What is the Fair Credit Billing Act (FCBA)?

Enacted in 1974, the Fair Credit Billing Act (FCBA) is a federal law that helps protect consumers from billing errors and unfair billing practices associated with open-ended consumer credit accounts, such as credit cards. 

The FCBA allows consumers to dispute billing errors. And it requires creditors to respond promptly with no harm to a consumer’s credit scores while the issue is investigated.

What you’ll learn:

• The FCBA provides protections against billing errors such as unauthorized charges as well as charges for undelivered goods or services.

• To file a dispute, you must send a written letter to the creditor within 60 days after the billing statement containing the error was sent to you.

• The FCBA requires creditors to acknowledge they’ve received a dispute within 30 days. They must investigate and resolve the dispute within two complete billing cycles, not to exceed 90 days.

• If the consumer’s dispute is successful, they may receive a credit for the disputed charge and related interest or fees.

Under the FCBA, consumers have the right to:

• Dispute billing errors. If you’d like to dispute an error, the FCBA gives you 60 days after the first billing statement containing the error was sent to you.

• Withhold payment. You typically aren’t obligated to pay the disputed amount or related interest charges while a creditor investigates your dispute. But withholding payment doesn’t apply to transactions not related to the dispute.

• Appeal the dispute decision. If you disagree with the outcome of an investigation, you can challenge the lender’s decision within 10 days.

• Avoid full liability. The FCBA limits your liability to $50 for unauthorized charges. But some credit card issuers, including Capital One, go beyond federal requirements and offer $0 liability on unauthorized charges.

The FCBA covers billing errors on open-ended or revolving credit accounts. Those accounts can include credit cards, charge cards and home equity lines of credit (HELOCs).

Examples of billing errors covered under the FCBA include:

• Unauthorized charges

• Charges with inaccurate dates or amounts

• Accounting errors, such as duplicate charges or missing payment credits

• Billing statements sent to the wrong address if you alerted the creditor to an address change, or later than required, which is 20 days before a billing cycle ends

• Charges for items that were purchased but not received

• Charges for goods or services that were returned, were rejected or weren’t delivered as promised

The FCBA doesn’t cover debit transactions or installment loans, such as auto loans. But other laws protect consumers from these types of transactions. 

The FCBA also doesn’t cover complaints about the quality of goods or services delivered by a merchant. And disputing a billing error under the FCBA isn’t the same as requesting a refund.

The FCBA sets notice and timing requirements for creditors and requires them to:

• Acknowledge a dispute letter within 30 days of receiving it or correct the error as the consumer requests. 

• Investigate and resolve the dispute within two complete billing cycles of receiving the letter, not to exceed 90 days. During this time, the creditor can’t collect the disputed amount or report it to credit bureaus as late. 

• Correct and refund related charges, such as interest or fees, if it’s determined an error occurred.

• Explain findings and share documentation with the customer if it’s determined that an error didn’t occur.

If the borrower disagrees with the creditor’s decision, they can appeal within 10 days.

To dispute a billing error under the FCBA, you’re required to notify the creditor in writing. The Federal Trade Commission (FTC) provides a sample letter to use as a guide.

According to the agency, here are other considerations to keep in mind:

• Note your deadline. You must provide your letter within 60 days of when the first billing statement containing the error was sent to you.

• Provide supporting documentation. You may want to submit copies of receipts or other documentation since they could help support your claim.

• Save your documentation. It may be a good idea to file away your letter and supporting documents in case you need to refer to them again during the dispute process.

Both the FCBA and the FCRA protect consumers, but they do so in different ways. The FCBA protects against billing errors. The Fair Credit Reporting Act (FCRA) does things like helping ensure that borrowers’ credit reports contain fair, accurate information and that their information is protected.

The FCBA is a federal law enacted to protect credit cardholders, among others. If you know your rights under the FCBA, you may be able to have potential billing errors corrected. 

Regularly monitoring your credit can help you spot potential issues, too. With CreditWise from Capital One, you can check your credit score and credit report for free, without hurting your credit scores. Plus, you can get free copies of your credit reports from AnnualCreditReport.com.