American should have promptly refunded your ticket, and the refund should have stuck. In fact, according to American’s conditions of carriage – the legal agreement between you and the airline – refunds will be provided within seven business days of receipt of the required refund information.
Here’s what went wrong: When the refund didn’t appear as promised, you contacted your credit card to place the amount in dispute. Even though you have a co-branded American Airlines card, it is offered through a bank, so the airline has no control over what happens to your dispute. The bank sided with you.
American’s billing system appears to have crossed its own wires between your initial charge, which was initially a valid one, and your subsequent refund request. It looks as if it incorrectly tagged your dispute as being in error, probably because it was already in the process of refunding your ticket.
This case underscores the importance of being patient when you’re waiting for a refund from an airline, or any travel company. Of course, there’s no excuse for American dragging its feet on a refund, but by jumping ahead of it and disputing the charge, you ended up confusing it.
How long should you wait for a refund? Anywhere from four to six weeks. After that, you need to be bothering the company for the money. (I list the names and numbers of their managers on my website: http://elliott.org/contacts/american-airlines-2/.) Use a credit card dispute only as a last resort.
I contacted American on your behalf, and it apologized, refunded your $371 and offered you a $125 voucher for a future flight.