Finances

FAIR CREDIT BILLING ACT

The Fair Credit Billing Act, 15 U.S.C. §§1666-1666j, provides consumers with a procedure to resolve billing disputes in open-end credit accounts, such as credit card accounts. 12 CFR §226.13 contains the regulations for billing errors for open-end credit plans. 
The billing errors covered by the Act includes:

Charges on the consumer's statement that were not made with the consumer's permission. 

A transaction for which the amount charged is incorrect. 

Charges for goods that were not delivered or accepted. It does not include a dispute that relates to the quality of property or services that the consumer has accepted. 

Charges for which the consumer wants more information. 

Mathematical errors by the card issuer, failure to properly credit the account, and the failure to mail the statement to the proper address. 15 U.S.C. §1666(b). 

The consumer must give the card issuer written notice of the error within sixty days after the statement containing the error is transmitted to the debtor. The notice must include the consumer's name and account number, a statement of the error, the consumer’s reasons for believing there is an error, and an estimate of the amount of money involved. 15 U.S.C. §1666(a). 

The card issuer must acknowledge receipt of the notice of error within 30 days unless the dispute is resolved before then. 15 U.S.C. §1666(a). 

The card issuer must resolve the dispute within 90 days, or two complete billing cycles, whichever is less. The card issuer can correct the account as the consumer has requested, correct it in a different amount, or after a reasonable investigation, decide that no billing error was made. Whatever action is taken by the card issuer, the card issuer must send the consumer a written explanation of the decision reached and inform the consumer of his or her right to request copies of the documents that support the conclusion that has been reached. 15 U.S.C. §1666(a). If the credit card company determines no error was made, the consumer has the normal grace period or ten days, whichever is longer, to pay the debt before a finance charge is imposed. 12 CFR §226.13(g). Failure to follow this dispute resolution procedure means the card issuer has forfeited the right to collect the disputed amount, up to $50. 15 U.S.C. §1666(e). 

During the dispute, the card issuer cannot restrict or close the account for nonpayment of the amount in dispute or report the amount in dispute to any consumer-reporting agency as a delinquency. The card issuer can continue to show the disputed amount on the billing statement and impose finance charges on the disputed amount, as long as the statement indicates that the amount does not need to be paid pending the resolution of the dispute. If the charge is found to be in error, the consumer is not responsible for these finance charges and any finance charges paid on the disputed amount will be credited to the consumer’s account. The consumer must continue to pay any undisputed obligations while the card issuer investigates the disputed charge. 15 U.S.C. §1666(d). 

If the consumer continues to allege that there is an amount in error after the creditor has reached its conclusion, the creditor may report the amount as a delinquency. In doing so, however, the card issuer must also report that the consumer disputes the bill. The card issuer must also notify the consumer of those to whom it reported the delinquency. When the dispute is finally resolved, the creditor must report the resolution of the dispute to those to whom it has reported the delinquency. 15 U.S.C. §1666a. 

The Act provides for the prompt crediting of a payment to the consumer’s account (15 U.S.C. §1666c) and provides instructions on what to do with excess payments on an account (15 U.S.C. §1666d). 15 U.S.C. §1666ji gives the consumer the right to sue the card issuer for some claims against sellers in some circumstances (not tort claims, where the consumer has made a good faith effort to resolve the dispute with the seller, the transaction was more than $50 and the transaction was within the same state as the address given the consumer or within 100 miles of that address). Liability in these cases is limited to the amount of the transaction remaining unpaid on the credit account. 15 U.S.C. §1666i(b). 

This information has been provided by Jay Speer, Virginia Poverty Law Center.

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