Resolving Credit Card Disputes

Dear Alpha Consumer,

I was renting a storage room from a popular company. I set up automatic payments on my credit card to pay for it. After closing my account at the storage place and moving to another state, my card continued to get billed. I realized this about a month later and called to tell the storage company. The manager asked me to fax my paperwork showing I had closed the account. I did so several times, but the company continued to bill me for four months. I have tried calling the manager and filed a complaint with the Better Business Bureau. What are my options, besides just paying the bill?

The good news is that you paid with a credit card, which offers you extra protection. The bad news is that four months have lapsed, which might make it more difficult to get your money back.

When you've been charged in error, the first step always is to ask the retailer for a refund, which you did. If that doesn't work, then it's time to call your card provider. Providers act as referees—and luckily, they want you to win.

All of the companies that I asked, including Discover, American Express, and Bank of America, said that they investigate disputes on behalf of their cardholders, and in the meantime they credit the customer for the charge that is being disputed. But they typically require such complaints to be filed within 60 days (at Discover, it's 180 days), and after that time has elapsed, treat situations on a case-by-case basis. So don't be slow about picking up the phone.

There are other caveats. While the burden of proof to show that the transaction is valid falls on the seller, the merchant may argue that it was legitimate. If the card provider believes the merchant, then you can use paperwork or other evidence to bolster your argument, but there are no guarantees.

Usually, though, credit card providers are like loyal best friends who always take your side in disputes with outsiders. (Disputes about extra fees and interest rate hikes are another story.) "Credit card companies almost always take your side unless the merchant can provide a very good explanation of why your dispute is false," says Justin McHenry, research director at IndexCreditCards.com and Zen Personal Finance blogger.

McHenry warns, though, that complaining too often could earn you a bad reputation, and your card provider may stop being so sympathetic—just like a former best friend.

• Readers, have you successfully (or unsuccessfully) disputed credit card charges? Do you have advice for this reader?