The Fair Credit Billing Act (FCBA) is a United States federal law enacted as an amendment to the Truth in Lending Act (codified at 15 U.S.C. § 1601 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.
Examples of billing errors
The following are examples of billing errors under the FCBA:
* Charges not actually made by the consumer
* Charges in the wrong amount
* Charges for goods not received by the consumer
* Charges for goods not delivered as agreed
* Failures to properly reflect payments or credits to an account
* Calculation errors
* Charges that the consumer wants clarified or requests proof of
Correction of billing errors
The FCBA allows consumers to dispute billing errors by sending a written notice of the dispute to the creditor. However, to trigger duties under the Act, the written dispute must be received by the creditor within sixty days of the account statement that first contained the billing error.
After receiving notice of a dispute, the credit issuer must acknowledge the dispute, 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.
* Credit card companies may not prohibit merchants from offering discounts to people who pay with cash or check.
* Banks may generally not use money in checking or savings accounts to pay a delinquent credit account with the same bank.
* The FCBA also 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.[2]
(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 faith attempt to resolve the dispute prior to invoking this right.)
Enforcement of the FCBA
The Federal Trade Commission 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 succesful). If the alleged unlawful conduct is widespread, the consumer can also seek to file a class action suit and seek damages up to $500,000 or 1 per centum of the net worth of the creditor
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