exposure to the merchant’s scammy or culty tactics. If they want to “discuss your concerns,” this is not likely to lead to a refund. Expect they will use the same nefarious psychological techniques that made you give them money in the first place to threaten you into dropping your dispute, coming back to the program, or even giving them more money for some additional product, program or service that you do not need.
If the merchant is just a big bloated corporation that — for example — can’t find the equipment you returned or can’t seem to get your bill right, if you feel you’ve “already done enough” and sat on the phone for too many hours, you have. Put all your disputes in writing from this point onward, and save those phone bills showing how long you were on the phone trying to resolve the problem.
Your dispute letters should go into detail about what was promised that was not delivered.
It’s best if your letter is one page, and states at the top that you are disputing because it was fraud and the product or services promised were not delivered.
Make it clear that you want the charges reversed, and the loan canceled.
Basic principle of doing a credit card dispute, aka a chargeback, is that you focus on what was promised and not delivered, NOT disappointment with “quality.” A good analogy is if you bought a sweater online that was advertised as 100% wool, but then when it arrived it was 50-50 wool and acrylic. Well, that is a good not delivered as described. Who cares if it has some wool, if they advertised it as 100% wool, and the price you paid was based on this promise? You are not complaining about the “quality” — you are claiming it was substantively different.
In your dispute letter, list out everything that was promised during the advertising (for example, the merchant’s videos, social media posts, email sequence and sales pages that induced you to buy) and specifically how the merchant did not deliver on those promises or guarantees. Clear bullet points, or side-by-side columns can be very useful. Explain it to them like they’re five years old.
In short, how was this a bait-and-switch?
Do not threaten to sue in the letter. Speak to them as if you believe that they will see that this is a scam and cancel the debt willingly.
A short and sweet sample letter is here to cure your writer’s block.
Dispute multiple times if you have to, in writing.
This can be frustrating, but sometimes it works if you just try one more time.
And if you ultimately need to bring an action under the Electronic Fund Transfer Act or Fair Credit Billing Act, your case should be stronger if they continued to deny you in the face of so much evidence.
If the bank denies your dispute because you "signed a contract," that doesn't mean that you don't have grounds for a chargeback.
Just because you signed a contract doesn’t mean you’re out of luck. If you were coerced or deceived into signing a contract, that contract should not be enforceable against you. If the contract requires that you engage in unlawful activity to hold up your end of the bargain, you should not be bound to that contract.
But what if you get on the phone with the fraud department at your credit card issuer or bank and they say that they have to honor the contract and stick you with the charges if the merchant produces a contract in response to your dispute? You must focus on the fact that the contracted-for product or service was not actually delivered. (And, follow up with another written dispute or written detail in response to the bank’s request for additional information.)
For example, suppose you signed a sales contract to buy a red hot tub. And instead of receiving a red hot tub, one of the following things occur: (a) you never receive any hot tub at all; (b) the merchant sends you a blue hot tub instead; (c) the merchant sends you a defective or damaged hot tub. Clearly, you did not get the red hot tub you paid for.
Services don’t get some special exception. If you buy a service, you are entitled to dispute to your bank if that service is not provided as it was advertised or described to you and the merchant has refused to refund you.
How to cancel those frustrating subscriptions that you can't seem to get out of
Dude, I just hate the subscription model. Companies love to make everything a subscription because they’re counting on you to forget to cancel in time, and that’s more profitable for them.
Back in the day, it used to be just fitness clubs that were hard to cancel. And nowadays, it isn’t just the fitness club that you are paying for via a subscription — it could be the yoga pants you wear to the gym, and the shampoo you use when you shower after your workout. It’s ridiculous.
It is marketed as a convenience to you, but rest assured, a lot of companies make it super inconvenient if not impossible to cancel a recurring charge.
This is where your paper trail is critical. It’s the old adage: “fool me once, shame on you; fool me twice, shame on me” — but in reverse. They might fool you once when you forget to cancel in time. “All right, you got me.” But then when you tell them again and again in writing that you no longer want the product or service, shame on them!
Fortunately, the FTC is listening to consumers on this issue! After over 16,000 comments, the FTC has adopted a final rule permitting consumers to “click to cancel,” so we don’t have to jump through so many hoops. You can read the FTC’s October 16, 2024 press release here.
Let’s see if companies comply with the rule…… While only the FTC can enforce the rule, a company’s failure to comply with the rule could constitute an unfair/deceptive trade practice under state law. I would certainly say so in Washington State.
If the bank denies your dispute because it has been longer than 45 days (or 60 days for credit cards), it isn't necessarily over.
The Electronic Fund Transfer Act protects you from unauthorized electronic transactions to your bank account, provided that you dispute within 45 days for most kinds of issues.
And in the case of credit cards, the Fair Credit Billing Act provides that you need to timely initiate chargeback disputes. That means, you need to dispute within 60 days of the issuance of the statement on which the disputed charge appears.
This is really hard for certain consumers who don’t realize that they were scammed until much later, or for an ongoing relationship where, due to the nature of the services rendered, it takes several months for you to realize that the merchant who is supposed to be performing a service for you is not actually performing those services.
All right, so let’s assume it has been a while. Dispute anyway. If they refuse to open up a dispute by phone, follow up with a detailed letter, so you control the conversation. You can put in a lot more detail supporting your dispute in writing. The credit card issuer might open up a dispute. The credit card issuer might find in your favor.
But if they don’t — and they reinstate certain charges after giving you a temporary credit — according to some caselaw, this lets you restart the 60-day clock. Dispute again, referencing your recent billing statement where the charge reappears.
You might also have claims under state law against the bank for unreasonably or unfairly investigating or denying your fraud dispute.
If: (a) you used a business credit card, (b) it was your small business that got scammed, or (c) after multiple requests for a refund and attempts to do chargebacks, you’re still stuck paying for something that you did not receive or was a scam, then depending on where you live, state law might still protect you if the bank’s denial of your dispute was unfair, deceptive or unreasonable.
If your bank blocks payments, but the lender still wants you to pay the loan, here's how to deal with any debt collectors.
I can’t candy-coat this: the lender might send you to collections. The lender, once presented with a detailed dispute letter from you outlining that you did not receive what you were promised in the advertising, should cancel the loan, but they might not.
If the lender sends you to collections, expect that you will have to tell your story and “plead your case” all over again with the debt collector.
Under the Fair Debt Collection Practices Act, you have the right to dispute the validity of the debt and request that a debt collector stop burning up your phone with harassing calls.
So if you are contacted by a third-party debt collector, again, via certified mail, dispute the debt. A verbal dispute is sufficient to trigger certain rights, but it is always best to follow up in writing and save all the details for a letter.
If you try to explain this on the phone with the debt collector, they will pretend to care…but then probably brainwash or bully you into paying them. Don’t let them!
In your letter, tell the debt collector the same things you told the original lender and your bank or credit card. The debt collector should close the collection account and return it to the original creditor with the reason for your dispute.
After you’ve given the debt collector the chance to do the right thing and cease collections due to fraud, if the debt collector continues to harass you or even sues you to collect the debt, you could have counterclaims (or grounds for an independent lawsuit) under the Fair Debt Collection Practices Act or your state’s consumer protection and other laws.
If you are served papers to collect a debt, it is real. You should get a lawyer to defend you and evaluate all your counterclaims; this is NOT something you should DIY.
And a final consideration: some people who are military, government, need to maintain a security clearance, or work in finance — anywhere where they might look at your credit score — will elect to pay a loan under duress simply to avoid being sent to collections. For those of you who feel you have no choice but to keep paying on a fraudulent debt, make sure your disputes create a good paper trail that you do not believe the debt is valid.
What to do if the merchant threatens to sue you for quitting a program or complaining about it
You cannot contract away your legal rights to complain to the FTC, leave honest reviews, initiate chargebacks, or talk to other victims of the same scam.
And if you are threatened with a lawsuit or even sued, in most states, this is called a SLAPP (strategic lawsuit against public participation), and — state-dependent — you would be within your rights to seek dismissal of any such lawsuit as frivolous, predatory, and a violation of your freedom of speech and other rights.
Such threats, whether or not they are carried out, can be independent grounds for claims against the merchant for unfair/deceptive practices under your state’s laws.
Your concerns that you are at fault here, or somehow obligated to stay in the contract, are indications that you were scammed and traumatized and may even be a victim of a financial crime.
While it is no easy task to explain this kind of financial trauma to an obstinate opposition, the law has recognized defenses to contracts for many years, and we are not talking about anything radically new.
This is not your fault, and the “big lesson from the Universe” here might be that you get to learn the value of standing up for yourself instead of rolling over and paying a fraudulent debt in shame for years.
As a heads up, I am licensed in Washington and Alaska. If neither you nor any of the potential defendants reside in those states and we end up working together, I will get local counsel.
In any event, I like to see people exercise all their rights and exhaust appropriate self-help avenues to get their money back first without a lawsuit. It will either succeed in solving your problem, or will trigger other rights and remedies you may have. So your willingness to do some legwork and be patient are super important.
Good luck with your disputes! Reach out to me if you want a consultation or need help with the process.