So Microsoft support agent says I can't get banned for disputing a charge but some people...

i want to refund but don't want to risk my account getting banned. The customer support said my account would be banned if i disputed. The charge doesn't even show on my Microsoft or Xbox account so why would My account be banned for something that isn't even on it. Honestly i will just try calling Microsoft support tomorrow again and see what will happen.

Not sure who they were speaking to but it wasn't Microsoft/Xbox support as they can't be contacted via a xbox account.You have to request a call back from them via the support page on this site.

Support can't ban anyone either.This person needs to be reported & blocked & the charges should be disputed with the mothers credit card company.

Have you checked the order history by signing into your account at account.microsoft.com to see if the game was refunded for some reason?

Your title says disputed charge did someone dispute the charge for the game?

If so then if the dispute was approved and the money was sent back to the payment option that the purchase was made off of then Microsoft would have taken the license for the game away and it would give you this message.

Here is a scenario that would constitute market place theft. I am not saying this is what happened in your case but here is an example.

1. There are some charges made onto the account on say your credit card that you did not authorize.

2. You call up your bank to dispute those charges and then the bank contacts Microsoft saying that these charges are disputed and then the charges are what is called charged back basically removed from the Microsoft account and credited back to the bank.
Microsoft sees this as a way of getting around their refund policy and trying to get something for free hence marketplace theft.

What should happen in a scenario like this is to contact xbox support when the charges are noticed and let them know there are charges that you do not recognize on the account and then they would look into it and give a refund if in policy.

What you can try and do is to sign into your sons account at commerce.microsoft.com it will show you the purchase history of his account and will show if there was any refunds/chargebacks done on any purchase.

You're right.

I've deleted my suggestion.

a chargeback will probably cause an dispute with Microsoft and some people mentioned that it can cause a (perma) ban.