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We’ve all had billings for merchandise returned or never received, or been double billed, maybe made a payment that was never accounted for. Through the dispute settlement procedures provided by the Fair Credit Billing Act (FCBA), these errors can be corrected. The FCBA applies only to open end accounts, such as credit card and revolving charge accounts – not for credit you repay on a fixed schedule.

The FCBA dispute settlement procedures apply only to disputes about “billing errors.” For example:

  • Unauthorized charges – federal laws generally limit your responsibility for unauthorized charges to $50;

  • Charges that list wrong details, such as date or amount;

  • Charges for goods and services you didn’t accept or weren’t delivered as agreed;

  • Mathematical errors;

  • Failure to post payments and other credits, such as returns; and

  • 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.

Take advantage of FCBA protections by:

  • Writing the creditor at their “billing inquires” address (not the payments address), and include your name, address, account number and a description of the billing error.

  • Sending your letter so that it reaches the creditor within 60 days after the bill containing the error was mailed to you. Send your letter by certified mail, return receipt requested, so that you have proof of what you sent. Include copies (not originals) of sales slips or other documents that support your position. Keep a copy of your dispute letter.

You may be asking, what happens while the bill is in dispute?

During the investigation, you may withhold the disputed portion of the billed amount. You are obligated to pay any part of the billing not being disputed, including finance charges on the disputed amount.

Until the investigation is complete, the creditor can not take any legal or other action against you to collect the disputed amount and related charges. The account can not be closed or restricted, however the disputed amount can be applied against your credit limit.

The creditor can not threaten your credit rating or actually report you as delinquent while your bill is in dispute. The creditor may, however, report that you are challenging your bill. Further, the Equal Credit Opportunity Act (ECOA) prohibits creditors from discriminating against credit applicants who exercise their rights, in good faith, under the FCBA. You cannot be denied credit just because you’ve disputed a bill.

If, after investigating the dispute, the billing is determined to be incorrect:

  • The creditor must explain to you – in writing – the corrections or adjustments that will be made to your account.

  • The creditor must remove all finance charges, late fees or other charges related to the error. If, once completed, the investigation determines the billing to be correct:

  • You must be informed, in writing, how much you owe and why.

  • You have a right to copies of relevant documents.

  • You now owe the disputed amount, plus any finance charges that accumulated while the amount was in dispute.

  • You also may have to pay any minimum amount you missed paying because of the dispute.

If you disagree with the results of the investigation, you have 10 days after receiving the explanation to write to the creditor, and indicate that you refuse to pay the disputed amount. The creditor may immediately begin collection procedures. However, if the creditor reports you to a credit bureau as delinquent, the report also must state that you don’t think you owe the money and the creditor must tell you who gets these reports.

Any creditor who fails to follow the FCBA settlement procedures may not collect the amount in dispute, or any related finance charges, up to $50, even if the bill turns out to be correct. The penalty applies if a creditor acknowledges your complaint in 45 days – 15 days too late – or takes more than two billing cycles to resolve a dispute. The penalty also applies if a creditor threatens to report – or improperly reports – your failure to pay to anyone during the dispute period.

You should note disputes about the quality of goods and services are not “billing errors,” so the dispute procedure does not apply. However, if you buy unsatisfactory goods or services with a credit or charge card, you may take the same legal actions against the card issuer as you are allowed to take under state law against the seller.

To take advantage of this protection regarding the quality of goods or services, you must:

  • Have made the purchase (it must be for more than $50) in your home state or within 100 miles of your current billing address;

  • Make a good faith effort to resolve the dispute with the seller first.

The dollar and distance limitations don’t apply if the seller also is the card issuer – or if a special business relationship exists between the seller and the card issuer.

Businesses that offer “open end” credit also must:

  • Give you a written notice when you open a new account – and at certain other times – that describes your rights to dispute billing errors;

  • Provide a statement for each billing period in which you owe – or they owe you – more than one dollar;

  • Send your bill at least 14 days before the payment is due – if you have a period within which to pay the bill without incurring additional charges;

  • Credit all payments to your account on the date they’re received, unless no extra charges would result if they failed to do so. Creditors are permitted to set some reasonable rules for making payments, say setting a reasonable deadline for payment to be received to be credited on the same date; and

  • Promptly credit or refund overpayments and other amounts owed to your account. This applies to instances where your account is owed more than one dollar. Your account must be credited promptly with the amount owed. If you prefer a refund, it must be sent within seven business days after the creditor receives your written request. The creditor must also make a good faith effort to refund a credit balance that has remained on your account for more than six months.

Violators of FCBA may be sued. If you win, you may be awarded damages, plus twice the amount of any finance charge – as long as it’s between $100 and $1,000. The court also may order the creditor to pay your attorney’s fees and costs.

The Federal Trade Commission (FTC) enforces the FCBA for most creditors except banks. The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers identify, stop and avoid them.

To report FCBA violations or to get free information on consumer issues, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at The FTC enters Internet, telemarketing, identity theft and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

You may also find these pages of interest:

RMCN Credit Services
375 Adriatic Parkway #2205
McKinney, TX 75072
(972) 529-0900 Office (972) 562-0225 Fax
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