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What is the Fair Credit Billing Act?

5 min read

Last Updated: January 7, 2025

Table of contents

Key Takeaways

The Fair Credit Billing Act helps protect credit card users from billing errors.
The Fair Credit Billing Act also reduces the consumer's liability in cases of fraud and card theft up to $50.
Consumers can dispute billing errors and have inaccurate charges removed if their dispute is successful.

The Fair Credit Billing Act (FCBA), enacted in 1974, amends the Truth in Lending Act (TILA), and protects consumers from unfair credit card billing practices. The act applies to open-end accounts, like credit cards and revolving charge accounts. However, it doesn’t apply to installment-based payment contracts or debit card transactions. It’s a powerful law that empowers you to fight back against billing errors and unfair charges.

What the Fair Credit Billing Act does

The FCBA provides a set of guidelines for consumers to dispute charges. Further, it sets clear timelines for both creditors and consumers to follow during the dispute process.

Billing errors covered under the FCBA

The FCBA empowers consumers to contest billing errors that may appear in their statements. Common errors include:

Incorrect dates or amounts: You can dispute a statement with inaccurate dates or transaction amounts.
Unauthorized charges: If you see a suspicious charge, it might have been made by a credit card thief. The FCBA act limits your total liability for unauthorized charges to $50. In addition, you're not liable for charges made after you've reported your card as stolen.
Math errors: Report any amounts in your bill that don’t add up correctly or if you notice an incorrect bill total after adding a tip.
Undelivered items: You can file a billing dispute for charges on products you paid for but never received. According to the Consumer Financial Protection Bureau^®, you may be able to dispute transactions for faulty products that you’ve partially paid for under specific circumstances.
Incorrectly addressed bills: If your credit card bill was sent to the wrong address after you've let your creditor know you’ve moved, you can dispute your bill. The creditor must receive your new address 20 days before the end of your billing period to dispute the bill.
Missing statement credits: When you return a product, you should receive statement credits for that purchase. You can dispute missing credits.
Unfamiliar charges: If you see an unfamiliar charge on your statement, ask your card issuer for proof of purchase or clarification.

Fair Credit Billing Act vs. the Fair Credit Reporting Act

The Fair Credit Billing Act and the Fair Credit Reporting Act were both created to protect consumer rights, but they aren’t the same.

As mentioned above, the Fair Credit Billing Act focuses on consumer protection with respect to unfair billing practices.

The Fair Credit Reporting Act (FCRA) helps to ensure the accuracy, fairness, and privacy of information in credit reports. This act allows you to know what information a credit bureau has about you, if the information in those files has been used against you, and what your credit score is. You can also dispute incorrect information in your credit report. In short, the FCRA involves your credit report rather than your monthly credit card statement.

Disputing billing errors under the FCBA

When you want to dispute billing errors, it's important to follow the FCBA's rules. As a starting point, it's a good idea to review your statement as soon as you receive it. If you spot a billing error, here's what to do:

Notify the credit card company in writing of the error within 60 days of receiving your statement.
You'll need to write a letter explaining the error and include your name, address, account number, date, and amount of the error. You can find a sample from the Federal Trade Commission here.
Include proof to support your claim, such as a copy of the relevant receipt.
Send the letter to your creditor's billing inquiries address.

Your creditor must now send you an acknowledgment of your dispute letter within 30 days. They’ll need to complete the investigation within two billing cycles. After this, you have 10 days to dispute the investigation results if they uphold the charge. If the creditor acknowledges the error, they will delete the disputed charge and remove any charges related to the error.

Did you know?

If you think you're a victim of credit card fraud, you should contact your credit card issuer right away. For Discover^® Cardmembers, you get a $0 Fraud Liability Guarantee. You’re never responsible for unauthorized purchases on your Discover Card.²

See if you’re pre-approved

What the FCBA means for creditors

The Fair Credit Billing Act requires creditors to follow certain rules designed to protect consumers. Creditors must:

Acknowledge a consumer dispute letter within 30 days of receiving it.
Not take any action that may hurt your credit until the dispute is decided.
Promptly post payments to your account and refund overpayments (or credit them to your account).

The FCBA also makes it mandatory for creditors to meet certain billing timelines. This includes responding to dispute letters within 30 days, sending you written notices explaining your rights to dispute billing errors, and applying payments to your account the same day (if delays would lead to a finance charge like late fees).

The Fair Credit Billing Act helps safeguard credit card users from fraud, unauthorized charges, and other billing errors that may otherwise damage their credit score. It also standardizes the process for billing disputes with clearly defined timelines for creditors and consumers. As a consumer, the first step to resolving billing disputes is to monitor your credit card bill regularly in order to catch any errors quickly.

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