The Fair Credit Billing Act (FCBA) is a federal law established in 1974 aimed at protecting consumers from unfair billing practices. The law defines the rights and responsibilities of both consumers and creditors regarding billing errors and disputes.
Key Provisions of the Fair Credit Billing Act
Dispute Resolution Procedures
The FCBA provides a structured process for consumers to dispute billing errors on credit accounts. Consumers must notify creditors of billing errors in writing within 60 days of the statement date, and creditors must acknowledge the complaint within 30 days and resolve it within 90 days.
Protection Against Unauthorized Charges
The FCBA limits consumer liability for unauthorized charges to a maximum of $50. This provides significant consumer protection against fraudulent activity on credit accounts.
Correction of Billing Errors
Creditors are required to correct billing errors and provide a detailed explanation regarding the corrections. Errors can include incorrect amounts, charges for goods or services not delivered, and charges without consumer agreement.
Types of Billing Errors
Billing errors covered under the FCBA include:
- Charges that list the wrong date or amount.
- Charges for goods and services not accepted by the consumer or not delivered as agreed.
- Mathematical errors.
- Failure to post payments and other credits, such as returns.
- Incorrect application of finance charges.
Applicability and Special Considerations
Who Does the FCBA Protect?
The FCBA applies to “open-end” credit accounts, such as credit cards and revolving charge accounts. It does not cover installment loans or real estate transactions.
Timing and Documentation
Timely notification and documentation are crucial in ensuring that disputes are handled under the protections of the FCBA. Consumers must provide relevant details and supporting evidence.
Historical Context
The FCBA was enacted as part of the Consumer Credit Protection Act to address widespread concerns about unfair billing practices and enhance consumer confidence in the use of credit.
Related Terms and Definitions
Credit Reporting Act (CRA): A law designed to ensure accuracy and privacy in consumers’ credit reports. Truth in Lending Act (TILA): Promotes informed use of consumer credit by requiring disclosures about its terms and cost. Consumer Financial Protection Bureau (CFPB): A regulatory agency charged with overseeing financial products and services offered to consumers.
FAQs
Does the FCBA cover debit card transactions?
How can a consumer dispute a billing error under FCBA?
Are there penalties for creditors who violate the FCBA?
References
- U.S. Federal Trade Commission (FTC). “Fair Credit Billing Act.” Accessed [Date].
- Consumer Financial Protection Bureau (CFPB). “Your rights under the Fair Credit Billing Act (FCBA).” Accessed [Date].
- USA.gov. “Optimal credit card billing dispute practices.”
Summary
The Fair Credit Billing Act (FCBA) stands as a foundational consumer protection law, guarding against unfair billing practices and ensuring fair dispute resolutions. By understanding its provisions, rights, and procedures, consumers can more effectively protect themselves from billing errors and unauthorized charges.
