What Is the Fair Credit Billing Act?

Have you ever been contacted by your credit card issuer about a suspicious transaction on your account? Ever checked your credit card statement and discovered charges you don’t recognize? Or found that you’ve been overcharged on a purchase, or billed for merchandise you never received?

If your answer is yes to any of the questions above, it’s a good idea to become familiar with the Fair Credit Billing Act (FCBA).

Fair Credit Billing Act Definition

The Fair Credit Billing Act is a federal law which was enacted in 1974 as an amendment to Regulation Z of the Truth in Lending Act (TILA). The law was designed to protect consumers from unfair credit billing practices. The law applies to “open end credit accounts.” These include credit cards and revolving charge accounts. The FCBA, however, does not apply to installment loans like mortgages, auto loans, or personal loans which you repay on a fixed schedule.

What Is the Purpose of the Fair Credit Billing Act?

Thanks to the FCBA, you can enjoy the following rights when it comes to your credit card accounts.

  • Your issuer must send your credit card bill so that it arrives at least 14 days before the minimum payment due date. (The CARD Act of 2009 now requires card issuers to ensure that your billing statements are delivered at least 21 days before payment is due.)

  • If you overpay, your credit card company must credit your account or refund you promptly. If an overpayment credit has remained on your account for more than six months, the card issuer must make a good faith effort to send you a refund.

  • You have the right to dispute credit card charges which you believe to be billing errors, including unauthorized charhes.

  • Your liability for unauthorized charges is capped at $50, if you report the fraud promptly. (Most credit card issuers will waive even this charge as a matter of customer service.)

  • You may be able to dispute credit card charges when you are dissatisfied with the quality of goods or services you received (though these aren't considered "billing errors" and are treated differently).

  • Your credit must resovle your dispute promptly (within two billing cycles, but not more than 90 days after receiving your dispute letter).

  • While an account is in dispute under the Fair Credit Billing Act, you do not have to pay the disputed amount.

  • During the investigation of a dispute, your creditor cannot take legal action to collect the disputed amount, threaten your credit rating, report you as delinquent, or restrict/close your account because you have disputed a bill or charge.

Lost or Stolen Credit Cards

The FCBA also offers you protection in the event that your credit card is lost or stolen. In fact, if you report the loss of your card before it is used for fraudulent transactions, the FCBA says you are not liable for any charges you didn’t authorize.

Keeping Your Account Safe From Fraud

Keeping Your Account Safe From Fraud

  • Cut up old credit cards (cutting through the card number) before you throw them away.

  • Shred monthly statements before you throw them away or consider signing up for paperless statements.

  • Shred monthly statements before you throw them away or consider signing up for paperless statements.

  • Only carry the credit cards you need. Store the rest in a secure location.

  • Report lost/stolen cards or suspicious activity to your card issuer immediately.

  • Monitor your credit reports periodically for suspicious activity.

  • If you’ve been a victim of identity theft or are worried about fraud, consider placing fraud alerts or credit freezes on your credit reports.

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