Do banks investigate disputed charges?

Dispute Resolution Process: Banks and Disputed Charges

When customers encounter unauthorized or incorrect charges on their bank accounts, they have the right to dispute these charges with their financial institution. Banks, in turn, are obligated to investigate such disputes and resolve them promptly.

Investigation Timeline

Federal regulations establish a mandatory investigation period for disputed charges. For most complaints, banks must conduct their investigations within 10 business days. However, for newly opened accounts, the investigation period extends to 20 business days. This extended period is intended to provide banks with additional time to verify the legitimacy of disputed transactions on recently established accounts.

Investigation Process

During the investigation, banks typically take the following steps:

• Gather Evidence: The bank may request copies of the original transaction receipts, account statements, and any other relevant documents.
• Contact the Merchant: The bank may reach out to the merchant involved in the disputed transaction to obtain additional information or verify the transaction.
• Review Internal Records: Banks will examine their own records to determine if there were any errors or irregularities in the processing of the transaction.
• Communicate with the Customer: The bank will keep the customer informed of the progress of the investigation and provide regular updates.

Dispute Resolution

Once the investigation is complete, banks will issue a determination on the disputed charge. If the bank determines that the charge was unauthorized or incorrect, they will typically reverse the charge and credit the customer’s account. If the bank finds that the charge was valid, they will inform the customer of their decision and provide an explanation.

Customer Responsibility

Customers are encouraged to review their bank statements regularly and promptly report any disputed charges to their bank. Delaying the reporting process may impact the bank’s ability to investigate the matter fully and effectively.

It’s important to note that banks have the authority to investigate disputed charges based on their own policies and procedures. The 10-day (or 20-day) investigation period is a minimum requirement set by federal regulations. Some banks may have internal processes that allow for faster or more thorough investigations.