Table of Contents
- What Is the Fair Credit Billing Act?
- Key Takeaways
- Understanding the FCBA's Protections and Processes
- Consumer Rights Under the Fair Credit Billing Act
- Obligations of Card Issuers and Lenders
- Comparing the FCBA and FCRA: Key Differences and Similarities
- What Kinds of Credit Does the Fair Credit Billing Act Not Cover?
- What Does 'Account in Dispute' Mean?
- Can a Consumer Dispute a Non-Refundable Charge?
- What Is a Chargeback?
- Will a Credit Billing Dispute Affect Your Credit Score?
- The Bottom Line
What Is the Fair Credit Billing Act?
Let me explain the Fair Credit Billing Act directly: it's a 1974 federal law that protects you from unfair credit billing practices. You can dispute unauthorized charges on your accounts and those for goods or services that weren't delivered.
Key Takeaways
The Fair Credit Billing Act, or FCBA, gives you power as a consumer by letting you dispute unauthorized charges and billing errors. It sets up a structured system to handle financial discrepancies on open-end credit accounts like credit cards. You have a 60-day window to report and challenge billing mistakes to your card issuer, and you must submit disputes in writing, except for lost or stolen cards. The FCBA requires credit issuers to respond within specific timeframes, and during investigations, they can't charge you interest on disputed amounts or expect you to pay them. Remember, the FCBA focuses on unfair billing practices, while the Fair Credit Reporting Act, or FCRA, deals with how credit information is collected and shared.
Understanding the FCBA's Protections and Processes
The Federal Trade Commission enforces the Fair Credit Billing Act, which applies to open-end credit accounts such as credit cards, charge accounts, and lines of credit. This act protects you from unfair billing practices, including charges you didn't authorize, charges with the wrong date or amount, charges for goods or services that weren't delivered, charges for items that were received but not as described, calculation errors, charges where you need clarification, and billing statements sent to the wrong address. Importantly, during an investigation, you can withhold payment only for the disputed amount, not the entire bill.
Consumer Rights Under the Fair Credit Billing Act
You have 60 days from receiving your bill to dispute a charge with the card issuer or lender. The charge must be over $50 to qualify for dispute, and you need to file complaints in writing. If your credit card was lost or stolen, though, you can dispute charges by phone instead. You can ask your card issuer to withhold payment and assist in resolving disputes with merchants. For unauthorized user charges, your liability is limited to $50. But if someone is authorized to use your card and makes unauthorized purchases, those aren't covered by the FCBA, and you're liable for them. You can challenge the lender's investigation results within 10 days.
Obligations of Card Issuers and Lenders
The card issuer or lender has 30 days to acknowledge your complaint. They have 90 days to complete the investigation, and during that time, they can't try to collect on the disputed amount, charge interest on it, or report it as late to credit bureaus—though they can report it as in dispute. If they find your dispute valid, they must correct the error and refund any fees or interest charged. If they decide it's invalid, they must explain their findings and provide you with documentation. Note that while the FCBA caps unauthorized charge liability at $50, many card issuers offer zero-liability policies.
Comparing the FCBA and FCRA: Key Differences and Similarities
People often compare the Fair Credit Billing Act to the Fair Credit Reporting Act. Both protect you from bad credit practices, but their purposes differ. The FCRA is a federal law that regulates how credit information about you is collected and reported, governing its sharing with others. The FCBA protects against unfair billing, while the FCRA guards against misuse of your personal information.
What Kinds of Credit Does the Fair Credit Billing Act Not Cover?
The Fair Credit Billing Act applies only to open-end credit, which you can borrow from repeatedly, like credit cards, charge cards, and home equity lines of credit. It doesn't cover closed-end credit, such as auto loans, mortgages, or home equity loans. If you need to dispute a charge on closed-end credit, other laws apply—for example, the Real Estate Settlement Procedures Act covers disputes with mortgage companies or loan servicers.
What Does 'Account in Dispute' Mean?
Under the Fair Credit Billing Act, 'account in dispute' refers to the 90-day period when a credit issuer is investigating your dispute. During this time, the issuer must either fix the issue or send you a letter explaining why they consider the dispute invalid.
Can a Consumer Dispute a Non-Refundable Charge?
Yes, just like any other charge, you have the right to dispute a non-refundable charge if you believe you have a valid claim, such as not receiving the product or service or not having authorized the charge.
What Is a Chargeback?
A chargeback is the return of money to you after successfully disputing a credit transaction, reversing the transfer from your bank account or credit card.
Will a Credit Billing Dispute Affect Your Credit Score?
No, filing a dispute won't impact your credit score. However, the card issuer may report the dispute to credit bureaus during the investigation, and that could appear on your credit report.
The Bottom Line
The Fair Credit Billing Act protects you from unfair billing practices. It gives you a way to dispute billing errors or unauthorized charges, and it requires credit issuers to investigate and resolve them.
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