The Fair Credit Billing Act (FCBA) helps fix credit card billing errors by providing for the prompt correction of errors on open-end credit accounts such as department store credit cards and protects consumers’ credit ratings while they are settling disputes.
Under the law, if a consumer is disputing a charge creditors cannot report the consumer’s account as delinquent. This law applies to open-end credit instruments, such as credit cards, revolving charge accounts, and overdraft checking.
Consumers who question an item are responsible for notifying the creditor in writing within 60 days of receiving a bill. The creditor must acknowledge the notice within 30 days and may not do anything to damage the consumer’s credit rating while the item is in dispute.
Overview of the Fair Credit Billing Act
Types of Disputes Covered
- Billing Errors.
- Unauthorized Charges (federal law limits your responsibility for unauthorized charges to $50).
- Charges that list the wrong date or amount.
- Charges for goods and services you didn’t accept or weren’t delivered as agreed.
- Math errors.
- Failure to post payments and other credits, such as returns.
- Failure to send bills to your current address – provided the creditor receives your change of address, in writing, at least 20 days before the billing period ends.
- Charges for which you ask for an explanation or written proof of purchase along with a claimed error or request for clarification.
How to dispute a billing error
Consumers must write the creditor at the address given for “billing inquiries” and include your name, address, account number anda description of the billing error. The dispute must be made within 60 days after the first bill containing the error was mailed to you.
Enclose any documentation such as sales receipts to support your dispute and mail the dispute certified, return receipt in order to have a record of the dispute.
Response from creditor
Within 30 days after receiving the dispute, the creditor must acknowledge the complaint and within two billing cycles, not to exceed 90 days, the creditor must resolve the dispute. If the bill is found to contain errors, the creditor must explain, in writing, any corrections made to the account. A credit must be given to the account and finance charges, late fees or other charges related to the error must be removed.
Should the account not contain any errors, the creditor must promptly inform you, in writing, how much you owe and why. The consumer has the right to request documentation proving money is owed on the disputed amount. Further, if you disagree with the results of the investigation, you can write the creditor within 10 days after receiving the written explanation from the creditor.
Consumer rights during the investigation process
Payment can be withheld on the disputed amount and related charges during the investigation. Any part of the account balance not in dispute must continue to be paid as normal, including finance charges.
The creditor may not take any legal or other action to collect the disputed amount and related charges (including finance charges) during the investigation and the creditor may not threaten your credit rating or report you as delinquent while your bill is in dispute.
However, after the investigation is completed and the creditor finds you owe the disputed amount, they begin collection procedures. However, if the creditor reports you to a credit bureau as delinquent, the report also must state that you don’t think you owe the money. The creditor must tell you who gets these reports.
When a creditor fails to follow procedures
Failure to follow procedures can result in a creditor not being able to collect the amount in dispute, or any related finance charges, up to $50, even if the bill turns out to be correct.
For example: If a creditor acknowledges your complaint in 45 days which is 15 days too late or takes more than two billing cycles to resolve a dispute, the penalty applies. The penalty also applies if a creditor threatens to report to the credit bureaus or improperly reports to the credit bureaus your failure to pay to anyone during the dispute period.
Violations of the Fair Credit Billing Act
You can sue a creditor who violates the Fair Credit Billing Act (FCBA). If you win, you may be awarded damages, plus twice the amount of any finance charge as long as it’s between $100 and $1,000. The court also may order the creditor to pay your attorney’s fees and costs.
Credit card companies can be reported to the Consumer Financial Protection Bureau for violations of the Fair Credit Billing Act. Visit the CFPB here.