Legal Definitions - FCBA

The Fair Credit Billing Act (FCBA) is a federal law designed to protect consumers from unfair billing practices related to credit cards and other revolving credit accounts. It establishes a clear process for consumers to dispute billing errors, such as unauthorized charges, incorrect amounts, or failure to credit payments, and requires creditors to investigate and resolve these disputes promptly and fairly.

Here are some examples of how the FCBA applies:

• Example 1: Unauthorized Charge

  Sarah reviews her credit card statement and discovers a $200 charge from an online retailer she has never purchased from. She immediately suspects it's an unauthorized transaction.

  How the FCBA applies: Under the FCBA, Sarah can dispute this unauthorized charge by notifying her credit card company in writing within 60 days of receiving the statement. The credit card company must then investigate the error and cannot hold her responsible for the disputed amount while the investigation is ongoing. If the charge is indeed unauthorized, Sarah's liability is limited, often to $0 if reported promptly.

• Example 2: Incorrect Amount or Duplicate Charge

  David purchases a new refrigerator for $1,200. When his credit card statement arrives, he notices two separate charges for $1,200 from the same appliance store on the same day.

  How the FCBA applies: The FCBA allows David to dispute this duplicate charge. He can send a written notice to his credit card issuer, explaining the billing error. The issuer is then obligated to investigate and correct the mistake, ensuring David is only charged once for the refrigerator and removing any interest or fees associated with the erroneous second charge.

• Example 3: Failure to Credit a Payment

  Maria mails her credit card payment well before the due date. However, her next statement shows a late fee and an outstanding balance, indicating her payment was not credited to her account.

  How the FCBA applies: Maria can use the FCBA to dispute this error. By notifying her credit card company in writing, she triggers their obligation to investigate why her payment wasn't processed correctly. The company must then correct the account, remove any erroneous late fees or interest charges, and ensure her payment is properly reflected.