FSA Debit Card

[Guest afreeling]

My company is going to be implementing a FSA Debit Card for our clients. A question came up about when a participant disputes that a charge occurred. For example, participant walks into a drug store and swipes their card for $20. When they get their FSA Account Balance Statement, they see that there was 2 charges for $20. The card company that we are going through says that VISAs dispute process can take upwards of 180 days to make a determination. My question is what happens at the end of the year (and grace period if applicable) if it is determined that the $20 was a faulty item, and as a result, the $20 gets put back into the participants account. Since the plan year is technically over, they can not submit an expense to obtain that reimbursement for the $20. At that point is it forfeited based on the Use-it-or-lose-it rule? Can the money be returned back to the participant as part of a mistake clause or something like that? My concern with that is that they are then receiving tax free money without having an eligible expense. Can the money be returned, but then taxed? If that is the case, then W-2's and taxes would have to be redone at that point as well. Has anyone run into this before? Thank you in advance for your assistance.