The Fair Credit Billing Act (FCBA) establishes procedures for resolving mistakes on credit billing and account statements. It is imperative to check these account statements frequently. These documents might have errors that could damage your credit. If you find an error or discrepancy, inform the company and dispute the error immediately.
Billing errors covered by this law include:
- Unauthorized charges against your card
- Charges that list the wrong date and amount
- Charges for goods or services that the consumer didn't accept or weren't delivered as agreed
- Errors in calculating charges and interest
- Failure to post payments, returns and other credits
- 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 that the credit owner had contested in writing and weren't previously resolved.
Notice of Billing Error
This law requires credit companies to inform consumers about their rights to report and resolve billing errors. In most cases, you need to report the error within 60 days of receiving the statement and:
- Write to the creditor at the address given for "billing inquiries," not the address for sending your payments, and include your name, address, account number and a description of the billing error.
- Send your letter by certified mail, return receipt requested, so you have proof of what the creditor received. Include copies (not originals) documents that support your position. Retain a copy of your dispute letter.
The creditor must respond to your complaint in writing within 30 days after receiving it, unless the problem has been resolved. The creditor has to resolve the dispute within two billing cycles (but not more than 90 days) after getting your letter. You aren't required to pay the disputed amount or any related charges resulting from the inquiry.
Creditor's Response to the Notice
Once notified of a billing error and it isn't resolved immediately, the creditor can't report the disputed amount as delinquent to any of the credit reporting companies. Instead, the following steps must be taken:
- Acknowledge receipt of the notice of billing error
- Conduct a reasonable investigation to determine if the billing error exists
- Correct the error and related charges if the error is valid
- Send a correction notice
- Report the resolution to each credit agency notified of a delinquency
After investigating the request and no error exists, or another error happened, the credit company must:
- Correct any other errors
- Send an explanation for the new error or why the account is correct
- Provide documentation supporting this explanation
- Notify the consumer of the amount owed and date the payment is due
Response from a creditor if you send a second notice isn't required. In addition, if the creditor initiates a collection on the amount you haven't paid, you can show that you have a billing error in your defense.
Important Note
Disputes about the quality of goods and services are not "billing errors," so the dispute procedure does not apply. However, if you buy unsatisfactory goods or services 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 seller.
To take advantage of this protection regarding the quality of goods or services, you must:
- have made the purchase (it must be for more than $50) in your home state or within 100 miles of your current billing address;
- make a good faith effort to resolve the dispute with the seller first.
The dollar and distance limitations don't apply if the seller also is the card issuer - or if a special business relationship exists between the seller and the card issuer.
Other Billing Rights
Businesses that offer "open end" credit also must:
- give you a written notice when you open a new account - and at certain other times - that describes your right to dispute billing errors;
- provide a statement for each billing period in which you owe - or they owe you - more than one dollar;
- send your bill at least 14 days before the payment is due - if you have a period within which to pay the bill without incurring additional charges;
- credit all payments to your account on the date they're received, unless no extra charges would result if they failed to do so. Creditors are permitted to set some reasonable rules for making payments, say setting a reasonable deadline for payment to be received to be credited on the same date; and
- promptly credit or refund overpayments and other amounts owed to your account. This applies to instances where your account is owed more than one dollar. Your account must be credited promptly with the amount owed. If you prefer a refund, it must be sent within seven business days after the creditor receives your written request. The creditor must also make a good faith effort to refund a credit balance that has remained on your account for more than six months.
If you believe that a creditor is violating the law, file a complaint with the Federal Trade Commission or you can sue a creditor who violates the 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.
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