The Federal Fair Credit Billing Act (FCBA) has established a process by which an individual can resolve issues related to unauthorized charges or errors on their bank and credit card statements. The FCBA provides individuals with special protections while they are pursuing this process.
The FCBA was enacted in 1974 as an amendment to the Truth in Lending Act (TILA). The FCBA was designed to protect consumers from unfair credit billing practices.
The FCBA applies to open end credit accounts. This includes things such as credit cards and revolving charge accounts. The FCBA does not apply to installment loans such as:
- Auto loans; and
- Personal loans which the individual repays on a fixed schedule.
It is important to note that the FCBA offers individuals certain protections but it does not give them to the individual automatically. In other words, the individual must be proactive and request the protections when needed.
An individual should always review their bank and credit card statements to ensure that they are accurate. An individual should also check to make sure their account balance is correct and there are no unauthorized charges or any other type of errors on their statements.
What Protections does the FCBA Provide?
There are several protections the FCBA provides to individuals regarding their credit card accounts. These include:
- The credit card bill must be sent in time so it arrives at least 14 days prior to the minimum due date. However, the CARD Act of 2009 requires the credit card issuer to send the bill in such a manner that it is delivered at least 21 days prior to the minimum payment due date;
- If an individual overpays, their credit card company must credit their account or refund the overpayment promptly. If the overpayment credit has remained on the account for more than 6 months, the credit card issuer must make a good faith effort to send the individual a refund;
An individual has the right to dispute credit card charges they believe are billing errors, including unauthorized charges;
- The individual’s liability for unauthorized charges is capped at $50 if they report the fraudulent charge promptly. Many credit card issuers will waive this charge in the name of customer service;
- An individual may be able to dispute a credit card charge when they are dissatisfied with the quality of goods or services they received. However, these are not considered billing errors and are treated differently;
- An individual’s creditor must resolve a dispute promptly, or within 2 billing cycles, and not more than 90 days after receiving a dispute letter;
- The individual does not have to pay the disputed amount while the account is in dispute;
- During the investigation of the dispute, the creditor cannot take any of the following actions:
- legal action to collect the disputed amount;
- threaten the individual’s credit rating;
- report the individual as delinquent; or
restrict or close the account because the individual has disputed a bill or charge.
The FCBA also offers individuals protection if their credit card is lost or stolen. As long as they report the loss of their credit card prior to it being used for any fraudulent transactions, the individual will not be liable for any charges they did not authorize.
It is important to note that debit card loss is not covered by the FCBA. The Electronic Funds Transfer Act (EFTA) offers protections when an individual experiences fraudulent debit transactions. The protections are not as good as those under the FCBA, so using a credit card for certain transactions may help protect an individual against fraud.
What Types of Disputes are Covered by the FCBA?
The FCBA only applies to billing errors. These include:
- Unauthorized charges;
- Charges that list the wrong date or amount;
- Charges for goods and services an individual did not accept or were not delivered as agreed;
- Math errors;
- Failure to post payments and other credits;
- Failure to send bills to the individual’s current address; and
- Charges for which an individual asks for an explanation or written proof of purchase along with a claimed error or request for clarification.
How Can I Take Advantage of the FCBA?
There are certain steps an individual must take in order to receive consumer protections under the FCBA. These include:
- Writing to the creditor at the billing inquiries address, and including:
- the individual’s name;
- account number; and
- a description of the billing error;
- Sending the letter so that it reaches the creditor within 60 days after the bill containing the error was first sent;
- Sending the letter by certified mail with a return receipt so that the individual has proof of what the creditor received. It is important to keep copies of any sales slips or other documents along with a copy of the dispute letter;
- The creditor must acknowledge the individual’s complaint in writing within 30 days of receipt, unless it has been resolved; and
- The dispute must be resolved within two billing cycles, and no more than 90 days, after receipt of the individual’s letter.
An individual may withhold payment of the disputed amount while the bill is in dispute. The creditor may not threaten their credit rating or credit report while the bill is in dispute.
How Can I Report an FCBA Violation?
The Federal Trade Commission (FTC) enforces the FCBA for most creditors. However, the FTC does not enforce the FCBA for banks.
The goal of the FTC is to prevent fraudulent, deceptive, and unfair business practices in the marketplace. It also seeks to provide information to help consumers spot, stop, and avoid these types of practices.
The FTC may enter fraud complaints into an online database. This database is available to civil and criminal law enforcement agencies across the United States.
What Happens After I Report an FCBA Violation?
Once the individual’s card issuer has completed their investigation of the dispute, they must notify the individual in writing of the results. If the charge was a mistake or a fraudulent charge, the individual’s account must be credited back for the charge. If there are any related finance charges, late fees, or other fees, those must be credited back as well.
If an individual discovers fraudulent activity on one of their credit cards, they should check their entire credit report for any sign of fraud. The Fair Credit Reporting Act (FCRA) gives individuals the right to dispute any information on their credit report that is incorrect.
If the creditor determines that the individual does owe the charge, they must send an explanation in writing. If the individual still disagrees with the credit issuer, they can write them bank again, but this letter must be sent within 10 days of receiving the explanation letter.
In some cases, it may be better for the individual to just pay the disputed amount if they are able. If they refuse to pay the disputed amount, even if they send a letter explaining why, they could suffer some repercussions. These may include:
- The card issuer beginning collection procedures;
- The card issuer reporting late payments to the credit bureaus, including a statement that the individual does not believe they owe the money; and
- Any late payments that are reported to the credit bureaus may damage an individual’s credit score.
Do I Need a Lawyer Experienced with the FCBA?
It is important to have the assistance of an experienced financial lawyer for any FCBA related issues you may have. It is important to note that, in response to a complaint by a consumer, the FTC will bring its own action against a company. However, your lawyer can assist you in filing your complaint, help you understand the law, and assist you with any other FCBA related questions.