Fair Credit Billing Act of 1974
The Fair Credit Billing Act of 1974 (FCBA) was passed to promote fair billing practices among creditors. The FCBA requires creditors to investigate disputed charges on a billing statement in a prompt manner. The FCBA applies specifically to open-end credit accounts such as credit cards; the Act does not apply to fixed-payment loans.
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What the Act Covers
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The FCBA covers specific billing errors. Errors covered by the act include unauthorized charges, charges with the wrong date or time, failure of the creditor to post payments or returns, and errors in interest charges. Disputes regarding failure to send billing statements to the proper address are also covered in the FCBA.
Notice
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A debtor must follow certain guidelines to avail himself of the act. For instance, notice of a billing dispute must be sent to the creditor's "billing inquiries" address. Debtors must include a name, address, account number and error in dispute. Additionally, notices of disputed charges must be sent to a creditor within 60 days of receiving a statement containing an error.
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Creditor's Responsibilities
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According to the Federal Trade Commission, "The creditor may not take any legal or other action to collect the disputed amount and related charges (including finance charges) during the investigation." Creditors may not threaten debtors with delinquency or threaten a debtor's credit rating while the error is in dispute. Creditors may, however, report that a debtor is disputing an error.
What's Next?
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If a billing statement is deemed correct after an investigation, a creditor must send the details of the investigation to the debtor. If the debtor disputes the findings, he must give the creditor notice within 10 days of receiving the findings. If after an investigation, a billing statement is found to contain an error, a creditor is required to explain the error in writing and reverse all charges related to the error. If a creditor fails to follow the procedures required by the FCBA, he may not collect on the charge in dispute or any charges related to the charge in dispute.
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References
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