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How to Handle a Dispute with Your Bank

Daniel Bortz

When money is involved, consumers take things personally. Disputes with your bank are bound to trigger strong emotions. If it's a quibble over, say, a $25 overdraft fee, your stress meter will likely stay at a cool temperature. But sometimes the stakes are higher--in the most serious discrepancies, a great credit score or future chance of employment may hang in the balance.

Whether the issue is miniscule or grave, many bank customers are vocal about their problems. Banks landed at No. 7 on the Better Business Bureau's list of the top 10 industries for consumer complaints and inquiries in 2012. Of course, banks make mistakes from time to time. Still, it can be hard to tell in a dispute who's right and who's wrong: the consumer or the bank?

It pays to consider the best way to approach your bank. Although disagreements vary--your credit card bill exceeds last month's charges or your checking account looks short--experts cite these general tips:

Consider your methods of communication. A phone call is quick and direct, but issuing your complaint through social media has its benefits. For one thing, it's public, which means the bank will likely work quickly to remedy the situation. Mark Schwanhausser, a Javelin Strategy & Research analyst who studies platforms consumers use for banking disputes, thinks consumers have the upper hand on Twitter. "Banks have to control their brand and their messages, and now they have to do it at lightning speed," he says. "It's not easy. I think it scares them."

Typically customers must lodge complaints on a bank's customer-service Twitter handle rather than on the company's general account. For example, if a Bank of America customer wants to report their deposit was posted to the wrong account, he or she should tweet @BoFA_help. The problem is many people don't know the protocol. "There is no receptionist on Twitter saying, 'How may I direct your call?'" Schwanhausser says. For consumers with more complex issues, Schwanhausser says it's wiser to just pick up the phone since the bank will likely reply on Twitter advising they take the conversation offline.

[Read: How to Complain to Companies (and Get Results).]

Remain calm but persistent. John Ulzheimer, president of consumer education at SmartCredit.com, says many of the calls customer-service agents field are from people who are ticked off, even if it's over something miniscule. Yet yelling and using profanity won't help your case. "The person on the other end of the line did not do anything to you," Ulzheimer says. "They didn't misassign your payment--that was an automated response."

Bank representatives appreciate customers who raise disputes in an even-toned manner. It may be hard to keep your emotions in check, but those who maintain control have a greater chance of success. Odysseas Papadimitriou, chief executive of credit-card comparison website Cardhub.com, says an agent who sympathizes with you will be more likely to put extra effort into resolving your dispute. As such, aim to make the customer-service rep your ally, not your enemy.

If you're the type of person who can't tolerate being put on hold for long, call during off-peak hours, suggests Nicole Lapin, a CNBC anchor and editor-in-chief of the personal finance website Recessionista.com. She recommends calling on Tuesdays or Wednesdays between 1 and 4 p.m. Also keep in mind that since bank disputes are specific, it's common for callers to be transferred several times before reaching the right department.

Navigate the channels. Once you're routed to the correct department, don't be afraid to take your issue to someone with more authority than a customer-service representative, who may not have the power to resolve your dispute, Ulzheimer says. Politely request to speak to the representative's supervisor or a manager. If you hit a dead end, ask to connect with the "retention department" if the bank has one, so you can speak with someone who cares most about keeping your business, suggests Ruth Susswein of Consumer Action, a nonprofit that advocates for bank customers.

Through its annual credit card survey, Consumer Action has consistently found customer service within banks to be significantly inconsistent. For its research, Consumer Action calls agents at top credit card issuers several times with the same dispute to see if they provide a matching answer. "We [typically have] to go back time and again just to get the same answer twice," Susswein says.

Stay organized. Make things easier by documenting materials related to the dispute, including copies of receipts or statements and notes on who you spoke with and at what time. Greg McBride, senior financial analyst at Bankrate.com, says, "Keeping track of the communication is something we should be doing with any type of dispute," but many people overlook it when they're caught up in an argument.

Keep an open mind. Even if you're positive the bank made a mistake, you may be wrong. Maybe you only glanced at the disclosure agreement you signed for a credit card--that lengthy document you thought wasn't worth your time. By law, credit card disclosures must be written in plain language, so that a layman can understand the provisions, and must appear in a format that's easy for consumers to digest, according to the Credit Card Act of 2009. Unfortunately that's a hard standard to enforce, and the wording in a disclosure agreement can leave people puzzled over what they sign.

Even so, consumers are legally held to those standards--even if it means they missed a payment by a few hours due to a time-zone mistake on their part. "You may realize it's your fault," says Cardhub's Papadimitriou. "If you go in thinking it's absolutely the bank's fault and you don't listen to a thing they say, you'll only make things worse for yourself."

Show your appreciation. Those who file a complaint may see the bank as the enemy. However, most banks try to be your ally. Mike Gnitecki, a special education teacher in Longview, Texas, learned this when his credit card lender helped him recoup $19,700 in disputes concerning eBay transactions with a single fraudulent seller. "[They] gave me back my funds in full within days," he says.

Also, in many cases, banks will waive a fee the first time it's incurred, even if it was well-disclosed, to stay on good terms with customers, says Nessa Feddis, vice president and senior counsel at the American Bankers Association. Customers who are respectful of a bank's leniency pave the way for a good relationship, whereas those with a spiteful tone may set themselves up for less-favorable outcomes in future disputes.

"Banks have a vested interest in ensuring that complaints are resolved to their customers' satisfaction, because they risk losing that customer to a competitor bank and they risk that customer relaying the experience to other customers or potential customers," says Feddis. "Resolving the complaint offers an opportunity for the bank to solidify the bank-customer relationship." However, she points out there are limits to a bank's flexibility. Banks may cap the number of times they waive certain fees. According to Feddis, the majority of big banks aren't opposed to swallowing a small charge to retain a customer--but that doesn't mean you should abuse their leniency.

There are also instances where the bank doesn't have the power to resolve the problem. For example, a bank can't override a merchant's "no return" policy. According to Feddis, the highest percentage of credit card complaints filed with the Better Business Bureau against banks are disputes that should have been resolved with the retailer--not the bank. McBride sees many consumers making this mistake: "To some extent, you do have a problem of barking up the wrong tree."

[Read: 10 Annoying Bank Fees--and How to Avoid Them.]

Your last resort. Before taking your dispute to an attorney, consider that legal counsel will just add more strain to your wallet. "Attorneys are expensive--they aren't cheap dates," says Ulzheimer. Legal fees add up, especially when cases drag on. So before you hire an attorney, Ulzheimer says, "you better make sure you've been damaged." By "damaged," he means you've sustained a serious financial blow, such as an error on your credit report that cost you a job.

A bank dispute that wasn't worth the financial investment for an attorney was one Gnitecki had with a bank over a $300 sign-up bonus. Gnitecki claims he was entitled to the bonus after he made the two direct deposits of at least $500 that were required, but says the bank lost his original voucher, which he was subsequently told was required to redeem the bonus. "I suppose I could have 'sued,' but that would be silly over such a small amount," he says.

[See 50 Ways to Improve Your Finances in 2013.]

If things don't go your way. You always have the option of changing banks, but moving isn't easy. You may have to refinance out of your current mortgage if you want to change lenders or cancel automatic bill pay or direct deposit. It's a "cumbersome" process, says McBride. "Picking up stakes and changing banks is doable, but it's not as easy as picking a different lunch place next Friday," he says.

Nonetheless, the hassle of switching banks shouldn't stop you from getting out of a bad situation. Papadimitriou says to an extent, consumers tend to be more willing to be "abused" by a financial institution, as opposed to being poorly treated at a restaurant. But like filing a complaint, placing a "to-go order" at your bank may be the best decision.

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