Have you ever received a bill from a credit card company that contained errors? Did the merchant charge your card twice? Does your billing statement contain unauthorized charges for goods or services that were not received or items that were returned? Or maybe you’ve been assessed fees for late payments even though you’ve always paid on time.
These are a few examples of common billing errors that appear on credit card statements. Fortunately, the Fair Credit Billing Act (FCBA) was designed to protect consumers from unfair billing practices.
Even better, you may not have to fork over your hard-earned cash to pay the bill until the issues are rectified. Furthermore, your credit score will not take a hit if you miss a payment while the billing error is in dispute.
Keep reading to learn more about how the Fair Credit Billing Act works and how to use it if the need arises.
Types of Accounts That Are Covered Under the Fair Credit Billing Act
The Fair Credit Billing Act is a powerful tool for consumers to have in their arsenal. It applies to the following types of accounts:
- Traditional credit cards
- Department store credit cards
- Retail credit cards
- Any other types of open end credit accounts.
However, the FCBA protections do not extend to installment accounts. These include auto loans, student loans, and mortgages.
A Closer Look at How the Fair Credit Billing Act Works
1. You have to follow specific guidelines to file a grievance.
The moment you spot inaccuracies, you should file a grievance. But you can’t pick up the phone, call the creditor, and demand they fix the issue. (Well, you can but chances are you won’t have much luck using that approach).
There are specific guidelines you must follow for coverage under the Fair Credit Billing Act. Otherwise, the credit card issuer is not obligated to investigate and resolve the dispute.
2. Disputes are to be submitted in writing.
It’s so much easier to give them a call or send an email detailing your issue. Unfortunately, you can’t exercise these options if you want to ensure your dispute is investigated by the creditor.
But why the hassle? It all boils down to two words: paper trail. Creditors want to make sure they have everything in writing to substantiate their decision. Otherwise, they may run into issues down the line if there are more problems with the account.
And in some situations, a written statement may not be enough to back up your assertions. You may need supporting documentation to boost the odds of the creditor ruling in your favor. But it’s not required to get the investigation going.
When you’re ready to submit a dispute, you’ll need the following:
- A written letter that includes your name, address, account number, detailed explanation of the billing error, and the amount. Also, include a note about any supporting documentation (if applicable).
- A copy of the billing statement with the contents in question highlighted.
- Copies of any supporting documentation.
If you need help drafting up a letter to dispute billing errors, the Federal Trade Commission has a handy template here.
Once you’re all set, drop off your package at the post office. Be sure to mail it with a return receipt so it’ll be hand-delivered and you can confirm its arrival.
3. Disputes must be initiated within 60 days.
Did you notice a billing error several months after the fact? The protections of the Fair Credit Billing Act may not apply to you. You have a 60-day window, starting from the date the bill was mailed, to submit a dispute. But what happens if you miss the cutoff? Your creditor may still review your claim, but they’re not legally obligated to do so.
So, should you file a grievance after the fact? It doesn’t hurt to try. And if you have strong evidence to back up your claim, you increase the chances of a positive resolution.
4. The creditor must respond within 30 days.
The federal law requires a creditor to provide a written response within 30 days. But that doesn’t mean they’ll conduct the investigation during this time frame. In fact, they must resolve the dispute within two billing cycles, and they have more than 90 days to reach a decision. So, be patient, as a delayed response could mean the creditor is still researching your claim.
5. You don’t have to pay the disputed amount until the dispute is resolved.
During the same 30-day window or until the investigation is complete, the Fair Credit Billing Act affords you the opportunity to withhold payment without facing repercussions. This is quite beneficial, considering credit card companies report accounts to the credit bureaus as delinquent once they hit the 30-day mark.
But, you are still responsible for the part of the bill that is accurate. And failure to make payment could result in the negative reporting of the account to the credit bureaus.
6. You’re still protected if the card is lost or stolen.
If your billing errors are a result of unauthorized use, you’re still covered under the Fair Credit Billing Act. Even better, it’s not necessary to file a grievance through snail mail.
Instead, you can pick up the phone and call them at first sight of fraudulent transactions on your credit card. Even if your card is compromised by hackers while in your possession, you’re still covered. Liability limits are as follows:
- $0 if the card is reported lost or stolen before use
- $50 maximum liability limit
7. Rulings on disputes can be challenged.
Was your dispute denied? You have the right to request more documentation to support the creditor’s decision. Another option is to reach out to them to learn more about why your claim was denied.
You can also submit a new dispute, but that doesn’t release your liability in the meantime. It just makes it so the creditor must make a note in your credit report detailing what has transpired thus far. (Note: you must challenge the outcome within 10 days of learning the decision for the note to be placed on your credit report).
Bonus Tip: Chargebacks
What if all the transactions on your credit card are valid, but the quality of one of the items isn’t up to par? You may be able to charge back the purchase to recoup your losses if the merchant refuses to issue a refund.
A few factors to consider before going this route:
- The purchase has to be unpaid on the credit card or you can’t fight the charge.
- The purchase must have occurred in your home state or within 100 miles of your mailing address.
- Chargebacks must be allowed under state law.
If the credit card issuer approves your dispute, a chargeback is granted and a refund will be issued.
Do you need additional help with billing disputes?
Having trouble with the billing dispute process? Reach out to the creditor once again to confirm you have the correct address for billing inquiries. Also, inquire about any additional documentation they may need to expedite the processing of your dispute. But if they continue to be uncooperative, file a formal complaint with the Federal Trade Commission (FTC). You can also hire a consumer lawyer and sue them.
Beyond the FCBA: Explore the FDCPA and FCRA
While the Fair Credit Billing Act (FCBA) offers valuable protections against unfair credit billing practices and billing errors, it’s not the only legislation that safeguards consumer rights in financial matters. We encourage you to also explore our informative pages on the Fair Debt Collection Practices Act (FDCPA) and the Fair Credit Reporting Act (FCRA).
The FDCPA is a crucial law that protects consumers from abusive, deceptive, and unfair debt collection practices. Understanding your rights under the FDCPA can empower you to respond effectively if you’re facing harassment or unfair practices from debt collectors.
Similarly, the FCRA plays a vital role in ensuring the accuracy, fairness, and privacy of information in consumer credit reports. It’s essential to know your rights under the FCRA, especially if you’re dealing with credit reporting errors or issues related to credit information privacy.
By familiarizing yourself with these laws, you can better navigate the complexities of credit, debt, and financial privacy. Visit our pages on the FDCPA and FCRA to learn more and arm yourself with the knowledge to protect your financial wellbeing.