What Is the Fair Credit Billing Act?
The Fair Credit Billing Act – FCBA is an act that expects that a credit card issuer promptly credits your payments and make necessary corrections on mistakes on your bill without causing damage to your credit score. It is an act that also establishes procedures for settling credit card billing disputes, including those linked to unauthorized charges.
To be entitled to protections provided by the FCBA, you must file your dispute within 60 days of when the error first appeared on your statement. When you dispute a charge, it may result in a “chargeback”- a reversal of the credit card transaction, which results in a refund to you from your card issuer.
Examples of Billing Errors
The following are examples of billing errors under the FCBA.
- Consumers are given 60 days from the time the received their credit card bill to dispute a charge with a card issuer. These charges must be over $50 to be considered eligible for dispute. The charge may be unauthorized, display an incorrect date or amount, or contain calculation errors. In a case where a good or service was not delivered, that charge can be disputed.
- The consumer must put into writing their complaints and have it mailed to the issuer. You can get a sample letter on the Federal Trade Commission website.
- The card issuer is given 30 days to acknowledge receipt of a complaint. After which they have two billing cycles to complete their investigation. During that time, the issuer is not allowed to try to accept the payment. Charge interest on it, or report it to credit bureaus as late. Note that these barriers only refer to the disputed payment. And, not other charges made during the same billing cycle. This can still accrue interest and be reported as late if not paid.
- Where the card issuer sees that the disputed payment was invalid. it must correct the error. And refund any fees or interest charged as a result. If it discovers there was no error, it must explain it’s findings. And, upon request, provide documentation to back them up. However, consumers can challenge the results of the investigation within 10 days. At which point the issuer must add a note to the charge. The issuer may still try to collect payment.
More Billing Errors
- In the case of lost or stolen cards, consumers may dispute charges by phone instead of writing. If the card was used by an unauthorized user to make purchases, the card holder’s liabilities are limited to $50 (issuers generally agree to pay this). When an authorized user uses the card to make unauthorized purchases, those charges are not covered by the Fair Credit Billing Act, and the cardholder will be liable for them.
- Where a consumer has a dispute with a merchant, they can ask the card issuer to withhold payment and request the issuer to wade in and help in resolving the dispute: the issuer is not required to settle the disagreement. However, consumers must meet certain requirements in order to take advantage of this right. They have to approach the vendor first, and unless the vendor is also the card issuer, the purchase has to exceed $50 and must have been made within 100 miles of the card holder’s mailing address.