Consumers have the right to dispute credit card errors under the Fair Credit Billing Act (FCBA). Credit card errors can be frustrating and expensive for cardholders, especially if the billing error maxes out the credit card or results in late fees. Under federal law, consumers have the right to dispute credit card billing errors. Consumers also have the right to file a federal lawsuit and seek money damages when the credit card company does not comply with the law.
The Fair Credit Billing Act applies to open accounts – credit cards and revolving credit accounts. An example of a revolving account is a department store account, such as Macy’s or Belk. The federal law does not apply to installment contracts, such as car loans, mortgages, home equity loans or other personal loans paid on an installment basis.
The FCBA applies to the following types of credit card billing errors
1. Unauthorized Charges – Under federal law, your responsibility for unauthorized charges on your credit card is limited to $50.
2. Wrong Date/Amount – Charges for goods or services that are incorrectly dated or are for the wrong dollar amount.
3. Not Mine/Not Delivered – Charges for goods or services that you did not order, receive or weren’t delivered to you.
4. Math Errors – Mathematical errors include incorrect computation of interest or charges.
5. Payments/Credits – The failure to post payments or credits, including returns.
6. Statement Not Delivered – The 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.
7. Proof of Purchase – Charges for which you ask for an explanation or written proof of purchase along with a claimed error or request for clarification.
In order to properly dispute the credit card billing errors, consumers must:
1. Dispute – Consumers must dispute the credit card billing error to the creditor. The dispute must be in writing and sent to the creditor’s address for “billing inquiries.” The billing address is often found in the fine print on the back of the credit card statement. The credit card dispute letter must include the account holder’s name, account number, address and a description of the billing error. The reason for the dispute should be clear and concise.
2. Mail – Mail the credit card dispute letter to the billing dispute address within 60 days after receiving the first bill containing the error. The dispute letter should be mailed by certified mail return receipt requested to document the dispute. Consumers should keep a copy of the dispute letter and return mail receipt for future reference, especially if an attorney needs the documents to review potential claims.
What does the credit card company have to do?
After a credit card company receives a dispute, the credit card company must acknowledge receipt of the dispute, in writing, within 30 days of receipt of the letter. Also, the credit card company, under federal law, must resolve the dispute within two billing statements but no more than 90 days after receiving the dispute letter.
The credit card company is not allowed to attempt to collect on the disputed amount. The creditor may not take legal or any other action (dunning letters or phone calls) to collect the disputed amount and related charges during the investigation time period. However, the credit card company may close or restrict the account, and the disputed amount may be applied against the credit limit.
Can I withhold payment while my credit card bill is in dispute?
Yes. An account holder may withhold payment on the disputed amount and related charges, such as interest, during the investigation period. But, the account holder MUST pay any part of the bill that is not in dispute, including interest on the undisputed amount.
How will my credit card dispute affect my credit report?
While the dispute is under investigation, the creditor may not report the account as delinquent to the consumer reporting agencies, such as Equifax, Experian, Innovis and Trans Union. The credit card company may not threaten the account holder’s credit rating while the bill is in dispute.
What if the credit card bill is wrong?
If the bill genuinely contains an error, the creditor must explain, in writing, the corrections that will be made to the account. The creditor must credit the disputed charges and related finance charges to the account. Also, the credit card company must remove late fees or other charges related to the error.
If your credit card bill contains a partial error, such as an authorized charge but for the wrong amount, the creditor must provide a written explanation for the amount owed for the disputed charge.
What if the credit card company determines the bill is correct?
The credit card company must promptly notify the consumer, in writing, how much is owed and why, if the creditor determines the disputed bill is correct. The consumer may request the credit card company to provide documents regarding the disputed charge. Although, the consumer will continue to owe the disputed amount and finance charges until proved otherwise.
The consumer may write the credit card company about the investigation results, but this must be done WITHIN 10 DAYS of receipt of the investigation results. The consumer may refuse to pay the credit card company, but the creditor may begin collections and reporting the debt to the credit reporting agencies. However, the report to the bureaus must include that the consumer disputed the account.
What if the credit card company fails to follow the law?
Any creditor who does not follow the settlement procedure may not collect the amount in dispute or any related finance charges up to $50. This is true even if the bill is correct! The creditor also may not threaten to report or report the failure to pay during the dispute period.
Consumers may sue the credit card company. Under the Fair Credit Billing Act, consumers may sue the creditor who violates the federal law. If successful, the consumer may recover money damages, plus two times the amount of any finance charge no less than $100 and not greater than $1000. The creditor may also have to pay the consumer’s attorney’s fees and costs to associated with the claim.
Consumers may also file a complaint with the Federal Trade Commission (FTC). To file a complaint with the FTC, call 1-877-382-4357, or click here. To file a complaint with the Consumer Financial Protection Bureau click here.
If you have disputed a credit card billing error and the creditor has failed to comply with the settlement procedures, contact us 24/7 for a free case review.