Can You Go to Jail for Disputing Charges?

It’s common for consumers to dispute charges if they believe there is an error in a transaction. While disputes can be valuable for rectifying discrepancies when making purchases or transferring money, you might be wondering if you could go to jail for disputing charges.

In this guide, we go over why it is a consumer’s right to dispute charges, expert advice on how to dispute a charge, and when associated white-collar crimes could lead to prison time.

Legal framework for financial disputes

Federal and state laws protect consumer rights in financial transactions so that financial institutions are more transparent and trustworthy. However, many consumers are not aware of the legal framework and laws related to unfair billing practices and charges. Here is what you should know.

Common consumer rights

• Right to equitable and fair treatment
• Right to privacy
• Right to dispute charges

Fair Credit Billing Act (FCBA)

The Fair Credit Billing Act was enacted in 1975. It is a federal law meant to protect consumers from unfair and predatory billing practices. It sets time limits for investigations and allows individuals to dispute any charges that are unauthorized on their accounts. Individuals can also dispute charges for undelivered goods and services.

Essentially, individuals are allowed 60 days to challenge charges. Here are the common disputes:

• Incorrect amounts charged
• Inaccurate statements
• Undelivered goods or services
• Unacceptable goods or services

Truth in Savings Act (TISA)

The Truth in Savings Act is another federal law, passed in 1991. It helps make it easier for consumers to compare interest rates, fees, and terms when dealing with deposit accounts. That way there is less obfuscation by financial institutions such as banks.

Here are the essentials that the Truth in Savings Act requires financial institutions to disclose regarding savings and deposit accounts for individuals:

• The interest rate
• Whether the interest rate is fixed or variable
• How the interest is calculated
• When the interest starts accumulating
• Maturity date of the account (mainly for certificate of deposits)
• Details of any early withdrawal penalties and their conditions
• Minimum balance requirements
• Balance computation methods

It is important to note that the Truth in Savings Act only applies to personal accounts opened by individuals. The act does not cover business accounts, organizations with business deposit accounts, or corporate accounts. If you’re opening an account and are unsure whether the Truth in Savings Act provides protection, you can ask the financial institution for more information.

Before this legislation, there was less transparency when it came to savings and loans, leading to a crisis in the 1980s and 1990s that eventually led to more consumer protection regulations and laws.

Consumer Financial Protection Bureau (CFPB)

The Consumer Financial Protection Bureau has guidelines surrounding how to dispute different kinds of charges. For example, with credit card charge disputes, here are the recommended steps of action:

• Send your credit card company a written letter within 60 days of the charge appearing on your billing statement
• Include your name and account number in the letter of notice
• Include the date of disputed charge, the dollar amount, and type of charge
• An explanation of why you believe the charge is an error

Expert advice on financial charge disputes

By following expert advice and best practices, it becomes easier to handle the process of making disputes over financial charges. Here are some key points that you should keep in mind when making a dispute over a financial charge.

Importance of proper documentation and communication

Make sure you keep written and electronic records of as much communication as you can. The more comprehensive your evidence, the more easily you can prove that a charge was made erroneously or with malicious intent. Thorough documentation helps ensure a smooth charge dispute process.

Here are the commonly relevant documents related to a financial dispute:

• Receipts
• Statements
• Correspondence with the financial institution

Initiate dispute promptly

A key to a successful and valid dispute is to initiate the dispute as soon as you realize there is a mistake with your bills. By initiating your dispute quickly, you are more likely to meet the timeframe requirements imposed by many financial institutions. Typically, you need to file a formal dispute for the charge within 60 days of the charge appearing on your account.

Consult with an experienced attorney

An attorney who is experienced in consumer protection laws and financial disputes can provide you with game-changing legal advice and representation. This can be particularly critical if you’re disputing a large charge that is complex or the financial institution is ignoring your letter.

Every financial dispute has its unique circumstances and details, which means generalized advice may not align with your situation. A financial professional or legal expert can provide you with individualized guidance and help you create a personalized strategy to tackle your financial disputes.

Reach out to consumer protection agencies

Many consumer protection agencies and organizations exist to offer assistance when individuals face unfair and predatory billing practices. For example, you might want to file a complaint with the Consumer Financial Protection Bureau (CFPB). By initiating the complaint process, the CFPB may be able to ensure compliance with laws and a smoother financial dispute process for you.

Understand chargebacks

Chargebacks are often viewed as a powerful last resort when it comes to disputing charges. It lets you potentially reverse a transaction you have made when you believe it is fraudulent or disputed. A successful chargeback reverses a transfer of money. Chargebacks are most commonly performed for credit card transactions, as the credit card issuer will refund the money to your account.

There are certain rules and requirements associated with initiating a chargeback. Credit card companies often expect you to provide evidence to support your claim that a chargeback is deserved and the transaction was fraudulent or unacceptable.

If filing a dispute with a merchant or financial institution has resulted in a dissatisfactory or untimely resolution, you might want to initiate a chargeback instead.

Uncommon information on legal and financial ramifications

Alternative dispute resolution methods

In some cases, individuals may wish to seek out other avenues of dispute resolution instead of going through a formal legal battle. Alternative Dispute Resolution (ADR) includes strategies such as mediation and arbitration, which involve a neutral third-party to help settle the dispute.

The main advantage to ADR is that both sides can avoid a time-consuming legal battle that potentially drains wallets due to attorney fees. An arbitrator could help you reach a compromise.

However, beware of unfair mediation where you feel pressured to settle. This could lead you to accept terms and agreements that are unfavorable to you.

Monitor your credit

Your credit scores reflect your creditworthiness, which expresses how likely you are to pay a loan back on time. These scores are based on your official credit reports. There are two main types of credit scores used by lenders and creditors when checking your credit: VantageScore and FICO.

It’s always a good idea to regularly monitor your credit score for any inaccuracies, unauthorized activities, or red flags for fraud. Free and paid credit monitoring services can facilitate the process of checking your credit once a month and staying on top of any unexpected changes to your credit score.

Escalation of a financial dispute to a legal issue

While many financial disputes have been settled without a legal battle, sometimes disputes of financial charges can lead to an escalation. This may occur if:

• The dispute is highly complex
• The financial institution refuses to cooperate
• The stakes are high
• Contracts have been breached
• Charge disputes keep recurring
• Consumer protection laws have been violated
• There is fraud or criminal activity

Crimes related to financial disputes

Disputing a charge is not a criminal offense. Instead, it is a protected consumer right. An individual can’t be sent to jail solely for disputing a charge.

However, as you initiate a financial dispute, other acts surrounding the process may be deemed illegal. For example, if you engage in fraudulent activities such as falsely claiming a transaction is unauthorized when it is not, you may face legal consequences. A lawsuit may be filed against you and you may be found liable for the transaction after all.

It is advisable to not dispute a purchase without a valid reason.

When are there criminal charges in financial disputes?

While financial disputes typically stay in the world of civil law, white-collar crimes such as fraud, embezzlement, and money laundering can potentially lead to jail time. If you’re concerned about a white-collar crime allegation against you, it is critical to find the expert services of a licensed attorney in your state so that you can receive personalized, accurate guidance.

Here are a few situations in which criminal charges may ultimately be pursued:

• If an individual forges documents or deliberately misrepresents facts during a dispute
• The individual has committed identity theft
• The individual has used a stolen card or performed card skimming
• Money laundering is the goal of the dispute as it conceals illegally obtained money

Safely navigating financial disputes

To safely navigate financial disputes, it’s a good idea to first understand the legal and financial aspects of the process. Here is a step-by-step guide on how to file a financial dispute.

1. Know your rights

Consumers have the right to privacy of their sensitive information and fair treatment. If you want to file a dispute, as long as you satisfy the timeframe and other requirements by filing a claim promptly, the financial institution cannot forbid you from filing a dispute.

2. Contact the financial institution

Reach out to the customer service department of the financial institution where your incorrect charge took place. Most commonly, charges are disputed with credit card companies and banks.

3. Provide information

You will be expected to provide details about why you believe the charge to be mistaken or fraudulent. Make sure to include relevant details such as:

• The transaction date
• Amount
• If your credit card was stolen
• Other important information

4. Document the dispute

As you go through the dispute process, make sure you document everything. Note down the names and contact information of any institutional representatives you speak with, the date and time of communication, as well as case or reference numbers provided. This gives you more leverage in case the dispute of the charge does not go smoothly.

5. Follow up with a written dispute

You are expected to write a letter of notice that declares your claim, along with supporting evidence. Ask your financial institution what the detailed process is for submitting a written dispute so that it is accepted.

6. Follow up and monitor the situation

After the initial filing of a dispute, check in with the investigation to see whether there are any updates. After you’ve filed a dispute, an investigation typically needs to be launched within 30 days. The entire process should be resolved within the next 90 days. If there are any further delays, make sure you file a complaint with a consumer protection agency.

Consumer protections in financial transactions

Consumer protection agencies serve an essential pro-consumer role as they work towards safeguarding the rights of all individuals in financial transactions. When it comes to disputes, a consumer protection agency such as the Consumer Financial Protection Bureau plays the following roles:

• Gives educational information regarding financial disputes
• Receives and investigates complaints with financial institutions
• Ensures compliance with consumer protection laws
• Mediates disputes
• Advocates for consumer rights

About The Author

Ru Chen

Content Writer

Ru Chen is a content writer with several years of experience in creating engaging and well-researched articles. She mostly writes about business, digital marketing, and law. In her free time, she can be found watching horror movies and playing board games with her partner in Brooklyn.

Articles by Ru Chen

---