Fair Credit Billing Act: How Many Days to Dispute a Charge?

The Fair Credit Billing Act (FCBA) is a federal law enacted in 1974. This legislation primarily protects consumers from unfair credit billing practices on open-end credit accounts, such as credit cards and revolving charge accounts. Its purpose is to establish clear guidelines for how credit card companies and other creditors must handle billing disputes and errors. The FCBA provides a structured process for individuals to dispute charges.

Qualifying Billing Errors

The Fair Credit Billing Act defines what constitutes a “billing error” that consumers can dispute. These errors encompass a range of inaccuracies that may appear on a credit statement. An unauthorized charge, which includes charges made by someone not authorized to use an account, is a common example. Charges with an incorrect amount or date also qualify as billing errors under the Act.

The FCBA covers situations where goods or services were not accepted by the consumer or were not delivered as agreed upon at the time of the transaction. This also extends to charges for items that were purchased but never received. Computational or accounting mistakes made by the creditor are also billing errors.

The Act also addresses instances where a creditor fails to properly credit a payment made by the consumer or to reflect a credit issued, such as a refund for returned merchandise. A billing statement sent to an incorrect address, provided the consumer notified the creditor of the address change at least 20 days before the end of the billing period, also falls under the FCBA’s protection. Charges for which the consumer requests clarification or proof of purchase, along with a claimed error, are also covered.

The Dispute Initiation Process

Initiating a dispute under the Fair Credit Billing Act requires the consumer to follow a precise procedure to ensure their rights are protected. A step involves sending a written notice to the creditor within a specific timeframe. This notice must be received by the creditor within 60 days after the first bill containing the error was mailed. Failing to meet this 60-day deadline can result in the forfeiture of the right to dispute the charge under the FCBA.

The written notice must include specific information. It needs to clearly identify the consumer’s name and account number. It should also state the consumer’s belief that the statement contains a billing error, specifying the dollar amount of the error and the date of the potential error.

The notice must provide a clear explanation of why the consumer believes there is an error. This enables the creditor to understand the nature of the dispute and begin their investigation. It is advisable to send this notice to the specific billing inquiries address provided by the creditor, often found on the back of the billing statement, rather than the general payment address. For proof of mailing and receipt, sending the letter via certified mail with a return receipt requested is a recommended practice. Keeping a copy of the letter and any supporting documents is also important for the consumer’s records.

Creditor Investigation and Resolution

After a creditor receives a valid written dispute notice from a consumer, the Fair Credit Billing Act outlines specific responsibilities and timelines for the creditor. The creditor must acknowledge receipt of the dispute in writing within 30 days of receiving the consumer’s notice. This acknowledgment confirms that the dispute process has officially begun.

Following the acknowledgment, the creditor is required to investigate the billing error and resolve the dispute within two complete billing cycles, but in no case longer than 90 days, after receiving the consumer’s letter. During this investigation period, the creditor may issue a provisional credit to the consumer’s account for the disputed amount. This temporary credit becomes permanent if the claim is found in the consumer’s favor; otherwise, it is debited back from the account.

The investigation can lead to one of two outcomes. If the creditor determines that a billing error occurred, they must correct the error on the consumer’s account. This includes removing the disputed amount and any associated finance charges or late fees. If no error is found, the creditor must provide a written explanation of their findings, detailing why they believe the bill is correct, and upon request, provide copies of documentary evidence of the consumer’s indebtedness.

Consumer Protections

During the dispute resolution process, consumers are afforded legal protections under the FCBA. While the dispute is under investigation, the consumer is not required to pay the disputed amount or any related finance charges. However, the consumer remains responsible for paying all other undisputed portions of their bill.

Creditors are prohibited from taking action to collect the disputed amount during this period. This means they cannot send dunning letters, refer the amount to collection agencies, or initiate legal action for non-payment of the disputed sum. The account may be reported as being “in dispute,” but not as delinquent.

Creditors cannot close or restrict the consumer’s account solely due to the disputed amount, unless the consumer fails to pay the undisputed portions of their bill. If a creditor fails to comply with the FCBA’s rules, they may forfeit their right to collect the disputed amount up to $50, even if the original bill was correct. Consumers also have the right to sue a creditor for damages if their FCBA rights are violated.