The Fair Credit Billing Act (FCBA) is a U.S. federal law which was created to protect American consumers from unfair billing practices imposed by creditors. It specifically applies to “open end” accounts, such as credit cards and revolving charge accounts as opposed to installment agreements or fixed-rate payment plans associated with certain types of loans. In addition, the law provides a venue for dispute resolution for consumers. Since the FCBA is an amendment of the U.S. Truth in Lending Act, the specific rights of consumers and dispute settlement procedures are outlined and governed by Title 15 of the United States Code, Section 1601.
According to the Fair Credit Billing Act, there are a number of billing errors subject to remediation by law. This includes mistakes relating to incorrect charge amounts, dates of purchase, or the failure to apply payments or other credits to the account during the same billing period. Several protection safeguards are also in effect. For instance, the consumer can only be held liable for unauthorized charges up to the first $50 US Dollars (USD) initially, and not at all if the charges prove to be unlawful. In addition, the consumer cannot be held responsible for charges for merchandise or services never received or rejected due to failing to meet expectations. Finally, charges cannot be enforced for items for which the consumer has made a written request for verification or proof of purchase.
To launch a billing dispute under the Fair Credit Billing Act, the consumer must first inform the creditor of the details of the dispute in writing within 60 days of the mailing date of the bill the error first appeared upon. The letter should be sent via certified mail, confirmed delivery, or other method producing a receipt of delivery or acceptance. It should also be accompanied by copies of any relevant documentation supporting the claim, such as a receipt for payment or returned merchandise. While the consumer is responsible for paying any portion of the bill not affected by the error, there is no obligation to pay charges in dispute.
In response to a billing dispute, the creditor must conduct an investigation, as well as acknowledge in writing the receipt of notification of the dispute within 30 days. After that, the creditor must resolve the matter within two consecutive billing cycles, or no more than 90 days from receipt of the consumer’s letter of dispute. If the creditor fails to follow these guidelines, or imposes or threatens to impose collection procedures during the investigation period, the consumer is entitled to bring a civil lawsuit against the creditor. Under the Fair Credit Billing Act, the consumer may be awarded twice the amount of finance charges imposed, as well as monetary damages and legal fees.