The Fair Credit Billing Act and the Electronic Fund Transfer Act

The Fair Credit Billing Act (FCBA) applies to "open end" credit accounts, such as credit cards, and revolving charge accounts - such as department store accounts and overdraft checking accounts. It does not cover installment contracts - loans or extensions of credit you repay on a fixed schedule, such as a car or home equity loan.   The Electronic Fund Transfer Act applies to electronic fund transfers, such as those involving automatic teller machines, point-of-sale debit transactions, and other electronic banking transactions.  Both acts are very similar in the rights they give to consumers.

What types of disputes are covered?

(1) Unauthorized charges (Federal law limits your responsibility for unauthorized charges to $50); 
(2) Charges that list the wrong date or amount; 
(3) Charges for goods and services you didn't accept or weren't delivered as agreed; 
(4) Math errors; 
(5) Failure to post payments and other credits, such as returns; 
(6) Failure to send bills to your current address - provided the creditor receives your change of address, in writing, at least 20 days before the billing period ends; and 
(7) Charges for which you ask for an explanation or written proof of purchase along with a claimed error or request for clarification. 

To take advantage of the law's consumer protections, you must write to the creditor at the address given for "billing inquiries," not the address for sending your payments, and include your name, address, account number and a description of the billing error.  Send your letter so that it reaches the creditor within 60 days after the first bill containing the error was mailed to you.   You should also send your letter by certified mail, return receipt requested, so you have proof of what the creditor received. Include copies (not originals) of sales slips or other documents that support your position. Keep a copy of your dispute letter.  Sample letter:

"I am writing to dispute a billing error in the amount of $______on my account. The amount is inaccurate because (describe the problem). I am requesting that the error be corrected, that any finance and other charges related to the disputed amount be credited as well, and that I receive an accurate statement.

Enclosed are copies of (use this sentence to describe any enclosed information, such as sales slips, payment records) supporting my position. Please investigate this matter and correct the billing error as soon as possible."

The creditor must acknowledge your complaint in writing within 30 days after receiving it, unless the problem has been resolved. The creditor must resolve the dispute within two billing cycles (but not more than 90 days) after receiving your letter.

What happens while my bill is in dispute?

You may withhold payment on the disputed amount (and related charges), during the investigation. You must pay any part of the bill not in question, including finance charges on the undisputed amount.  The creditor may not take any legal or other action to collect the disputed amount and related charges (including finance charges) during the investigation. While your account cannot be closed or restricted, the disputed amount may be applied against your credit limit.  

Will my credit rating be affected?

The creditor may not threaten your credit rating or report you as delinquent while your bill is in dispute. However, the creditor may report that you are challenging your bill. In addition, the Equal Credit Opportunity Act prohibits creditors from discriminating against credit applicants who exercise their rights, in good faith, under the FCBA. Simply put, you cannot be denied credit simply because you've disputed a bill.

What if the bill is incorrect?

If your bill contains an error, the creditor must explain to you - in writing - the corrections that will be made to your account. In addition to crediting your account, the creditor must remove all finance charges, late fees or other charges related to the error.  If the creditor determines that you owe a portion of the disputed amount, you must get a written explanation. You may request copies of documents proving you owe the money.

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