Fair Credit Billing Act (FCBA)

What Is the Fair Credit Billing Act?

The Fair Credit Billing Act is a 1974 federal law enacted to protect consumers from unfair credit billing practices and enables individuals to dispute unauthorized charges and undelivered goods or services.

Key Takeaways

  • The Fair Credit Billing Act provides consumers with protection from unfair billing practices.
  • Billing errors covered by the law include unauthorized charges, charges with an incorrect date or amount, and calculation errors.
  • Consumers have 60 days from the time they receive their credit card bill to dispute a charge with a card issuer.
  • The FCBA protects consumers from unfair billing practices, while the FCRA addresses unfair practices using a consumer's personal information.
  • A chargeback is the return of money to a customer following the successful dispute of a particular transaction.

Understanding the Fair Credit Billing Act

The Federal Trade Commission enforces the Fair Credit Billing Act which covers "open-end" credit accounts such as credit cards or charge accounts. The Act provides consumers with protection from unfair billing practices such as:

  • Charges not authorized by the consumer.
  • Charges with the wrong date or amount.
  • Charges on goods or services that weren't delivered.
  • Charges for goods or services that are received by not as described.
  • Calculation errors.
  • Charges for which the consumer needs clarification.
  • Statements delivered to an incorrect address.

How the Fair Credit Billing Act Works

For Consumers

  • 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, is unauthorized, display an incorrect date or amount, or contain calculation errors. Complaints must be filed in writing.
  • 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.
  • If a good or service was not delivered, that charge can be disputed.
  • If an unauthorized user makes purchases with a card, the card holder's liabilities are limited to $50.
  • 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 card was lost or stolen, consumers may dispute charges by phone rather than in writing.
  • Consumers can challenge the results of the investigation within 10 days.

For Card Issuers

  • The card issuer has 30 days to acknowledge receipt of a complaint.
  • The issuer has 90 days to complete their investigation, during which time the issuer is not allowed to try to collect payment on the disputed amount, charge interest on it, or report it to credit bureaus as late.
  • If the card issuer finds that the dispute is valid, it must correct the error and refund any fees or interest charged as a result.
  • If the dispute is invalid, the card issuer must explain its findings and provide documentation.

Important

During an investigation, a consumer may withhold payment only on the disputed amount.

Fair Credit Billing Act (FCBA) vs. Fair Credit Reporting Act (FCRA)

The Fair Credit Billing Act is often compared to the Fair Credit Reporting Act (FCRA). Both are designed to protect consumers from bad credit card practices but the purpose of each law is different.

The Fair Credit Reporting Act is a federal law that regulates the collection and reporting of credit information from consumers. The law governs how a consumer's credit information is collected and shared with others.

The FCBA protects consumers from unfair billing practices while the FCRA protects consumers from unfair practices regarding their personal information.

Frequently Asked Questions

What Does "Account in Dispute" Mean?

Under the Fair Credit Billing Act, "account in dispute" refers to the 90-day period in which a credit issuer is investigating a consumer's dispute. The credit issuer must either remedy the situation or send a letter to the consumer explaining why the dispute is invalid.

What Is the Electronic Fund Transfer Act?

The Electronic Fund Transfer Act (EFTA) protects consumers when they transfer funds electronically. Such methods of transfer include ATMs, direct deposit, Internet banking, and debit card transactions.

Can a Consumer Dispute a Non-Refundable Charge?

Just like with any other charge, the consumer has the right to dispute the transaction as long as there is a valid claim. Valid claims include not receiving the product or service or not having signed or authorized the non-refundable charge.

What Is a Chargeback?

A chargeback is the return of money to a customer following the successful dispute of a particular transaction. It reverses a money transfer from the payer's bank account or credit card.

Will a Dispute Affect a Consumer's Credit Score?

No. Filing a dispute has no impact on a consumer's credit score.

The Bottom Line

The Fair Credit Billing Act is designed to protect consumers from unfair billing practices. The act provides a path for consumers to dispute billing errors or unauthorized charges and incorporates remedies for both consumers and credit card issuers.