What Are Your Rights When a Merchant Charges You Incorrectly?
When a merchant bills you for the wrong amount, double-bills you, charges a canceled subscription, or processes an unauthorized transaction, federal consumer protections and state laws provide remedies—but the exact path depends on how you paid.
In my practice helping clients resolve billing disputes, the fastest wins come when consumers act promptly, document communications, and use the correct dispute channel (merchant first, then card issuer or bank, then regulator). Below I explain the rights you can invoke, typical timelines, practical steps, and escalation options so you can resolve errors with minimal stress and financial harm.
Key federal protections you should know
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Fair Credit Billing Act (FCBA): Protects consumers for billing errors on “open-end” credit accounts such as credit cards. Under the FCBA you can dispute billing errors in writing within 60 days after the creditor mailed the first statement showing the error. (See the CFPB overview on billing disputes: https://www.consumerfinance.gov/consumer-tools/credit-cards/)
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Electronic Fund Transfer Act (EFTA / Regulation E): Covers unauthorized or erroneous electronic fund transfers, including most ATM and debit card transactions and many ACH transfers. Timing matters: report unauthorized debit-card transactions quickly to limit liability (see details below). (EFTA summary: https://www.consumerfinance.gov/consumer-tools/electronic-fund-transfers/)
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State consumer protection laws and the FTC: States often add consumer protections covering deceptive practices, refunds, and “false advertising.” The FTC and state attorneys general can act on patterns of unlawful merchant conduct. (FTC consumer site: https://www.ftc.gov/)
Typical rights and remedies by payment type
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Credit cards (FCBA): You may withhold payment and dispute charges for billing errors, charges for goods/services not delivered, or charges that differ from what you agreed to. Notify your creditor in writing within 60 days of the statement date that shows the charge. The creditor must acknowledge your complaint within 30 days and resolve it generally within two billing cycles (but not more than 90 days).
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Debit cards and bank accounts (EFTA/Reg E): For unauthorized card transactions, report the loss or error immediately. If you notify your bank within 2 business days after learning about a lost card or unauthorized use, your maximum loss is $50. If you notify after 2 business days but within 60 days after the bank sends the statement showing the error, your loss could be up to $500. If you wait more than 60 days after the statement, you may not be reimbursed. For many other EFT errors, banks must investigate and correct errors promptly. (Source: CFPB/EFTA guide https://www.consumerfinance.gov/)
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ACH, recurring charges and subscriptions: Consumers can stop unwanted recurring charge attempts by contacting the merchant to cancel and by disputing unauthorized debits with their bank. Banks typically allow you to dispute an unauthorized ACH debit under NACHA rules and Regulation E procedures.
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Cash or check purchases: These rely on merchant cooperation and state law. If a seller won’t refund a cash error, you may need to use small-claims court or a consumer-protection complaint to recover funds.
Practical step-by-step dispute process (what I recommend)
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Review your records immediately: Compare the charge on your statement with receipts, order confirmations, and any written agreements. Note the date, amount, location, and merchant descriptor.
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Contact the merchant first: Call or email customer service, explain the error, and request a refund or correction. Be polite but persistent. If the merchant agrees, get confirmation in writing and check your account for the refund.
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Keep a dispute file: Save receipts, screenshots, emails, chat transcripts, the name of the agent you spoke with, and any case or ticket numbers. I tell clients a well-organized folder often resolves disputes faster.
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Escalate to your bank or card issuer if the merchant refuses: For credit cards, file a billing dispute under the FCBA (in writing if required by your issuer). For debit cards or bank-account errors, contact your bank and ask for an investigation under Regulation E.
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Consider a chargeback for card transactions: If the merchant won’t cooperate, ask your card issuer about a chargeback. Chargebacks reverse the merchant’s transaction while the issuer investigates. See our guide on when to seek a chargeback vs a bank dispute for pros and cons: When to Seek a Chargeback vs a Bank Dispute.
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File a regulator complaint if needed: If the merchant’s conduct is unlawful or you hit a dead end with your bank, file a complaint with the Consumer Financial Protection Bureau (https://www.consumerfinance.gov/complaint/) or your state attorney general’s consumer protection division.
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Use small claims or hire counsel for larger sums: If you can’t get relief through the merchant, bank, or regulator and the amount justifies it, small-claims court is a cost-effective option. For complex cases or significant sums, consult an attorney.
For a printable dispute letter and exact wording you can use, see our template: How to Dispute a Billing Error: A Step-by-Step Letter Template.
Timelines and documentation that matter
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60 days is the headline deadline for FCBA credit-card disputes and for some EFTA protections tied to the statement date. Don’t let this deadline pass without initiating a dispute—start with merchant contact and then file with the issuer in writing if required.
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Save evidence long-term: Screenshots of online orders, confirmation emails, receipts, proof of canceled subscriptions, and any merchant confirmation are crucial if a dispute goes to chargeback, bank arbitration, or small claims.
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Track dates carefully: Note when the merchant billed you, when you noticed the error, when you contacted the merchant, and when you notified your bank. These dates determine your rights under FCBA and EFTA.
Common problems and how to avoid them
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Paying the merchant and assuming the issue is resolved: A refund may appear, then be reversed if not documented properly. Confirm the reason for the refund and get written confirmation.
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Waiting too long to report unauthorized transactions: Regulation E’s liability limits require prompt reporting. If you wait, you may face greater losses.
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Ignoring recurring small charges: Small recurring errors add up—dispute them early and document cancellation confirmations.
When the merchant claims “we can’t help”—next steps
If the merchant refuses to cooperate, escalate to your card network or bank and request a chargeback or error investigation. If you’re dealing with subscription billing that keeps recurring despite cancellation, start with your merchant, then contact your bank to stop future debits, and file complaints with the CFPB or your state AG if needed. (See our article on escalating bank disputes: https://finhelp.io/glossary/how-to-escalate-a-billing-dispute-with-your-bank/.)
Example scenarios from practice
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A client was billed twice for a home services visit. The business issued a refund after we provided a dated invoice and bank statement showing duplicate billing. The bank reversed one charge and the merchant confirmed the correction.
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Another client had recurring fitness-app charges after canceling. We used the subscription confirmation to prove cancellation, disputed with the card issuer, and filed a complaint with the CFPB when the merchant failed to honor the cancellation. The card issuer issued a provisional credit while it investigated.
These real cases show documentation plus quick escalation often wins.
How to file effective complaints:
- Be concise and factual.
- Include transaction dates, amounts, merchant name, and screenshots of receipts or cancellation confirmations.
- State the resolution you want (refund, stop future charges, correct billing).
File with the CFPB (https://www.consumerfinance.gov/complaint/), the FTC for pattern abuse (https://www.ftc.gov/), and your state attorney general for deceptive business practices.
When to get professional help
If the merchant’s behavior suggests fraud, identity theft, or large-scale deception, contact an attorney. For straightforward billing errors that the merchant and issuer refuse to fix, consider small-claims court. If a charge affects your credit or you face collections as a result of an uncorrected billing error, consult a consumer-law attorney.
Professional disclaimer
This article is educational and reflects common federal protections and practical steps I use in client work. It is not legal advice. For personalized legal guidance, consult an attorney licensed in your state.
Authoritative sources and further reading
- Consumer Financial Protection Bureau — credit card billing and error resolution: https://www.consumerfinance.gov/
- Federal Trade Commission — consumer protection information: https://www.ftc.gov/
- Electronic Fund Transfer Act (Regulation E) summaries: https://www.consumerfinance.gov/consumer-tools/electronic-fund-transfers/
Related FinHelp guides
- How to Dispute a Billing Error: A Step-by-Step Letter Template: https://finhelp.io/glossary/how-to-dispute-a-billing-error-a-step-by-step-letter-template/
- When to Seek a Chargeback vs a Bank Dispute: https://finhelp.io/glossary/when-to-seek-a-chargeback-vs-a-bank-dispute/
- How to Escalate a Billing Dispute with Your Bank: https://finhelp.io/glossary/how-to-escalate-a-billing-dispute-with-your-bank/
