How the Fair Credit Billing Act (FCBA) protects consumers

Your credit score is an important aspect of your financial well-being, and the Fair Credit Billing Act (FCBA) protects you from unfair billing practices and unscrupulous practices that can harm it. The FCBA provides consumers with various protections and rights, but it’s helpful to know how it all works.

Billing errors and bad practices can lower your score and make it difficult to open new lines of credit, get loans and get a job. Understanding the FCBA can help you protect yourself and file a dispute if needed. Our guide sums up the basic information you need to know, including your rights as a consumer and how to dispute errors.

Key takeaways:

• The FCBA protects consumers from billing practices and the Fair Credit Reporting Act (FCRA) focuses on practices that involve a consumer’s personal information.
• The FCBA covers billing errors, like unauthorized charges, calculation errors and charges with incorrect dates or amounts.
• The FCBA only applies to revolving credit, like credit cards and other lines of credit, but it doesn’t cover auto loans and mortgages.
• Disputes using the FCBA must be filed within 60 days of receiving the bill from their card issuer or lender.

The Fair Credit Billing Act protects consumers from various unfair billing practices. Many people utilize the FCBA protections for bad billing practices on their credit cards, but it also applies to other forms of revolving credit like personal lines of credit and home equity lines of credit (HELOC).

Under the FCBA, you have the right to dispute errors on your billing statements, but you must file the dispute within 60 days of receiving your bill. While under review, the creditor cannot take action against you. This includes threatening collections or reporting non-payment to the credit bureaus.

Your liability for unauthorized charges is $50. This means you’re only responsible for a maximum of $50 of the fraudulent charges.

Knowing your rights under the FCBA can help you deal with creditors when filing a dispute. As mentioned above, you have the right to dispute unfair billing practices and billing errors on your bill — but you must do so within 60 days of receiving your bill.

Some of your additional rights include:

• You don’t have to pay for credit charges occurring after reporting your card lost or stolen
• If the investigation confirms a billing error, the creditor must remove the incorrect charges and adjust your balance accordingly
• The creditor must provide you with an explanation of their investigation and provide details about how they made their decision
• If your card number is stolen via a card shimmer or skimmer, it’s treated the same as if your card was stolen

The FCBA works by giving you rights and protections against unfair billing practices. It’s enforced by the Federal Trade Commission (FTC) and covers situations such as:

• Unauthorized or fraudulent charges
• Charges showing the wrong date or amount
• Charges on goods or services that were misrepresented
• Charges on goods or services that weren’t delivered
• Math errors
• Statements delivered to the wrong address
• Suspicious charges

If you find any of the above on your billing statement, you can file a dispute with the creditor.

Once received, the creditor must acknowledge the dispute within 30 days. They then have two billing cycles to complete their investigation. This entire process typically takes between 30 and 90 days. If they don’t agree with the dispute, you have 10 days to challenge the results of the investigation.

Creditors may be responsible for multiple penalties if they don’t follow the FCBA guidelines when they receive a dispute. If the investigation shows there was an error, they must issue refunds promptly and correct the billing mistakes. If they don’t, some damages can include:

• Any actual damages sustained as a result of the violation
• Twice the amount of any finance charge associated with the billing error with a minimum of $500 and a maximum of $5,000 in statutory damages or a higher amount if an established pattern or practice of FCBA violations can be demonstrated
• Costs and reasonable attorney’s fees incurred by the consumer

To file an FCBA dispute, you must send a written letter via mail to the creditor within 60 days of receiving your bill. The Consumer Financial Protection Bureau (CFPB) provides a sample letter for disputing billing errors.

When sending your letter, it’s important to include any documentation that backs your claim. Some helpful documentation includes:

• Canceled payments
• Receipts for purchases reflecting a different amount than what’s on your statement
• Correspondence with the merchant discussing a fraudulent charge
• Police reports

When sending the letter to the creditor, it should go to the address listed for their billing inquiries, which is often different from the address for regular payments.

If your creditor finds that your bill has a mistake, the creditor must credit your account and remove all late fees or charges related to the error. If the creditor finds the dispute invalid, they must notify you in writing how much you owe and why.

It’s common to see the FCBA compared to the Fair Credit Reporting Act (FCRA), but there are some key differences. The FCRA regulates how your credit information is collected, and the FCBA protects you from unfair billing practices.

A chargeback is when the creditor returns the money to your account. If the investigation shows that your dispute is legitimate, you receive a chargeback for that specific transaction. When the chargeback occurs, it will reverse the money transfer from your bank or credit card.

You will see no positive or negative impact on your credit score when you file a dispute with the creditor. However, the credit bureau Experian® explains other occurrences that may happen as a result of the dispute process:

• The creditor may add a statement on your report that there is currently a dispute
• Potential lenders may require the dispute to be resolved before proceeding with your application for major purchases

Negative marks on your credit report can significantly impact your credit score, and sometimes, it’s best to get help from professionals.

Lexington Law Firm has a team of credit specialists who help challenge reporting errors on your behalf as part of our service. To become a client, sign up today, and you can also get a free credit assessment to see where your credit stands.

Note:The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.