The Definition of the Fair Credit Billing Act

The Fair Credit Billing Act protects consumers against credit card billing errors.

While credit cards and other types of revolving credit can offer consumers convenience and spending flexibility, they can also present a unique set of problems, including errors related to the creditor's billing practices. The federal Fair Credit Billing Act provides consumers with specific protections against credit billing errors, as well as remedies for disputing these mistakes.

Purpose

The purpose of the Fair Credit Billing Act is to protect consumers from credit billing errors that could potentially have a negative impact on their credit score. The Fair Credit Billing Act establishes the process by which billing errors may be disputed by consumers and what the responsibilities of the creditor are with regard to these disputes. The FCBA also provides consumers with additional protections regarding payments, billing statements and refunds or other account credits.

Application

The Fair Credit Billing Act applies to all types of open-ended credit agreements, including credit cards and other types of revolving credit. The FCBA covers billing errors related to unauthorized charges, charges for the wrong amount or date, charges for purchases or services that were never received, mathematical errors, the creditor's failure to post payments or other credits to your account, failure to deliver a billing statement or charges for which you request written verification. For disputes concerning purchases, the FCBA requires that the purchase be greater than $50 and be made in your home state or within 100 miles of your billing address. For purchases made online or over the telephone, the FCBA allows creditors to resolve disputes at their own discretion.

Disputes

Under the Fair Credit Billing Act, you may dispute a billing error in writing within 60 days of receiving the bill containing the error. The creditor then has 30 days to acknowledge receipt of the dispute and 90 days to investigate and resolve the dispute. During this period, you have the right to not pay the disputed portion of the bill and the creditor cannot seek any collection action against you for the disputed amount.

Creditor Responsibilities

Under the Fair Credit Billing Act, creditors must notify you in writing of your right to dispute billing errors when opening a new account. They must also provide a billing statement for each period in which you carry a balance and mail your bill at least 14 days before payment is due. All payments must be credited to your account on the day they are received, and any refunds must be credited within seven days.

Violations

If you have attempted to dispute a billing error with a creditor and you feel they have violated your rights under the FCBA, you have the right to sue for damages for up to $1,000. Violations would include failure to resolve the dispute in a timely manner or threatening to report negative information to the credit bureau. The Federal Trade Commission also encourages consumers to report any violations of the Fair Credit Billing Act.

References

• FTC: Facts for Consumers - Fair Credit Billing
• Lawyers.com: Fair Credit Billing
• FTC: The Fair Credit Billing Act