Legal Definitions - Fair Credit Billing Act (FCBA)

The Fair Credit Billing Act (FCBA) is a federal law designed to protect consumers from unfair billing practices related to "open-end credit" accounts, most commonly credit cards. It establishes clear procedures for consumers to dispute billing errors and limits their financial responsibility for unauthorized charges.

Under the FCBA, if you believe there's an error on your credit card statement, you have 60 days from the date the statement was mailed to notify your creditor. This applies to various types of errors, such as charges for items you didn't purchase, incorrect amounts, goods or services you never received or that were unsatisfactory, or mathematical mistakes. The disputed amount must generally be over $50.

The Act also provides significant protection against unauthorized use of your credit card. If your card is lost or stolen and used by someone else without your permission, your maximum liability for those unauthorized charges is limited to $50, provided you report the loss or theft promptly. The Federal Trade Commission (FTC) is the primary agency responsible for enforcing the FCBA.

• Example 1: Disputed Service Charge

  Scenario: Sarah hired a landscaping company to trim her trees for $200. After the service, she noticed they only trimmed half the trees and left a large mess. When she received her credit card statement showing the full $200 charge, she immediately contacted her credit card company to dispute the charge, explaining the service was incomplete and unsatisfactory.

  Explanation: This illustrates the FCBA's protection for consumers disputing charges for unsatisfactory goods or services. Sarah, by notifying her credit card company within 60 days, is exercising her rights under the Act to challenge a charge for a service that was not delivered as agreed.

• Example 2: Unauthorized Online Purchase

  Scenario: David checked his credit card statement and found a $350 charge from an online electronics store he had never shopped at. He realized his card information must have been compromised. He promptly reported the fraudulent charge to his credit card issuer.

  Explanation: This example demonstrates the FCBA's provision limiting consumer liability for unauthorized transactions. Even though the fraudulent charge was $350, David's maximum personal responsibility for this unauthorized use will be capped at $50, as long as he reported it in a timely manner.

• Example 3: Billing Error for a Recurring Subscription

  Scenario: Maria subscribed to a streaming service for $15 per month. After canceling her subscription, she noticed a $15 charge for the service appeared on her credit card statement two months later. She contacted her credit card company within the 60-day window to dispute this incorrect recurring charge.

  Explanation: This scenario highlights the FCBA's coverage of billing errors, specifically an incorrect charge for a service that should have been canceled. Maria's action of disputing the charge within the specified timeframe allows her to leverage the protections of the FCBA to resolve the billing mistake.