Have you ever
been billed for merchandise you returned or never received? Has your credit
card company ever charged you twice for the same item or failed to credit a
payment to your account? One of the benefits of using credit and charge cards
is that they come with built-in consumer protection under a federal law called
the Fair Credit Billing Act (FCBA). This law gives you the right to dispute
fraudulent and unfair credit charges.
The Fair Credit
Billing Act (FCBA) applies to "open end" credit accounts, such as
credit cards, revolving charge accounts (department store accounts), and
overdraft checking accounts. It does not cover installment contracts – loans or
extensions of credit you repay on a fixed schedule. Consumers often buy cars,
furniture and major appliances on an installment basis, and repay personal
loans in installments as well.
What types of
disputes are covered?
settlement procedures apply only to disputes about "billing errors."
charges. Federal law limits your responsibility for unauthorized charges to
list the wrong date or amount.
goods and services you did not accept or were not delivered as agreed.
Failure to post
payments and other credits, such as returns.
Failure to send
bills to your current address – provided you supply a change of address at
least 20 days before the billing period ends.
which you ask for an explanation, or written proof of purchase along with a
claimed error or request for clarification.
advantage of the law's consumer protections, you must:
Write to the
creditor at the address given for “billing inquiries,” not the address for
sending your payments, and include your name, address, account number and a description
of the billing error.
letter so that it reaches the creditor within 60 days after the first bill
containing the error was mailed to you.
letter by certified mail, return receipt requested, so you have proof of what
the creditor received. Include copies (not originals) of sales slips or other
documents that support your position. Keep a copy of your dispute letter.
must acknowledge your complaint in writing within 30 days after receiving it,
unless the problem has been resolved. The creditor must resolve the dispute
within two billing cycles (but not more than 90 days) after receiving your
while my bill is in dispute?
withhold payment on the disputed amount (and related charges), during the
investigation. You must pay any part of the bill not in question, including
finance charges on the undisputed amount.
may not take any legal or other action to collect the disputed amount and
related charges (including finance charges) during the investigation. While
your account cannot be closed or restricted, the disputed amount may be applied
against your credit limit.
Will my credit
rating be affected?
may not threaten your credit rating or report you as delinquent while your bill
is in dispute. However, the creditor may report that you are challenging your
bill. In addition, the Equal Credit Opportunity Act prohibits creditors from
discriminating against credit applicants who exercise their rights, in good
faith, under the FCBA. Simply put, you cannot be denied credit simply because
you have disputed a bill.
What if the
bill is incorrect?
If your bill
contains an error, the creditor must explain to you – in writing – the
corrections that will be made to your account. In addition to crediting your
account, the creditor must remove all finance charges, late fees or other
charges related to the error.
If the creditor
determines that you owe a portion of the disputed amount, you must get a
written explanation. You may request copies of documents proving you owe the
What if the
bill is correct?
creditor's investigation determines the bill is correct, you must be told
promptly and in writing how much you owe and why. You may ask for copies of
relevant documents. At this point, you will owe the disputed amount, plus any
finance charges that accumulated while the amount was in dispute. You also may
have to pay the minimum amount you missed paying because of the dispute.
If you disagree
with the results of the investigation, you may write to the creditor, but you
must act within 10 days after receiving the explanation, and you may indicate
that you refuse to pay the disputed amount. At this point, the creditor may
begin collection procedures. However, if the creditor reports you to a credit
bureau as delinquent, the report also must state that you do not think you owe
the money. The creditor must tell you who gets these reports.
If the creditor
fails to follow the procedure
who fails to follow the settlement procedure may not collect the amount in
dispute, or any related finance charges, up to $50, even if the bill turns out
to be correct. For example, if a creditor fails to acknowledge your complaint
within the 30 days allowed after receiving it or takes more than two billing
cycles to resolve a dispute, the penalty applies. The penalty also applies if a
creditor threatens to report – or improperly reports – your failure to pay to
anyone during the dispute period.
the quality of goods and services are not "billing errors," so the
dispute procedure does not apply. However, if you buy unsatisfactory goods or
services with a credit or charge card, you can take the same legal actions
against the card issuer as you can take under state law against the seller.
advantage of this protection regarding the quality of goods or services, you
The dollar and
distance limitations do not apply if the seller also is the card issuer – or if
a special business relationship exists between the seller and the card issuer.
offer "open end" credit also must:
Give you a
written notice when you open a new account that describes your right to dispute
statement for each billing period in which you owe – or they owe you – more
than one dollar.
Send your bill
at least 14 days before the payment is due – if you have a period within which
to pay the bill without incurring additional charges.
payments to your account on the date they are received, unless no extra charges
would result if they failed to do so. Creditors are permitted to set some
reasonable rules for making payments, say setting a reasonable deadline for
payment to be received to be credited on the same date.
or return overpayments and other amounts owed to your account. This applies to
instances where your account is owed more than one dollar. Your account must be
credited promptly with the amount owed. If you prefer a refund, it must be sent
within seven business days after the creditor receives your written request.
The creditor must also make a good faith effort to refund a credit balance that
has remained on your account for more than six months.
You can sue a
creditor who violates the FCBA. If you win, you may be awarded damages, plus
twice the amount of any finance charge – as long as it is between $500 and
$5,000. The court also may order the creditor to pay your attorney's fees and
hire a lawyer who is willing to accept the amount awarded to you by the court
as the entire fee for representing you. Some lawyers may not take your case
unless you agree to pay their fee – win or lose – or add to the court-awarded
amount if they think it is too low.
Your City, State, Zip Code
Your Account Number
Name of Creditor
City, State, Zip Code
Dear Sir or Madam:
I am writing to dispute a billing error in the amount of $______on my account. The amount is inaccurate because (describe the problem). I am requesting that the error be corrected, that any finance and other charges related to the disputed amount be credited as well, and that I receive an accurate statement.
Enclosed are copies of (use this sentence to describe any enclosed information, such as billing statements, sales slips, payment records) supporting my position. Please investigate this matter and correct the billing error as soon as possible.
Enclosures: (List what you are enclosing.)