Use the fair credit billing
act and truth in lending laws to protect your rights when you encounter billing
errors.
We've all experienced billing errors, defective
goods, refunds, and lost or stolen credit cards, but do you know where do you
turn or what recourse do you have when the bill arrives?
To keep our credit in good standing we need to pay our debts on
time however from time to time we encounter complications so, to protect our
credit rating, we can use the fair credit billing rules to have mistakes and
misunderstandings corrected.
First, try to deal directly with the creditor using credit laws
to help you settle your complaints. Here are some additional tips and advice to
help you deal with billing errors.
- Credit laws that apply
- Credit billing errors
- Defective goods or services
- Prompt credit for payments, refunds, and credit
balances
- Cancelling a Mortgage
- Lost or Stolen Credit Cards
- Unsolicited Cards
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1. Credit laws that apply.
Fair Credit
Billing Act (FCBA)sets up procedures requiring creditors to promptly
correct billing mistakes; allowing you to withhold payments on defective goods;
and requiring creditors to promptly credit your payments.
Truth in
Lending (TIL) gives you three days to change your mind about certain credit
transactions that use your home as collateral; it also limits your risk on lost
or stolen credit cards.
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2. Billing Errors
Month after month John Jones was billed for a lawn mower he
never ordered and never got. Finally, he tore up his bill and mailed back the
pieces--he was just trying to explain things to a person instead of a computer.
There's a more effective, easier way to straighten out these
errors. The Fair Credit Billing Act requires creditors to correct errors
promptly and without damage to your credit rating.
The law defines a billing error as any
charge:
- For something you didn't buy or for a purchase made by
someone not authorized to use your account;
- That is not properly identified on your bill or is for an
amount different from the actual purchase price or was entered on a date
different from the purchase date; or
- For something that you did not accept on delivery or that was
not delivered according to agreement.
Billing errors also include:
- errors in arithmetic;
- failure to show a payment or other credit to your
account;
- failure to mail the bill to your current address, if you
told the creditor about an address change at least 20 days before the end of
the billing period; or
- a questionable item, or an item for which you need more
information.
Actions you can take to protect yourself.
If you think your bill is wrong, or want more information
about it, follow these steps:
First: Notify the creditor in writing within
60 days after the first bill was mailed that showed the error. Be sure to write
to the address the creditor lists for billing inquiries and provide the
following information:
- your name and account number;
- the date and suspected amount of the error or the item you
want explained.
- that you believe the bill contains an error and why you
believe it is wrong; and
Second: Pay all parts of the bill that are
not in dispute. But, while waiting for an answer, you do not have to pay
the amount in question (the "disputed amount") or any minimum payments or
finance charges that apply to it.
The creditor must acknowledge your letter within 30 days,
unless the problem can be resolved within that time. Within two billing
periods--but in no case longer than 90 days--either your account must be
corrected or you must be told why the creditor believes the bill is correct.
If the creditor made a mistake, you do not pay any finance
charges on the disputed amount. Your account must be corrected, and you must be
sent an explanation of any amount you still owe.
If no error is found, the creditor must send you an
explanation of the reasons for that finding and promptly send a statement of
what you owe, which may include any finance charges that have accumulated and
any minimum payments you missed while you were questioning the bill. You then
have the time usually given on your type of account to pay any balance, but not
less that 10 days.
Third: If you still are not satisfied, you
should notify the creditor in writing within the time allowed to pay your bill.
Demand that they provide you with the requested information.
A creditor may not threaten your credit
rating while you're resolving a billing dispute.
Once you have written about a possible error, a creditor must
not give out information to other creditors or credit bureaus that would hurt
your credit reputation. And, until your complaint is answered, the creditor
also may not take any action to collect the disputed amount.
After the creditor has explained the bill, if you do not pay
in the time allowed, you may be reported as delinquent on the amount in dispute
and the creditor may take action to collect. Even so, you can still disagree in
writing.
Then the creditor must report that you have challenged your
bill and give you the name and address of each person who has received
information about your account.
When the matter is settled, the creditor must report the
outcome to each person who has received information. Remember that you may also
place your own side of the story in your credit record.
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3. Defective Goods or Services
Your new sofa arrives with only three legs. You try to return
it; no luck. You ask the merchant to repair or replace it; still no luck.
The Fair
Credit Billing Act allows you to withhold payment on any damaged or poor
quality goods or services purchased with a credit card, as long as you have
made a real attempt to solve the problem with the merchant.
This right may be limited if the card was a bank, travel or
entertainment card or any card not issued by the store where you made your
purchase. In such cases, the sale:
- Must have been for more than $50; and
- Must have taken place in your home state or within 100
miles of your home address.
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4. Prompt Credit for Payments and Refunds for Credit Balances
Some creditors will not charge a finance charge if you pay your
account within a certain period of time. In this case, it is especially
important that you get your bills, and get credit for paying them, promptly.
Check your statements to make sure your creditor follows these
rules:
Billing. Look at the date on the postmark.
If your account is one on which no finance or other charge is added before a
certain due date, then creditors must mail their statements at least 14 days
before payment is due.
Crediting. Look at the payment date entered
on the statement. Creditors must credit payments on the day they arrive, as
long as you pay according to payment instructions. This means, for example,
sending your payment to the address listed on the bill.
Credit Balances. If a credit balance results
on your account (for example, because you pay more than the amount you owe, or
you return a purchase and the purchase price is credited to your account), the
creditor must make a refund to you. The refund must be made within seven
business days after your written request, or automatically if the credit
balance is still in existence after six months.
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5. Cancelling a Mortgage
Truth in Lending gives you a chance to change
your mind on one important kind of transaction--when you use your home as
security for a credit transaction.
For example, when you are financing a major repair or
remodeling and use your home as security, you have three business days, usually
after you sign a contract, to think about the transaction and to cancel it if
you wish.
The creditor must give you written notice of your right to
cancel, and, if you decide to cancel, you must notify the creditor in writing
within the three-day period. The creditor must then return all fees paid and
cancel the security interest in your home.
No contractor may start work on your home, and no lender may
pay you or the contractor until the three days are up. If you must have the
credit immediately to meet a financial emergency, you may give up your right to
cancel by providing a written explanation of the circumstances.
The right to cancel (or right of rescission) was provided to
protect you against hasty decisions--or decisions made under pressure--that
might put your home at risk if you are unable to repay the loan.
The law does not apply to a mortgage to finance the
purchase of your home; for that, you commit yourself as soon as you
sign the mortgage contract. And, if you use your home to secure an open-end
credit line--a home equity line, for instance--you have the right to cancel
when you open the account or when your security interest or credit limit is
increased. (In the case of an increase, only the increase would be cancelled.)
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6. Lost or Stolen Credit
Cards
If your wallet is stolen, your greatest cost may be
inconvenience, because your liability on lost or stolen cards is limited under
Truth in Lending.
You do not have to pay for any unauthorized charges made after
you notify the card company of loss or theft of your card. So keep a list of
your credit card numbers and notify card issuers immediately if your card is
lost or stolen.
The most you will have to pay for unauthorized charges is $50
on each card--even if someone runs up several hundred dollars worth of charges
before you report a card missing.
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7. Unsolicited Cards
It is illegal for card issuers to send you a credit card unless
you ask for or agree to receive one. However, a card issuer may send, without
your request, a new card to replace an expiring one.
If you've fallen behind on your bills, especially credit cards,
don't panic. You may have several good options available to you. Your success
starts by assessing your current situation and finding a trusted service
provider that is licensed in your state.
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Prattville, Alabama
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