If you have ever disputed a charge with your debit or credit card company, you know what a potent weapon this type of complaint can be.
The card issuer generally takes your word against the merchant or service provider at the outset, restores the money to your bank account temporarily or issues a credit and then goes about its investigation.
It essentially demands that the merchant or service provider who supposedly did you wrong prove that it did no wrong at all.
Dealing with disputes require a lot of manual labor.
Every time someone initiates a dispute, the bank that issued the card must look into it. Someone has to contact the merchant and wait for a reply that may include a receipt or other documentation. Merchants must carve out time to respond to each dispute.
They also pay one-time fees for the privilege and may end up paying higher overall fees to accept cards if disputes are too frequent. Or they just get cut off from accepting cards altogether. The true cost per dispute to the banks of all of this back and forth ranges from $10 to $40, according to a 2010 estimate by the consultants at First Annapolis. Story by Ron Lieber for The New York Times.