What is the Fair Credit Billing Act?

The Fair Credit Billing Act or FCBA is a US federal law that was enacted in the year 1975 and aims to protect consumers from unfair and unreasonable credit billing practices. The Fair Credit Billing Act only applies to credit accounts that are considered “open end” accounts. These include charge accounts, such as those issued by department stores, and credit card accounts. This federal law does not concern or include debit cards or loans.

The main purpose of the Fair Credit Billing Act is to give people the right to dispute or challenge errors in their credit or charge account billing statements. The FCBA provides detailed guidelines for consumers and creditors alike and lays out the procedures required to manage and settle such disputes on credit or charge account billing statements.

The FCBA covers disputes about billing statement errors such as calculation errors, unauthorized charges, charges in the wrong date or amount, charges for items that were not delivered per agreement, charges for items and/or services that were not received or were damaged, failure to reflect payments made or credits to the account, charges that need proof or clarification, and billing statements delivered to the incorrect address.

To dispute an error in a billing statement, the consumer must notify the creditor by writing a formal letter detailing the error. The letter must be sent to address specific to “billing inquiries” and must include correct details such as full name, billing address, account number, and supporting documents like copies of receipts or sales slips. The letter must be received by the creditor within 60 days after the billing statement with the errors was received. The creditor has 30 days to acknowledge receipt of the written notification and must take the necessary action to resolve the dispute within two billing cycles after receipt of the letter.