Fair Credit Billing Act (FCBA)

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Fair Credit Billing Act (FCBA)

What Is the Fair Credit Billing Act?

The Fair Credit Billing Act is a federal legislation established in 1974 to protect consumers from unfair credit billing practices and to allow people to contest unlawful charges and undelivered products or services.

Key Takeaways

  • The Fair Credit Billing Act protects customers from unfair billing practices.
  • Unauthorized charges, charges with an inaccurate date or amount, and calculation mistakes are all examples of billing errors covered by the law.
  • Consumers have 60 days after receiving their credit card statement to dispute a charge with the card issuer.
  • The FCBA protects customers from deceptive billing practices, while the FCRA targets deceptive tactics using personal information.
  • A chargeback is the refund of money to a client after a successful dispute of a specific transaction.

Understanding the Fair Credit Billing Act

The Fair Credit Billing Act, which applies to “open-end” credit accounts such as credit cards or charge accounts, is enforced by the Federal Trade Commission. The Act protects customers from unfair invoicing practices such as:

  • Charges that the customer did not approve.
  • Charges with the incorrect date or amount
  • Charges for non-delivery of goods or services
  • Charges for products or services not received as stated.
  • Calculation errors.
  • Charges that the customer wishes to clarify.
  • Statements were sent to the wrong address.

How the Fair Credit Billing Act Works

For Consumers

  • Consumers have 60 days after receiving their credit card statement to dispute a charge with the card issuer.
  • To be eligible for a dispute, charges must be more than $50, be illegal, reflect an inaccurate date or amount, or have arithmetic mistakes. Written complaints must be lodged.
  • If a customer has a problem with a merchant, they may request that the card issuer delay payment and assist in resolving the dispute.
  • If a product or service was not provided, the fee might be challenged.
  • If an unauthorized user uses a card, the card holder’s liability is restricted to $50.
  • If someone is permitted to use a card but makes unlawful transactions with it, the charges are not protected by the Fair Credit Billing Act and the cardholder is responsible for them.
  • If a credit card is lost or stolen, customers may challenge transactions over the phone rather than in writing.
  • Consumers have 10 days to reject the investigation’s findings.
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For Card Issuers

  • The card company has 30 days to respond to a complaint.
  • The issuer has 90 days to finish their inquiry, during which time they are not permitted to attempt to collect payment on the disputed amount, impose interest on it, or report it as late to credit agencies.
  • If the card issuer determines that the dispute is genuine, it must remedy the mistake and refund any fees or interest that were charged as a consequence of the error.
  • If the dispute is found to be invalid, the card issuer is required to explain its conclusions and provide proof.

Important

A customer may delay payment just on the disputed amount during an inquiry.

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

The Fair Credit Billing Act and the Fair Credit Reporting Act are often contrasted (FCRA).Both are intended to safeguard customers from unfair credit card practices, but they serve distinct purposes.

The Fair Credit Reporting Act is a federal legislation that governs the collection and reporting of consumer credit information. The legislation controls how credit information about a customer is gathered and shared with others.

The FCBA protects customers from unfair billing practices, while the FCRA protects consumers from unfair personal information practices.

Frequently Asked Questions

What Does “Account in Dispute” Mean?

The Fair Credit Billing Act defines “account in dispute” as the 90-day period during which a credit issuer investigates a consumer’s grievance. The creditor must either correct the problem or write the customer a letter stating why the dispute is incorrect.

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What Is the Electronic Fund Transfer Act?

When customers move money online, they are protected under the Electronic Fund Transfer Act (EFTA). ATMs, direct deposit, Internet banking, and debit card transactions are examples of transfer mechanisms.

Can a Consumer Dispute a Non-Refundable Charge?

As with any other fee, the customer has the opportunity to contest the transaction if there is a legitimate claim. Valid claims include failure to get the goods or service or failure to sign or approve the non-refundable price.

What Is a Chargeback?

A chargeback is the refund of money to a client after a successful dispute of a specific transaction. It cancels a payment from the payer’s bank account or credit card.

Will a Dispute Affect a Consumer’s Credit Score?

No, a consumer’s credit score is unaffected by filing a dispute.

The Bottom Line

The Fair Credit Billing Act is intended to safeguard customers from unfair billing practices. The statute includes remedies for both customers and credit card issuers and offers a channel for consumers to challenge billing mistakes or illegal payments.

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