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ISSUES
Fair Credit Billing Act
The Fair Credit Billing Act (FCBA) was enacted to help consumers
with credit billing issues. Credit billing errors do occur and
can be resolved if you know how to use the Fair Credit Billing
Act (FCBA).
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 a loan or credit sales, which is 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.
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. 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 original 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.
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.
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. Keep that letter in case the
creditor fails to remove the claim from your credit history. You'll
need to as proof.
If the creditor investigates and still believes the bill is correct,
you must be told promptly in writing how much you owe and why.
You may also ask for copies of relevant documents. At this point,
you will owe the disputed amount, plus any finance charges that
accumulated while it was disputed.
Even after the FCBA dispute settlement procedure has ended, you
may still feel the bill is wrong. If this happens, write the creditor
within 10 days after receiving the explanation
and say you still refuse to pay the disputed amount. At this point,
the creditor may begin collection procedures. However, if the
creditor reports you to a credit bureau as delinquent, he must
also state that you don't think you owe the money. Also, you must
be told who receives such reports.
Any creditor who fails to follow the FCBA dispute settlement
procedure may not collect the amount in dispute, or any finance
charges on it, up to $50, even if the bill turns out to be correct.
For example, this penalty would apply if a creditor acknowledges
your complaint in 45 days (15 days too late) or takes more than
two billing cycles to resolve a dispute. It also applies if a
creditor threatens to report - or goes ahead and improperly reports
- your non-payments to anyone. You also have the right, as more
fully described below, to sue a creditor for any violations of
the FCBA.
Keep very good notes, dates, times. who you spoke with
and keep all written records and letters between you and your
creditor. And, be timely!
The FCBA also requires open end creditors to do the
following for their customers:
• Give you a written notice when you open a new account,
and at other specified times, describing your right to dispute
billing errors.
• Provide a statement for each billing period in which
you owe, or they owe you, more than $1.00.
• Mail or deliver your bill to you at least 14 days before
the payment is due, if you are given a time period within which
to pay the bill without incurring additional finance or other
charges.
• Credit all payments to your accounts as of the date
they are received, unless not doing so would not result in extra
charges.
• Promptly credit or refund overpayments.
For more information contact the Federal
Trade Commission.
The above information should be understood to be a general discussion
of the subject matter and does not constitute a legal opinion
about the situation. For further information please consult a
qualified professional.
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