Fair Credit Billing Act: It’s purpose is to protect individuals from unfair billing practices. It also provide a mechanism for addressing billing errors in “open end” credit accounts. Which includes credit card or charge card accounts.
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. Individuals have a wide range of rights when doing business with companies around the world.
The Fair Credit Billing Act has several mechanisms in place to ensure fair and accurate billing. Below are the details provided in this article;
The Fair Credit Billing Act (FCBA)
The Fair Credit Billing Act is a United States federal law enacted in 1974 under the Truth in Lending Act. It serves as a means to ensure companies used fair and safe billing processes.
The FCBA gives individuals the ability to dispute charges or temporarily withhold payment for a product or service. That is if purchases on a charge or credit card were made in error or the customer was overcharged.
Before the FCBA individuals had no protections under the law regarding merchants’ mistakes. Now, the law requires credit card and charge card issuers to investigate disputed charges. 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.
Billing Errors Covered by the Fair Credit Billing Act (FCBA)
The following are examples of billing errors covered by the FCBA:
Charges not actually made by the individual
Charges in the wrong amount.
Goods or services charges not received by the individual
Goods charges not delivered as agreed
Charges for goods that were damaged on delivery
Failures to properly reflect payments or credits to an account
Charges that the consumer wants clarified or requests proof of
Statements mailed to the wrong address
Significantly not as described product/goods
Other Regulations Created by the FCBA
In addition to creating a mechanism for dealing with billing errors, the FCBA contains additional regulations, including the following:
Billing statements must be sent at least fourteen days before the payment is due for open end credit accounts that have a grace period prior to adding finance charges.
If banks report payments as delinquent to credit bureaus they must also report a charge is disputed.
Credit card companies may not prohibit merchants from offering discounts to people who pay with cash or check.
Banks may generally not use money in checking or savings accounts to pay a delinquent credit account with the same bank.
The FCBA’s § 170 gives a consumer the right to sue or assert defenses against the credit company
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. You should send a 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 letter of dispute is required within 60 days of the statement mail date.
If the credit card was stolen or used for fraudulent charge; 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 your 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. That is after the investigation concludes.
The Fair Credit Billing Act is a well-known individual protection law. Individuals should take note of the restrictions of the FCBA; namely the 60-day time frame. Also the dollar threshold for making a claim.
Credit card and charge card holders have the right to dispute charges they do not believe are accurate. Resulted from fraudulent activity, or where the merchant did not deliver the product or service as promised.