Fair Credit Billing Act:
Dispute Billing Errors Directly
with the Creditor
by rebuildcreditscores.com
Copyright RebuildCreditScores 2008.
All Rights Reserved
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The Fair Credit Billing Act provides for the prompt correction of errors on
open-end credit accounts such as department store credit cards and
protects consumers' credit ratings while they are settling disputes.
Under this law, if a consumer
is disputing a charge,
creditors cannot report the
consumer's account as
delinquent.

This applies to open-end
credit instruments, such as
credit cards, revolving
charge accounts, and
overdraft checking.

Consumers who question an
item are responsible for
notifying the creditor in
writing within 60 days of
receiving the bill.
Basics of the Fair Billing Act

Types of disputes covered

  • Billing Errors.
  • Unauthorized Charges (federal law limits your responsibility for
    unauthorized charges to $50).
  • Charges that list the wrong date or amount.
  • Charges for goods and services you didn't accept or weren't
    delivered as agreed.
  • Math errors.
  • Failure to post payments and other credits, such as returns.
  • Failure to send bills to your current address - provided the creditor
    receives your change of address, in writing, at least 20 days before
    the billing period ends.
  • Charges for which you ask for an explanation or written proof of
    purchase along with a claimed error or request for clarification.

Consumers must do the following to take advantage of the Fair
Billing Act:

  • Write to the creditor at the address given for "billing inquiries," not
    the address for sending your payments.
  • Include your name, address, account number and a description of
    the billing error.
  • Send your letter so that it reaches the creditor within 60 days after
    the first bill containing the error was mailed to you.
  • Send your letter by certified mail, return receipt requested, so you
    have proof of what the creditor received.
  • Send supporting documentation such as copies (not originals) of
    sales slips or other documents that support your position. Keep a
    copy of your dispute letter.

Responsibility of the creditor

  • The creditor must acknowledge your complaint in writing within thirty
    (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 letter.

What you can do while the dispute is under investigation

  • You may 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.

What creditors can and cannot do while the dispute is under
investigation

  • The creditor 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.
  • The creditor may not threaten your credit rating or report you as
    delinquent while your bill is in dispute.
  • The creditor may report that you are challenging your bill.
  • The Equal Credit Opportunity Act prohibits creditors from
    discriminating against credit applicants who exercise their rights. You
    cannot you cannot be denied credit because you've disputed a bill.

If your disputed bill does contain errors and the bill is incorrect

  • The creditor must explain to you, in writing, the corrections that will
    be made to your account.
  • The creditor must credit 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 money.

If your disputed bill does not contain errors and 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'll
    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 ten (10) days after receiving the
    explanation.
  • 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 don't think you owe the money. The creditor must
    tell you who gets these reports.

What if the creditor fails to follow the procedure

  • If a creditor fails to follow the settlement procedure they cannot
    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 acknowledges your complaint in 45 days
    which is 15 days too late  or takes more than two billing cycles to
    resolve a dispute, the penalty applies. The penalty also applies if a
    creditor threatens to report to the credit bureaus or improperly
    reports to the credit bureaus your failure to pay to anyone during the
    dispute period.

Responsibilities of creditors that offer “Open End” credit

  • Creditors must give you a written notice when you open a new
    account, and at other times, that describes your right to dispute
    billing errors.

  • Creditors must provide a statement for each billing period in which
    you owe or they owe you, more than one dollar.

  • Creditors must send your bill at least fourteen (14) days before the
    payment is due if you have a period within which to pay the bill
    without incurring additional charges.

  • Creditors must credit all 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.

  • Creditors must promptly credit or refund 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.

What to do if the creditor violates the FCBA

  • You can sue a creditor who violates the Fair Credit Billing Act
    (FCBA). If you win, you may be awarded damages, plus twice the
    amount of any finance charge as long as it's between $100 and
    $1,000. The court also may order the creditor to pay your attorney's
    fees and costs.

  • Report the Creditors to the Federal Trade Commission (FTC). The
    FTC works for the consumer to prevent fraudulent, deceptive and
    unfair business practices in the marketplace and to provide
    information to help consumers spot, stop, and avoid them.  Visit the
    FTC at www.ftc.gov.

To review the full Fair Credit Billing Act visit:
http://www.ftc.gov/os/statutes/fcb/fcb.pdf
 
The creditor must acknowledge the notice within 30 days and may not
do anything to damage the consumer's credit rating while the item is in
dispute.
American Express
More Resources
Sample Dispute letter to creditor. Use this letter to get creditors to correct billing
errors.

Disputing information on your credit files
Tips for Disputing Negative information in your Credit Files.

Fair Credit Reporting Act (FRCA)
Helpful FCRA Rules you can use when writing letters to the credit bureaus and
collection agencies.

Your States Statute of Limitations
Learn the amount of time a creditor can sue you for a debt according to your State.
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