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? While
frustrating, these errors can be corrected. It takes a little
patience and knowledge of the dispute settlement procedures provided
by the Fair Credit Billing Act (FCBA).
The law applies to "open end"
credit accounts, such as credit cards, and revolving charge accounts
- such as department store 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?
The FCBA settlement procedures
apply only to disputes about "billing errors." For example:
-
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; and
-
charges for which you ask for
an explanation or written proof of purchase along with a claimed
error or request for clarification.
To take 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.
-
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. Include copies (not originals) of sales slips or
other documents that support your position. Keep a copy of your
dispute letter.
The creditor 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 letter.
Date
Your Name
Your Address
Your City, State, Zip Code
Your Account Number
Name of Creditor
Billing Inquiries
Address
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
sales slips, payment records) supporting my position. Please
investigate this matter and correct the billing error as soon
as possible.
Sincerely,
Your name
Enclosures: (List what you are enclosing.) |
What happens while my bill is
in dispute?
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.
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.
Will my credit rating be
affected?
The creditor 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've 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
money.
...the bill is correct?
If the 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'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 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 don't think you owe the
money. The creditor must tell you who gets these reports.
...the creditor fails to
follow the procedure?
Any creditor 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 acknowledges your
complaint in 45 days - 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 - or
improperly reports - your failure to pay to anyone during the
dispute period.
An important caveat
Disputes about 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.
To take advantage of this
protection regarding the quality of goods or services, you must:
The dollar and distance
limitations don't apply if the seller also is the card issuer - or
if a special business relationship exists between the seller and the
card issuer.
Other billing rights
Businesses that offer "open end"
credit also must:
-
give you a written notice when
you open a new account - and at certain other times - that
describes your right to dispute billing errors;
-
provide a 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;
-
credit all payments to your
account on the date they're 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; and
-
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.
Suing the creditor
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's between
$100 and $1,000. The court also may order the creditor to pay your
attorney's fees and costs.
If possible, 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's too low.
Reporting FCBA violations
The Federal Trade Commission (FTC) enforces
the FCBA for most creditors except banks. 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. To file a complaint or to get
free information on consumer issues, call toll-free, 1-877-FTC-HELP
(1-877-382-4357), or use the complaint form at
www.ftc.gov. The FTC enters
Internet, telemarketing, identity theft and other fraud-related
complaints into Consumer Sentinel, a secure, online database
available to hundreds of civil and criminal law enforcement agencies
in the U.S. and abroad.