The Fair Credit Billing Act offers protections for consumers against unfair credit billing practices.
Even though the law originally passed in 1974, the Fair Credit Billing Act is still relevant today. Perhaps among the best features of the FCBA are that creditors have to respond to your billing dispute quickly and you don’t have to pay the disputed amount — at least until the investigation is resolved.
What consumers should know about FCBA protections
The FCBA set strict guidelines for creditors to follow that protect consumers from having their credit damaged while waiting for the result of a credit billing dispute investigation. The law offers us all sorts of protections, including the rights to dispute a charge with a card issuer, to withhold payment of a disputed charge until an investigation is complete, and to receive a refund or credit to your account for overpayment.
Do the protections under the Fair Credit Billing Act apply to all types of credit?
The Fair Credit Billing Act protections only apply to open-ended credit plans and revolving charge accounts. They do not apply to installment loans or extensions of credit paid on a fixed schedule.
Disputing billing errors
Disputing billing errors is fairly straightforward, but you must follow the rules in the FCBA to be protected under the law. Just some of the kinds of billing errors that can be disputed include unauthorized charges, charges with the wrong amount listed, charges with the wrong date listed and math errors.
To dispute a charge, you need to mail a letter that includes your name, address, account number and a description of your billing error, and send it to your creditor’s billing inquiries address. You should also include copies of anything that backs up why you’re disputing the billing error (like a receipt showing a different purchase amount than what was billed, for example). The letter must reach your creditor within 60 days after you receive the billing statement that contains the error.
The creditor must acknowledge receipt of your complaint within 30 days of receiving it, unless they resolve the issue first. And no matter the outcome, the creditor must resolve the dispute within two billing cycles after receiving your letter.
While you don’t have to pay for the disputed transaction during the dispute, you do have to make payments related to all other purchases. The creditor is not allowed any actions related to the dispute that might ding your credit, but they can note the dispute.
If after receiving the results of the investigation you disagree with the decision, you can dispute that, too. You have 10 days (beginning from when you received the results) to do so, and you can note that you will not pay the disputed amount. At this point, the creditor can begin trying to collect on the amount owed and report you as delinquent if you fail to pay the amount owed. That said, creditors must also report that you’re disputing the amount owed when reporting the payment delinquency.
If the creditor fails to meet any of the timelines required by the Fair Credit Billing Act during the investigation process, they can’t collect the amount in dispute, regardless of whether the bill was correct or not.
Do I really have to mail my dispute to be protected under the FCBA?
Unfortunately, you must submit written notice by mail to dispute a transaction and call upon your protections as a consumer under the FCBA. You can, of course, dispute a transaction by phone or online — but you’d have no recourse under the FCBA.
Withholding payment on merchant disputes
If you’re having a dispute with a merchant over the quality of goods or services you purchased on a credit card, the Fair Credit Billing Act can help. These situations don’t involve billing errors, so the dispute procedure doesn’t apply — but if you have a problem with goods or services you paid for with a credit or charge card, you can take the same legal actions against the card issuer as you can take under state law against the merchant.
This protection only applies to purchases of more than $5 made in your home state or within 100 miles of your current billing address (though there’s an exception on both counts if the card issuer and merchant are one and the same). You must also have made a good faith effort to have the issue corrected with the merchant before taking legal action against your card issuer.
Other protections granted in the FCBA
The Fair Credit Billing Act also offers a handful of other protections. For instance, creditors must promptly post payments to your account when they receive them. This helps to protect you from paying unfair interest or fees.
The law also allows you to request a refund if you make an overpayment on your account. If you don’t request a refund, the creditor must apply the excess payment to your account.
Next steps
The Fair Credit Billing Act offers a lot of protections to consumers, but it’s important to carefully follow the procedures outlined in the law to call upon your rights when disputing transactions.
Unfortunately, the FCBA was written before anyone dreamed of the internet — and the law hasn’t been updated — so you must mail your billing error disputes in order to be covered under the law.
To be certain your billing error dispute is received, consider sending your dispute by certified mail and asking for a return receipt. And thanks to the Fair Credit Reporting Act, all three major credit bureaus are required by law to give you a copy of your credit report, at your request, at least once every 12 months for free — so you can check whether your account was reported as delinquent while you were disputing the transactions. You can also get, through Credit Karma, your Equifax and TransUnion VantageScore 3.0 credit scores for free, any time.