Fair Credit Billing Act
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- The Fair Credit Billing Act generally applies to "open end" credit accounts that include: credit cards, revolving charge accounts, and overdraft checking.
- If you find a mistake on your bill, you must send a separate written billing error notice to the creditor. It must reach the creditor within 60 days after the first bill containing the error was mailed to you.
- Your billing error notice must be acknowledged by the creditor in writing within 30 days after it is received, unless the problem is resolved within that period.
- While a bill is being disputed, the creditor may not threaten to damage your credit rating or report you as delinquent to anyone.
Has the department store's computer ever
billed you for merchandise you returned to the store or never
received? Or has the credit card company ever charged you twice
for the same item or failed to properly credit a payment made on
your account? Credit billing errors do occur, but they are easy
to resolve if you know how to use the Fair Credit Billing Act
(FCBA). Congress passed this law in 1975 to help consumers
resolve disputes with creditors and to ensure fair handling of
credit accounts.
The FCBA generally applies only to "open end" credit
accounts. Open end accounts include credit cards, revolving
charge accounts (such as department store accounts), and
overdraft checking. The periodic bills, or billing statements,
you receive (usually monthly) for such accounts are covered by
the FCBA. The Act does not apply to loans or credit sales which
are paid according to a fixed schedule until the entire amount is
paid back.
The FCBA settlement procedure applies only to disputes over
"billing errors" on periodic statements, such as the
following:
* Charges not made by you or anyone authorized to use your
account.
* Charges which are incorrectly identified or for which the wrong
amount or date is shown.
* Charges for goods and services you did not accept or which were
not delivered as agreed.
* Computational or similar errors.
* Failure to properly reflect payments or other credits, such as
returns.
* Not mailing or delivering bills to your current address
(provided you give a change of address at least 20 days before
the billing period ends).
* Charges of which you request an explanation or written proof of
purchase.
When many consumers find a mistake on their bill, they pick up
the phone and call the company to correct the problem. You can do
this if you wish, but phoning does not trigger the legal
safeguards under the FCBA.
To be protected under the law, you must send a separate written
billing error notice to the creditor. Your notice must reach the
creditor within 60 days after the first bill containing the error
was mailed to you. Send the notice to the address provided on the
bill for billing error notices (and not, for example, directly to
the store, unless the bill says that's where it should be sent).
In your letter, you must include the following information:
* Your name and account number.
* A statement that you believe the bill contains a billing error
and the dollar amount involved.
* The reasons why you believe there is a mistake.
It's a good idea to send it by certified mail, with a return
receipt requested. That way you'll have proof of the dates of
mailing and receipt. If you wish, send photocopies of sales slips
or other documents, but keep the originals for your records.
Your letter claiming a billing error must be acknowledged by
the creditor in writing within 30 days after it is received,
unless the problem is resolved within that period. In any case,
within two billing cycles (but not more than 90 days), the
creditor must conduct a reasonable investigation and either
correct the mistake or explain why the bill is believed to be
correct.
You may withhold payment of the amount in dispute including
the affected portions of minimum payments and finance charges
until the dispute is resolved. You are still required to pay any
part of the bill which is not disputed, including finance and
other charges on undisputed amounts.
While the FCBA dispute settlement procedure is going on, the
creditor may not take any legal or other action to collect the
amount in dispute. Your account may not be closed or restricted
in any way, except that the disputed amount may be applied
against your credit limit.
While a bill is being disputed, the creditor may not threaten
to damage your credit rating or report you as delinquent to
anyone. However, the creditor is permitted to report that you are
disputing your bill.
Another federal law, the Equal Credit Opportunity Act, prohibits
creditors from discriminating against credit applicants who, in
good faith, exercise their rights under the FCBA. You cannot be
denied credit merely because you have disputed a bill.
If your bill is found to contain a billing error, the creditor must write you explaining the corrections to be made on your account. In addition to crediting your account with the amount not owed, the creditor must remove all finance charges, late fees, or other charges relating to that amount. If the creditor concludes that you owe part of the disputed amount, this