How to Win an American Express Dispute

I’ve been on the giving and receiving end of disputes and chargebacks. Hence, I found myself inspired to write this guide.

I’ll provide tips and information that’ll help customers fight unfair transactions, and merchants fight unfair disputes. I will also provide information on American Express’s general procedures when dealing with chargebacks to ensure you know what you’re getting into.

Let’s file (or fight) a dispute.

Key Takeaways

• American Express doesn’t use the terms “chargebacks” and “disputes” interchangeably like most card providers.
  • Chargebacks are the forced reversal of funds from a merchant.
  • Disputes are issues that customers bring up with a particular transaction.
• Merchants can win by understanding chargeback thresholds and submitting compelling evidence within 20 days.

• Customers can win disputes by filing within 120 days and providing strong evidence of unauthorized charges, billing errors, or issues with goods/services.

• Card Members (cardholders) can dispute a single transaction twice (max).

Important Information

Before we proceed with tips on winning chargebacks, merchants and customers need to know how American Express’s dispute process (and their chargebacks) works.

What is a Chargeback & Is it Different from a Dispute?

Most card networks, payment processors, and institutions will use the terms “Chargeback” and “dispute” interchangeably. For instance, Mastercard could label the process of disputing a transaction as a “chargeback process” or “dispute process.”

American Express has different definitions:

• Dispute: A customer has an issue with a transaction and brings it up to American Express. This becomes a dispute, which results in a chargeback or a resolved case.
• Chargeback. The forced reversal of funds from the merchant results from an Inquiry if the case isn’t resolved. Or, during an “Upfront Chargeback” case, the merchant is immediately charged.

Regardless of the process, it begins with a dispute when a customer doesn’t agree with a transaction. Whether it results in a chargeback will depend.

In an Inquiry case, the customer disputes a transaction, Amex requests information from the business, and then decides whether to issue a chargeback based on the evidence provided.

If the merchant is a part of the Partial Immediate or Immediate Chargeback Programs or the Fraud Full Recourse Program, sellers will immediately pay a chargeback (in this case, upfront chargeback).

Merchants enter the first 2 programs if their chargeback rate is above 1% for 3 consecutive months.

In an Upfront Chargeback, merchants and customers provide evidence, then American Express decides whether the chargeback stands.

Summary: Disputes are the process of fighting an unfair transaction. And a Chargeback is a forced reversal of funds from the merchant.

Are Chargebacks the Same as Refunds?

Chargebacks and refunds are not the same because a refund is initiated by the customer, who contacts the merchant to request their money back. The merchant then processes the refund.

A chargeback is a forced transaction reversal initiated by the card issuer. The issuer will do this when a customer disputes a transaction, and the issuer investigates and decides in the customer's favor. Reversing the transaction without the merchant's consent.

Summary: A refund is a voluntary action by the merchant, while a chargeback is an involuntary action imposed on the merchant by the card issuer.

Can American Express Deny Chargebacks & Disputes?

American Express cannot deny chargebacks and disputes outright, but they can be reversed in the merchant's favor.

Valid Reasons for Disputing a Credit Card Charge

Some valid reasons a Card Member (customer) can dispute a charge include::

• Fraudulent charges: The cardholder did not authorize the charge, or their card information was stolen.
• Billing errors: The merchant charged the wrong amount, charged the cardholder multiple times for the same purchase, or failed to issue a refund.
• Problems with goods or services: The cardholder did not receive the goods or services they ordered, the goods or services were not as described, or the goods or services were damaged or defective.
• Canceled transactions: The cardholder canceled a subscription or recurring payment, but the merchant continued to charge them.

Customers cannot dispute a transaction because of bad service. Not being satisfied with the quality of goods or services is a valid reason for a dispute, but general dissatisfaction with the service isn’t.

How the Dispute Process Works

Disputes can take one of 2 paths. As mentioned, if merchants are involved in any particular programs, they’ll immediately receive a chargeback and go down the “Upfront Chargeback” path.

If they’re in an industry deemed as “high risk” or have a certain number of fraudulent transactions (Amex doesn’t specify), they’re in the Fraud Full Recourse Program. In this program, they can’t provide evidence for fraudulent transactions.

Anyway, here are the different processes:

Inquiry:

1. Cardholder disputes a charge.
2. American Express may send an Inquiry to the merchant if more information is needed.
3. Amex reviews the merchant's response and decides whether to resolve the case or proceed with a chargeback.
4. If the dispute cannot be resolved, American Express processes a chargeback.

Upfront Chargeback:

1. Cardholder disputes a charge.
2. Amex debits the disputed amount from the merchant's account and sends a notice.
3. American Express reviews the merchant's response and decides whether to reverse the chargeback or let it stand.

Screenshot from American Express.

If American Express rules in the Card Member’s (cardholder) favor, the merchant cannot arbitrate (fight) the result. However, if Amex’s decision favors the seller, the customer can dispute the transaction again (second chargeback).

Card Members CANNOT fight a single transaction more than 2 times.

How to Win an AMEX Dispute as a Merchant

• Chargeback Fee: $25; only if your chargeback rate is 1% or above for 3 consecutive months.
• Days to Respond:
  • Respond to Inquiry or Chargeback: 20 days
  • Issue Credit / Refund: 7 days

If you don’t already have an American Express Dispute Center account, you’ll need to talk to your payment processor about signing up. This is where you’ll respond to disputes, receive alerts, and provide evidence.

From there, you’ll need to get to submitting evidence.

Firstly, You Should Understand American Express’s Chargeback Threshold

Merchants should not have a chargeback rate of 1% for 3 consecutive months with American Express cards. Otherwise, they’ll place you in the Immediate or Partial Immediate chargeback programs.

Also, if you’re in either program, American Express will charge you a $25 fee per chargeback until you lower your chargeback rate below the threshold. They don’t specify how long you need to keep your chargeback rate below 1% before they remove you from either program.

Both programs are the same, except they’ll be different chargeback reason codes:

• FR4: Immediate Chargeback Program
• FR6: Partial Immediate Chargeback Program

You’ll see FR6 on transactions below a particular threshold.

Know Whether It’s Worth Fighting the Dispute

If you’re receiving an inquiry from American Express, you don’t need to worry about fighting the dispute. Whether you fight a dispute becomes vital if you receive an upfront chargeback.

Again, if you receive an upfront chargeback, are dealing with a fraudulent transaction, and are part of the Fraud Full Recourse monitoring program, Amex won’t let you submit evidence.

Without being a part of any chargeback programs…

Don’t fight a chargeback if it has to do with merchant error or true fraud (aka third-party fraud). Merchants win only 9.27% of true fraud disputes — the average across all industries is around 30% [1].

And if there’s merchant error involved, there’s not much you can do to prove the transaction was legitimate if you actually made a mistake. You’ll need to anticipate the customer’s response to gauge whether this particular chargeback reason is worth fighting.

If it’s a case of friendly fraud, for instance, a customer forgets they authorized a transaction, then the odds are in your favor. Your chance of winning rises to 43.82% since it’s often easier to prove the transaction was legitimate if it wasn’t third-party fraud.

Ensure you have fraud scoring software to determine whether a transaction is legitimate. Such a tool will also help you determine whether a dispute is worth fighting.

Building a Representment Package: What You Need

A representment package is a collection of evidence that merchants submit to dispute a chargeback. 

Here's how to build one and anticipate cardholder counterarguments:

1. Understand the Chargeback Reason: Review the chargeback reason code to understand the specific claim made by the cardholder. This will help you tailor your response and provide the most relevant evidence.

2. Gather Compelling Evidence: Collect all documentation that supports the validity of the transaction and refutes the cardholder's claim.

This may include:

• Signed sales receipt or contract: Proves the cardholder agreed to the purchase.
• Invoices or billing statements: Shows the amount charged and the transaction date.
• Proof of delivery: Confirms the delivery of goods or services to the cardholder. This could be a tracking number, delivery confirmation, or signed delivery receipt.
• Communication records: Emails, chat transcripts, or phone call logs documenting interactions with the cardholder regarding the purchase or dispute.
• Refund or cancellation policy: If applicable, provide documentation of your policies to show that the cardholder was aware of the terms and conditions.

Again, the specific evidence required will vary by reason code. What you’ll need to gather also depends on your industry. For instance, if you’re selling collectibles, you may need to submit a certificate of authentication. Whereas, a car rental service might provide a rental agreement.

3. Write a Persuasive Rebuttal Letter: Craft a clear and concise letter explaining why the chargeback is invalid. Address the specific reason code and provide a detailed explanation of the evidence you are submitting. Be professional and avoid emotional language.

4. Anticipate Counterarguments: Put yourself in the cardholder's shoes and consider their potential counterarguments. Address these proactively in your rebuttal letter by providing additional evidence or explanations to strengthen your case.

For example:

• If the customer claims they didn't receive the goods or services, provide detailed proof of delivery with tracking information and delivery confirmation.
• If they claim they didn't authorize the purchase, provide evidence of their consent, such as a signed contract or online order confirmation.
• If the buyer claims the goods or services were not as described, provide detailed product descriptions, photos, or testimonials to support your case.

Our Tips for Fighting a Dispute

Most of our tips involve gathering the most comprehensive evidence possible to support your case. We also recommend ensuring you submit evidence within 20 days. Otherwise, you automatically lose the dispute.

There’s nothing else you, as a merchant, can do when faced with a chargeback or a dispute.

Except…

You could hire a chargeback analyst. They’re an additional expense, however, they’ll know whether a chargeback (or dispute) is worth fighting, the correct evidence to gather, and how to use data to prevent future chargebacks.

We have a separate guide on choosing the best specialist.

How to Win an AMEX Dispute as a Customer

Important Information:

• Do Chargebacks Affect Credit Score? No.
• Can Merchants Sue for Chargebacks? No.
• Number of Days to File a Chargeback: 120 days from the transaction date.

You (the customer) have 120 days from the transaction date to file a dispute under most categories. American Express will give you an exception if your transaction falls within these categories:

• Goods or services returned or refused: You returned the purchased item or refused delivery but haven’t received a refund.
• Goods or services canceled: You canceled your order for goods or services, but the merchant has not processed the cancellation or issued a refund.
• Goods or services not received or only partially received: You didn’t receive the goods or services you ordered or only received a part of their order.

They don’t specify how much of an extension you get. I suppose it depends on the situation. If you’re filing (for instance) a year after the transaction date, ensure you're thorough with your evidence. Then perhaps Amex will give you an extension until then.

You are also allowed to dispute a single transaction twice. So long as you can provide new evidence that’s more convincing than the evidence submitted during the prior dispute.

I’m going to let you know ahead of time that there’s no magic that’ll make you win a dispute. The best action you could take to improve your odds is to provide compelling evidence and ensure that you meet all of Amex’s filing requirements.

How to File a Dispute

The easiest way to dispute a transaction is online [2]:

1. Log into your Inquiry & Dispute Center
2. Navigate to Open a Billing Dispute
3. Pick your transaction and follow the steps to open a dispute

From there, wait for a confirmation that’ll include your case ID.

You could also call them at 1-800-446-6307 or write a letter to them at [3]:

American Express, P.O. Box 30384,

Salt Lake City, UT 84130.

They want you to include your name, account number, the description of the error, and the dollar amount of the suspected error.

From there, they’ll send you a statement on the issue. You must reply to this statement within 60 calendar days. Otherwise, they’ll reject your dispute.

Gather Your Evidence

When disputing a transaction with American Express, the evidence you’ll need to provide will depend on the specific reason for the dispute.

Here are some common scenarios and the corresponding evidence typically required:

1. Unauthorized Transaction:

• Proof of Identity: A copy of government-issued ID or recent billing statement.
• Transaction Details: Date, amount, and description of the unauthorized transaction.
• Communication with Merchant: Any emails, letters, or chat transcripts with the seller attempting to resolve the issue.

2. Billing Error:

• Original Receipt or Invoice: Showing the correct amount that should have been charged.
• Bank Statement: Showing the incorrect charge on the account.

3. Goods or Services Not Received:

• Order Confirmation: Showing the details of the order placed.
• Shipping or Delivery Confirmation: If applicable, proof that the item was never delivered or received.

4. Merchandise Quality Issue:

• Photos or Videos: Clearly showing the defect or damage to the product.
• Return Policy: A copy of the merchant's return policy (if applicable).

5. Other Disputes:

• Contracts or Agreements: If the dispute relates to a contract or agreement, provide a copy.
• Medical Records: If the dispute involves medical services, provide relevant medical records or bills.
• Other Relevant Documentation: Other documents that support the claim, such as emails, invoices, or receipts.

American Express may request additional evidence depending on the circumstances of the dispute.

Can a Customer go to Jail for Filing Chargebacks?

You’ll only go to jail for committing chargeback fraud — knowingly stealing money. For instance, a man in Florida was sentenced to 10 years in prison for stealing more than $9 million in reversals [4]. Otherwise, you won’t go to jail.

Wrapping Up

The best steps you can take to win a chargeback as a customer or a business are to adhere to Amex’s timelines and to provide comprehensive evidence. Otherwise, American Express could flat-out reject your argument and favor the opposing side.

If you’re a business and want to avoid chargebacks in general, you’ll need alerts to ensure you can address customers’ concerns before they escalate a dispute to a chargeback. We partner with major alert providers (e.g., Ethoca) and can help.

Learn how our alerts work.

Sources

• [1] Midigator: Chargeback report statistics
• [2] American Express: Billing Inquiry dispute
• [3] American Express: FAQs on disputing transactions
• [4] Market Watch: Florida man sentenced for fraud