Fair Credit Billing Act – FCBA – Credit & Debt
What Is the Fair Credit Billing Act?
The Fair Credit Billing Act is a 1974 federal law designed to protect consumers from unfair credit billing practices.
Understanding the Fair Credit Billing Act
The Fair Credit Billing Act (FCBA) lays out consumers' rights to dispute credit card issuers' charges:
- Consumers have 60 days from the time they receive their credit card bill to dispute a charge with a card issuer. Charges must be over $50 to be eligible for dispute. They may be unauthorized, display an incorrect date or amount, or contain calculation errors. If a good or service was not delivered, that charge can be disputed.
- The consumer must make their complaint in writing and mail it to the issuer. The Federal Trade Commission has posted a sample letter to its website.
- The card issuer has 30 days to acknowledge receipt of a complaint. They then have two billing cycles to complete their investigation; during that time the issuer is not allowed to try to collect the payment, charge interest on it, or report it to credit bureaus as late. These limitations only applied to the disputed payment, not other charges made during the same billing cycle, which can still accrue interest and be reported as late if not paid.
- If the card issuer finds that the disputed payment was invalid, it must correct the error and refund any fees or interest charged as a result. If it finds there was no error, it must explain its findings and, upon request, provide documentation to back them up. Consumers can challenge the results of the investigation within 10 days, at which point the issuer must add a note to the charge. The issuer can still try to collect a payment, however.
- If a card was lost or stolen, consumers may dispute charges by phone rather than in writing. If an unauthorized user makes purchases with a card, the card holder's liabilities are limited to $50 (which issuers generally agree to pay). If a person is authorized to use a card but makes unauthorized purchases with it, those charges are not covered by the Fair Credit Billing Act, and the cardholder is liable for them.
- If a consumer has a dispute with a merchant, they can ask the card issuer to withhold payment and request that the issuer helps resolve the dispute; the issuer is not required to settle the disagreement, however. Consumers must meet certain requirements to take advantage of this right: they must approach the vendor first; and unless the vendor is also the card issuer, the purchase must exceed $50 and have been made within 100 miles of the card holder's mailing address.