Debtor and Creditor

Fair Credit Billing Act

You just received your credit card billing statement, and it shows that you used the card to purchase a sweater. It's news to you, but now you're wondering how to get the charge removed from the bill. The Fair Credit Billing Act sets out the procedures to challenge disputed charges on your credit card.


The Fair Credit Billing Act (FCBA) requires creditors to promptly investigate any disputed charges on billing statements and to fix any valid errors without damaging the consumer's credit rating.

The law applies to open-end credit accounts - credit cards, and revolving charge accounts, such as "charge cards." The law doesn't apply to loans that have fixed payment schedules, such as car loans or payment plans.

Billing errors cover by this law include:

  • Unauthorized charges against your card
  • Charges that list the wrong date and time
  • Charges for goods or services that the consumer didn't accept or weren't delivered as agreed
  • Errors in calculating charges and interest
  • Failure to post payments, returns and other credits
  • Failure to send a statement to the consumer's current address if notice provided within 20 day
  • Charges that the credit owner had contested in writing and weren't previously resolved

Notice of Billing Error

This law requires credit companies to tell consumers about their rights to reoprt and resolve billing errors. In most cases, you must report the error within 60 days of receiving the statement and:

  • Send a notice of billing error to the address provided on the billing statement
  • Provide sufficient information to identify the your name and account number
  • State the type of error, the date and the amount of the error, and reason(s) why you believe an error occurred

You aren't required to pay the disputed amount or any related charges resulting from the inquiry. Also, if you pay your credit card automatically, the creditor can't deduct the disputed amount from your account or return it.

If you don't send a notice of billing error, you could file a claim under the Truth in Lending Act based on incorrect charges in the statement.

Creditor's Response to the Notice

Once notified of the a billing error and it isn't resolved immediately, the creditor can't report the disputed amount as delinquent to any of the credit reporting companies. Instead, the following steps must be taken:

  • Acknowledge receipt of the notice of billing error
  • Conduct a reasonable investigation to determine if the billing error exists
  • Correct the error and related charges if the error is valid
  • Send a correction notice
  • Report the resolution to each credit agency notified of a delinquency

After investigating the request and no error exists, or another error happened, the credit company must:

  • Correct any other errors
  • Send an explanation for the new error or why the account is correct
  • Provide documentation supporting this explanation
  • Notify the consumer of the amount owed and date the payment is due

Response from a creditor if you send a second notice isn't required.

In addition, if the creditor initiates a collection on the amount you haven't paid, you can show that you have a billing error in your defense.

If you believe that a creditor is violating the law, file a complaint with the Federal Trade Commission or consult an attorney about filing a lawsuit in court.

Questions for Your Attorney

  • What law requires creditors to investigate disputed charges on a credit card account?
  • What kind of billing errors does the Fair Credit Billing Act cover?
  • What procedures do I follow in order to report a credit card billing error?
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