The Fair Credit Billing Act – (15 U.S.C. §§ 1666-1666j)
What is required?
The Fair Credit Billing Act (FCBA) protects consumers by requiring creditors to investigate and respond to billing disputes as well as requiring prompt crediting of refunds.
Who is regulated?
The FCBA applies to open-end credit. Credit card companies are the most common examples of an open-end creditor. However, the provisions of the FCBA will apply to banks, credit unions, and other lenders when an open-end loan, such as a line of credit, is made.
When does the law apply?
The FCBA will generally apply when a consumer discovers a credit card billing statement error or other open-end loan billing statement error.
- When a consumer discovers an error, he or she has 60 days from the first date the error appeared on a bill to notify the creditor of the error.
- The notice must be in writing and allow the creditor to identify the consumer’s name and account number. The notice must also include a description of the error and why the consumer believes an error was made.
- After receiving the error notice, the creditor must acknowledge receipt of the notice within 30 days.
- Unless the creditor is going to correct the error reported by the consumer, it must conduct a reasonable investigation. The investigation must be completed no later than 90 days after it receives the error notice.
- During the time the creditor is investigating the reported error, it cannot attempt to collect the amount that is in dispute.
- If the creditor determines that an error has occurred, it must correct the error and credit the account with the disputed amount and any related charges. It also must mail a correction notice to the consumer.
- If the creditor determines that no error occurred, or a different error than the one reported occurred, it must mail an explanation of the reasons for its determination to the consumer, give the consumer evidence of its determination, if requested, and correct any other error which it may have discovered.
Is there a solution?
If a creditor fails to follow the billing error procedures described above, a consumer may be entitled to actual damages and statutory damages of up to $5,000. In addition, the FCBA contains a “fee-shifting” provision which may require the defendant to pay for the plaintiff’s attorney fees and court costs.