The Fair Credit Billing Act (“FCBA”) is a federal law designed to protect you from unfair credit billing practices. The FCBA applies to open ended credit accounts, such as credit cards, department store cards and revolving credit accounts-a line of credit where your balance and monthly payment fluctuate. This Act provides guidelines for both consumers and creditors to manage disputes regarding billing statements. Specifically, the FCBA provides an outlet for consumer regarding billing disputes for merchandise purchased and for complaints about the quality of goods and services.
If you have a dispute under the FCBA, you must follow the procedures outlined in the statute but only as it applies to billing errors. Examples of billing errors include charging the wrong account or amount, charges for goods that were never received, failing to post payments and/or credits to your account, failure to send goods to a current address. To exercise your rights, you must write a letter to the creditor at the designated “billing inquiries” address with your name as it appears on your billing statement, address, account number and an explanation of the billing error you are complaining about. The letter must be received by the creditor within 60 days of receipt of the disputed billing statement. Similar to disputing an item on your credit report, this letter should be sent certified mail, so that you have proof of when it was sent and received by the creditor. Under the law, the creditor must respond to your dispute within 30 days of receipt and must provide a resolution within two billing cycles.
The FCBA permits you to withhold payment during the investigation process, however any remaining portion of the bill must be paid. During the investigation, the creditor may not initiate collection efforts or take legal action on the disputed amount but it may use the balance against your credit limit. Much like the Fair Debt Collection Practices Act (“FDCPA”) a creditor is prohibited from threatening to damage your credit by reporting you as delinquent because of the dispute and potential creditors cannot refuse to extend you credit on the grounds that you have a bill under dispute.
Under the FCBA, if the creditor discovers an inaccuracy on your bill during the investigation process, it must provide you with a written explanation of the corrections to be made to your account including any finance charges and/or late fees that may have accumulated during the dispute process. However, if the creditor determines you actually owe the disputed amount, it must provide you with a written explanation and if requested, copies of documents used to reach its decision. Should you disagree with the results, you must notify the creditor within 10 days and while you may refuse to make payment, it is now that the creditor may make efforts to collect either by hiring a collection agency or filing suit. The FCBA, a consumer minded statute, prohibits a creditor from collecting a disputed amount if it fails to follow the outlined procedures.