Over the last several decades, the federal government has put certain legislation in place focused on consumer protections. From credit reporting and fair lending to customer billing, consumers have a wide range of rights when doing business with companies around the world.
In 1974, the Fair Credit Billing Act, or FCBA, was signed into law, offering unique safeguards related to billing practices. The bill is meant to protect consumers from errors in revolving credit accounts, such as charge cards and credit cards.
The Fair Credit Billing Act has several mechanisms in place to ensure fair and accurate billing. Those safeguards are detailed below, so you can understand how this law protects you.
Jump to a section:
- Fair Credit Billing Act
- Your Right to Dispute Billing Errors
- How to File a Dispute
- Your Rights During a Dispute
- Resolution of a Dispute
The Fair Credit Billing Act
The Fair Credit Billing Act was established under the Truth in Lending Act as a means to ensure companies used fair and safe billing processes. The FCBA allows individuals to dispute credit card charges or temporarily withhold payment for a product or service if purchases were made in error or the customer was overcharged.
Before the FCBA consumers had no protections under the law regarding merchants’ mistakes. Now, the law requires credit card and charge card issuers to investigate disputed charges, and the merchant must provide a refund when a claim of fraudulent or erroneous charges is made.
Under the law, consumers are protected against negative consequences of withholding payment or disputing purchases. The dispute process previously had a negative impact on a consumer’s credit score because payments were not being made.
However, the FCBA now gives consumers protection from negative credit entries as a dispute is in process. Additionally, the law safeguards individuals from liability and fraudulent charges if their charge or credit card was part of a data breach.
Although the FCBA affords some protections to cardholders, it does little if the consumer does not follow the steps for disputing. It is only when you formally dispute a charge that the protections under the law are in place. Here are a few things to know about the dispute process:
Your Right to Dispute Billing Errors
The Fair Credit Billing Act includes several common billing errors, including:
- Unauthorized charges
- Charges that are in the wrong amount or on the wrong date
- Charges for services or goods not accepted after purchase or not delivered as agreed
- Math errors on charges
- Failure to post payments like returns for items
- Failure to send bills to the individual’s address
If one of these errors occurred on a charge or credit card, you as a consumer have a right to dispute the error. Any dispute under the FCBA must be submitted within 60 days after the bill containing the error was mailed.
If a dispute is requested after this 60-day window, the card issuer has no responsibility to investigate your claim. For this reason, it is important to pay close attention to billing statements for charge and credit cards, and ensure that each charge is accurate. Additionally, disputes are only legally protected when they exceed $50.
How to File a Dispute
To file a dispute after an erroneous charge, you must put the complaint in writing and mailed directly to the card issuer. Under the law, calling the credit card or charge card issuer will not suffice.
Include identifying information in the dispute letter such as your name, address, account number, and the dollar amount of the charge in question. You also need to include the reason for the dispute, such as a fraudulent charge or an incorrect billing amount. The letter should be sent by certified mail so it can be tracked. The Federal Trade Commission provides an easy-to-use sample dispute letter for this purpose.
In certain instances, the dispute process differs. Here are some of those example, and a few tips to keep in mind for each scenario.
- If the credit card issuer made a mistake – A written dispute letter is required within 60 days of the statement mail date.
- If the credit card was stolen or used for fraudulent charges – A written dispute letter is not required for fraudulent charges. Instead, call your credit or charge card issuer immediately to notify them of the problem. You should also cancel the card.
- If the merchant failed to provide a product or service you purchased – You have the right to temporarily withhold payment if the purchase is more than $50. However, this is reserved only for products or services that were not delivered as promised by the merchant. A call may also work in this case, but to be safe, send a formal dispute in writing.
Your Rights During a Dispute
The Fair Credit Billing Act provides several rights to consumers, including the right to dispute and to withhold payment. During the dispute process, individuals have up to 60 days to submit a complaint, and the card issuer has up to 30 days to acknowledge receipt of the dispute.
The card issuer also has two full billing cycles to resolve the issue if the dispute is found to be valid. During this time, there is no requirement to pay the questioned amount. Your credit score and report are not impacted by withholding payment for this type of dispute. However, other payments must continue to be made on time and in full.
Resolution of a Dispute
For a successful dispute, the FCBA requires that card issuers provide a refund for the charges if they have already been paid. They must waive any late fees, interest charges, or other costs associated with the erroneous charge.
If a complaint is unfounded, the credit issuer is required to provide an explanation in writing. If you want to appeal the decision of the credit card or charge card company, you have that right. Any appeal must be submitted in writing within 10 days after the investigation concludes.
Bottom Line
The Fair Credit Billing Act is a well-known consumer protection law, but it offers significant benefits with protections against fraudulent and erroneous charges.
Credit card and charge card holders have the right to dispute charges they do not believe are accurate, that resulted from fraudulent activity, or where the merchant did not deliver the product or service as promised.
Consumers should take note of the restrictions of the FCBA, namely the 60-day timeframe and the dollar threshold for making a claim. Going through the dispute process can be time-consuming, particularly if there is an appeal submitted after the investigation closes.