What Is the Fair Credit Billing Act (FCBA)?

As a credit cardholder, you probably take it for granted that your billing statements will be correct. Even if you find an error, you know that there’s an established procedure for disputing it.

But that wasn’t always the case. Before the Fair Credit Billing Act (FCBA), it was often very difficult for customers to dispute errors on their credit card statements. As a result, many were billed unfairly.

What is the Fair Credit Billing Act, and how does it impact you as a consumer? Here’s a closer look at the law and how to dispute errors on your credit card billing statement.

What is the Fair Credit Billing Act?

The FCBA is a consumer protection law passed in 1974 as an addendum to the Truth in Lending Act. It protects consumers in three primary ways:

• Shielding them from unfair or deceptive billing practices
• Limiting their liability for fraud or unauthorized purchases
• Allowing them to dispute billing errors

The law applies only to open-ended credit accounts, such as credit cards and home equity lines of credit. It does not apply to debit cards or to installment loans like mortgages and car loans.

What kinds of billing errors does the FCBA cover?

The FCBA outlines what constitutes a billing error under the law. These are some of the most common billing errors it allows you to dispute.

Fraud and unauthorized charges

If your card is stolen and the thief uses it, the FCBA limits your liability for unauthorized purchases to $50. However, most major card issuers offer zero-liability fraud protection, which means that you won’t be held liable for any fraudulent purchases.

Charges for purchases not delivered as promised

The FCBA lets you dispute charges for purchases you paid for and never received. This stronger protection is one reason many people prefer to make purchases with a credit card instead of a debit card. 

Duplicate charges

Sometimes, a credit card statement will list the same purchase twice. If this happens, you can dispute the duplicate charge.

Improperly credited payments

When you pay more than the minimum payment, the credit card issuer is required to apply the overage to the portion of your balance with the highest interest rate. If it does not, you may file a dispute.

How the dispute process works under the FCBA

You might wonder, “What is FCBA dispute process like?” The law outlines three steps that account holders must follow.

1. Send a dispute letter within 60 days 

If you notice an error on your billing statement, you have 60 days from the billing date to initiate a dispute. Generally, the easiest way to do this is to file the dispute online. If you choose to mail a dispute letter, make sure to send it to the address that corresponds to billing inquiries (not the one that corresponds to payments).

It’s a good idea to keep a copy of the letter you sent for your own records.

2. Wait for the company to investigate

In most cases, credit card companies have two billing cycles to investigate disputes. During this time, you do not have to pay the disputed amount or any interest related to it. However, you are required to pay the rest of your bill.

3. Take action (if needed) when you get the result

If the credit card issuer decides that your dispute is valid, it will fix the error, and you won’t have to do anything else. 

However, if the issuer determines that you owe some or all of the disputed amount, you should pay it promptly. Otherwise, you could face late fees, credit damage, and other consequences.

Creditors’ obligations during the dispute process

The FCBA does more than just allow consumers to file disputes. It also establishes requirements for the credit card companies that receive those disputes:

• The company must acknowledge receipt of a dispute within 30 days
• It must investigate the dispute within two billing cycles (up to 90 days)
• It may not report the disputed portion of the balance as delinquent during the investigation

If a credit card company investigates a disputed charge and finds that the charge is legitimate, it cannot immediately report it to the credit bureaus. The company must give the account holder at least 10 days to bring their account current first.

What to do if a creditor violates the FCBA

What happens if a credit card company violates the FCBA? Many consumers opt to file a complaint with one or more of these agencies:

• The Federal Trade Commission (FTC)
• The Consumer Financial Protection Bureau (CFPB)
• Their state attorney general’s office

These organizations don’t always resolve individual complaints. In some cases, it may be worth it to file a lawsuit. If you file an FCBA lawsuit and are successful, you may recover the following damages:

• Any actual losses you suffered
• Twice the finance charge (a minimum of $500 and a maximum of $5,000)
• Reasonable attorney’s fees

A consumer protection lawyer can help you decide whether filing a lawsuit is the best course of action.

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