Fair Credit Billing Act
Encyclopedia
The Fair Credit Billing Act (FCBA) is a United States
federal law
enacted in 1975 as an amendment to the Truth in Lending Act
(codified at et seq.). Its purpose is to protect consumers from unfair billing practices and to provide a mechanism for addressing billing errors in "open end" credit
accounts, such as credit card
or charge card
accounts.
to the vendor.
After receiving notice of a dispute, the credit issuer must acknowledge the dispute within thirty days, investigate the claim and, within ninety days, either make appropriate corrections to the account or send a letter to the consumer explaining why the creditor believes there was no error. If the creditor responds that they believe there was no error, the consumer can request copies of documentation supporting the validity of the disputed items.
is the "overall enforcing agency" for purposes of administrative enforcement, though compliance by banks is enforced under section 8 of the Federal Deposit Insurance Act
.
A consumer may also file a private lawsuit in any state or federal court with jurisdiction
over the parties to recover actual damages, statutory damages
of double the erroneous finance charge(s), and his or her costs and attorney fees (if the claim is successful). If the alleged unlawful conduct is widespread, the consumer can also seek to file a class action suit and seek damages up to the lesser of $500,000 or 1 per centum of the net worth of the creditor.
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
federal law
Federal law
Federal law is the body of law created by the federal government of a country. A federal government is formed when a group of political units, such as states or provinces join together in a federation, surrendering their individual sovereignty and many powers to the central government while...
enacted in 1975 as an amendment to the Truth in Lending Act
Truth in Lending Act
The Truth in Lending Act of 1968 is United States federal law designed to promote the informed use of consumer credit, by requiring disclosures about its terms and cost to standardize the manner in which costs associated with borrowing are calculated and disclosed...
(codified at et seq.). Its purpose is to protect consumers from unfair billing practices and to provide a mechanism for addressing billing errors in "open end" credit
Credit (finance)
Credit is the trust which allows one party to provide resources to another party where that second party does not reimburse the first party immediately , but instead arranges either to repay or return those resources at a later date. The resources provided may be financial Credit is the trust...
accounts, such as credit card
Credit card
A credit card is a small plastic card issued to users as a system of payment. It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services...
or charge card
Charge card
A charge card is a card that provides an alternative payment to cash when making purchases in which the issuer and the cardholder enter into an agreement that the debt incurred on the charge account will be paid in full and by due date or be subject to severe late fees and restrictions on card...
accounts.
Examples of billing errors
The following are examples of billing errors under the FCBA:- Charges not actually made by the consumerConsumerConsumer is a broad label for any individuals or households that use goods generated within the economy. The concept of a consumer occurs in different contexts, so that the usage and significance of the term may vary.-Economics and marketing:...
- Charges in the wrong amount
- Charges for goods or services not received by the consumer
- Charges for goods not delivered as agreed
- Charges for goods that were damaged on delivery
- Failures to properly reflect payments or credits to an account
- Calculation errors
- Charges that the consumer wants clarified or requests proof of
- Statements mailed to the wrong address
Correction of billing errors
The FCBA allows consumers to dispute billing errors by sending a written notice of the dispute to the creditor. To trigger duties under the Act, a person must send a written dispute via mail (US Postal Service) to the "billing inquiries" address on their credit card statement. This dispute must be received by the creditor within sixty days of the statement date on the account statement that first contained the billing error. This often leads to a chargebackChargeback
A chargeback is the return of funds to a consumer, forcibly initiated by the consumer's issuing bank. Specifically, it is the reversal of a prior outbound transfer of funds from a consumer's bank account, line of credit, or credit card....
to the vendor.
After receiving notice of a dispute, the credit issuer must acknowledge the dispute within thirty days, investigate the claim and, within ninety days, either make appropriate corrections to the account or send a letter to the consumer explaining why the creditor believes there was no error. If the creditor responds that they believe there was no error, the consumer can request copies of documentation supporting the validity of the disputed items.
Other regulations of the FCBA
In addition to creating a mechanism for dealing with billing errors, the FCBA contains additional regulations, including the following:- Billing statements must be sent at least fourteen days before the payment is due for credit accounts that have a grace period prior to adding finance charges.
- If banks report payments as delinquent to credit bureaus they must also report a charge is disputed.
- Credit card companies may not prohibit merchants from offering discounts to people who pay with cash or check. (per § 167)
- Banks may generally not use money in checking or savings accounts to pay a delinquent credit account with the same bank. (per § 169)
- The FCBA's § 170 gives a consumer the right to sue or assert defenses against the credit company (instead of the actual merchant) in a dispute about the quality of goods or services received, to the dollar extent of the amount of the charge(s) involved.(The dollar amount of the charge must exceed $50, and the purchase must have been made in the consumer's home state or within 100 miles of their address (unless the creditor is affiliated with the merchant, in which case these restrictions do not apply). The consumer must also make a good faithGood faithIn philosophy, the concept of Good faith—Latin bona fides “good faith”, bona fide “in good faith”—denotes sincere, honest intention or belief, regardless of the outcome of an action; the opposed concepts are bad faith, mala fides and perfidy...
attempt to resolve the dispute prior to invoking this right.)
Enforcement of the FCBA
The Federal Trade CommissionFederal Trade Commission
The Federal Trade Commission is an independent agency of the United States government, established in 1914 by the Federal Trade Commission Act...
is the "overall enforcing agency" for purposes of administrative enforcement, though compliance by banks is enforced under section 8 of the Federal Deposit Insurance Act
Federal Deposit Insurance Act
The Federal Deposit Insurance Act of 1950, , formally removed section 12B of the Federal Reserve Act of 1913 creating the Federal Deposit Insurance Corporation , which itself was an amendment by the Banking Act of 1933, and put it into its own act called the Federal Deposit Insurance Act, which has...
.
A consumer may also file a private lawsuit in any state or federal court with jurisdiction
Jurisdiction
Jurisdiction is the practical authority granted to a formally constituted legal body or to a political leader to deal with and make pronouncements on legal matters and, by implication, to administer justice within a defined area of responsibility...
over the parties to recover actual damages, statutory damages
Statutory damages
Statutory damages are a damage award in civil law, in which the amount awarded is stipulated within the statute rather than being calculated based on the degree of harm to the plaintiff. Lawmakers will provide for statutory damages for acts in which it is difficult to determine a precise value of...
of double the erroneous finance charge(s), and his or her costs and attorney fees (if the claim is successful). If the alleged unlawful conduct is widespread, the consumer can also seek to file a class action suit and seek damages up to the lesser of $500,000 or 1 per centum of the net worth of the creditor.
See also
- Fair Credit Reporting ActFair Credit Reporting ActThe Fair Credit Reporting Act is a United States federal law that regulates the collection, dissemination, and use of consumer information, including consumer credit information. Along with the Fair Debt Collection Practices Act , it forms the base of consumer credit rights in the United States...
(FCRA) - Fair Debt Collection Practices ActFair Debt Collection Practices ActThe Fair Debt Collection Practices Act , et seq., is a United States statute added in 1978 as Title VIII of the Consumer Credit Protection Act...
(FDCPA) - Fair and Accurate Credit Transactions ActFair and Accurate Credit Transactions ActThe Fair and Accurate Credit Transactions Act of 2003 is a United States federal law, passed by the United States Congress on November 22, 2003, and signed by President George W. Bush on December 4, 2003, as an amendment to the Fair Credit Reporting Act...
(FACTA) - amended the FCRA. (Liability of holder of credit card) which limits cardholder liability for unauthorized use of a credit card to $50.
Sources and external links
- Full text of the FCBA in pdf format - Federal Trade Commission