Definition
The Fair Credit Billing Act (FCBA) is a federal law enacted to protect consumers from unfair billing practices and provide a mechanism for addressing billing errors regarding open-end credit accounts like credit cards and revolving charge accounts. Codified under Title VI (Sections 127-129) of the Consumer Credit Protection Act, the FCBA addresses various billing disputes and sets procedures for resolving them.
Examples
- Incorrect Charges: If a consumer notices an unauthorized charge on their credit card statement, they can use FCBA provisions to dispute the charge.
- Goods or Services Not Received: A consumer who paid for an item that never arrived can dispute the charge through FCBA protections.
- Mathematical Errors: If there’s a mistake in the calculation on a bill, the FCBA allows the consumer to dispute this discrepancy.
Frequently Asked Questions (FAQs)
What types of accounts come under the FCBA?
The FCBA applies only to open-end credit accounts such as credit cards and revolving charge accounts. It does not cover installment loans or loans required to be repaid in a specific number of payments.
How does the FCBA address billing errors?
The FCBA requires that creditors acknowledge a consumer’s complaint within 30 days of receiving it and resolve the dispute within two billing cycles, but not more than 90 days.
What should consumers do to dispute a billing error?
Consumers should send a written dispute to the creditor’s address for billing inquiries, not the payment address, within 60 days of the error appearing on the statement.
Can a consumer withhold payment on the disputed amount?
Yes, under the FCBA, consumers can withhold payment on the disputed amount during the resolution process without risk of interest accruing or penalty fees.
What happens if the creditor does not comply with the FCBA guidelines?
If a creditor fails to follow the FCBA procedures, they forfeit the right to collect the disputed amount and associated finance charges, up to $50.
Related Terms
- Open-End Credit: A type of credit agreement that allows borrowers ongoing access to funds up to a specified limit, commonly exemplified by credit card accounts.
- Billing Cycle: The interval between billing statements for any open-end credit account, typically over one month.
- Billing Error: Any mistake in a billing statement including unauthorized charges, charges for goods not received, or arithmetic errors.
Online References
- Federal Trade Commission: Fair Credit Billing Act
- Consumer Financial Protection Bureau: Credit Card Billing Disputes
Suggested Books
- “The Law of Consumer Credit and Protection” by Michael Brian: A comprehensive guide that explores various consumer credit laws, including the FCBA.
- “Consumer Finance: Law, Regulation, and Policy” by Adam J. Levitin: This book delves into the regulatory environment of consumer finance, highlighting key laws and consumer protections.
- “Consumer Credit and the American Economy” by Thomas A. Durkin, Gregory Elliehausen, Michael E. Staten, Todd J. Zywicki: A detailed exploration of consumer credit trends, including regulatory frameworks like the FCBA.
Fundamentals of the Fair Credit Billing Act (FCBA): Business Law Basics Quiz
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