Key Takeaways
- Limits liability to $50 for unauthorized credit charges.
- Requires written dispute within 60 days of billing error.
- Creditors must resolve disputes within two billing cycles.
- Protects against billing errors on credit, not debit cards.
What is Fair Credit Billing Act (FCBA)?
The Fair Credit Billing Act (FCBA) is a federal law enacted in 1974 to protect consumers from unfair billing practices on open-end credit accounts like credit cards. It limits your liability for unauthorized charges and provides a formal process to dispute billing errors, enhancing consumer rights in credit transactions.
The FCBA applies specifically to revolving charge accounts and credit cards, excluding debit cards or installment loans. Understanding this law helps you safeguard your finances from billing discrepancies and potential fraud.
Key Characteristics
The FCBA provides clear, consumer-friendly protections focused on billing errors and dispute resolution:
- Billing Errors Covered: Unauthorized charges, incorrect amounts, goods or services not received, and billing sent to outdated addresses are all protected under the FCBA.
- Liability Limits: Your maximum liability for unauthorized charges is capped at $50, although many card issuers offer zero liability policies.
- Dispute Notice Requirements: You must send a written dispute within 60 days of the statement date to activate FCBA protections.
- Creditor Response Timelines: Creditors must acknowledge disputes within 30 days and resolve them within two billing cycles or 90 days.
- Payment Withholding: You can withhold payment on disputed amounts during the investigation without affecting your credit status.
How It Works
When you identify a billing error on your credit card statement, sending a written notice to the creditor’s designated billing address within 60 days is essential. This initiates a formal dispute under the FCBA, triggering creditor obligations to investigate.
Creditors must acknowledge receipt of your dispute within 30 days and complete the investigation within two billing cycles (up to 90 days). During this period, they cannot attempt to collect the disputed amount or report negative information to credit bureaus, protecting your credit score as outlined by the FDIC guidelines.
Examples and Use Cases
Practical scenarios illustrate how the FCBA protects consumers in everyday credit transactions:
- Unauthorized Charges: If your card is fraudulently used, such as with Delta ticket purchases, your liability is limited, and you can dispute the charges under FCBA rules.
- Goods Not Delivered: Suppose you order products but receive nothing or defective items; the FCBA allows you to dispute these charges until resolved.
- Incorrect Charges: A billing error, such as being charged $175 instead of $75, can be challenged by submitting proof like receipts, ensuring creditors comply with FCBA timelines.
- Credit Card Selection: Choosing cards from our best credit cards guide can help you find issuers with robust protections aligned with FCBA standards.
Important Considerations
To maximize FCBA benefits, promptly review your statements and act within the 60-day dispute window. Written disputes should be detailed and sent via mail to the creditor’s specified address to ensure eligibility.
Note that online disputes may not always qualify under the FCBA, as it predates digital communications. Additionally, the law excludes debit cards and installment loans, so understanding your account type is crucial. For related financial security, consider learning about dark web risks and indemnity protections to safeguard your personal information and credit.
Final Words
The Fair Credit Billing Act limits your liability for billing errors and unauthorized charges, providing a clear process for dispute resolution. To protect your rights, promptly send a written dispute within 60 days of the statement date if you notice any errors.
Frequently Asked Questions
The FCBA is a federal law enacted in 1974 that protects consumers from unfair billing practices on open-end credit accounts like credit cards. It limits your liability for unauthorized charges, allows you to withhold payment during disputes, and requires creditors to follow specific timelines for resolving billing errors.
The FCBA covers open-end credit accounts such as credit cards and revolving charge accounts. It does not apply to debit cards, installment loans like auto or furniture financing, or fixed-payment contracts.
Billing errors covered include unauthorized charges, charges for goods or services not accepted or delivered as agreed, unprocessed credits like returns, incorrect amounts or dates, and bills sent to an old address after you’ve updated your address timely.
Your liability for unauthorized charges is limited to $50 under the FCBA, even if you report the fraud after the fact. Many credit card companies offer zero liability policies beyond this amount.
You must send a written notice to your creditor’s billing dispute address within 60 days of the statement date showing the error. Make sure to include supporting documents like receipts and continue paying undisputed amounts to avoid delinquency.
Creditors must acknowledge your dispute in writing within 30 days and complete their investigation within two billing cycles, not exceeding 90 days. During this time, they cannot collect the disputed amount or report it as delinquent.
If the error is confirmed, the creditor must correct your bill, refund any fees or interest related to the error, and notify you in writing. No further action is needed from you in this case.
Yes, if the creditor explains why the charge is valid and you disagree, you can challenge their decision within 10 days. You also have the right to add your side of the dispute to your credit report.
