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Resolving Billing Errors With the Fair Credit Billing Act

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Fair Credit Billing Act of 1974

Is there an inaccurate or unauthorized charge on your credit card?

You’ve got plenty of rights, thanks to the Fair Credit Billing Act of 1974.

With the help of the Fair Credit Billing Act you can file a dispute and free your credit card account of billing errors including:

  • Unauthorized charges
  • Charges for goods and services that were not delivered as agreed
  • Credit card charges with the wrong dollar amount
  • Failure by a credit card issuer to post a payment or a return

To make use of your rights under the Fair Credit Billing Act, you will need to put your complaint in writing. You must:

  • Write to your credit card company using the address for “billing inquiries.”
  • Include in your letter: your name, mailing address, account number and description of the billing error
  • Mail the letter within 60 days after receiving a bill with a disputed error

Once a card issuer receives your letter, the dispute must be resolved within two billing cycles, according to the Fair Credit Billing Act. You have the right to withhold payment on the disputed charges during a credit card company’s investigation.

Keep your credit card accounts clean and accurate by reviewing credit card bills each month.  It’s also a good idea to keep close tabs on your credit score. With’s free tools, you receive a free credit score, which is updated each month.  You also receive expert advice on improving your credit.

For more of your consumer protections under the Fair Credit Billing Act, here is an excerpt of the law dealing specifically with resolving billing errors.

The Fair Credit Billing Act

Public Law 93-495 – October 28, 1974

Chapter 4 – Credit Billing

§ 161. Correction of billing errors

(a) If a creditor, within sixty days after having transmitted to an obligor a statement of the obligors account in connection with an extension of consumer credit, receives at the address disclosed under section 127(b) (11) a written notice (other than notice on a payment stub or other payment medium supplied by the creditor if the creditor so stipulates with the disclosure required under section 127(a) (8) from the obligor in which the obligor

(1) sets forth or otherwise enables the creditor to identify the name and account number (if any) of the obligor,

(2) indicates the obligors belief that the statement contains a billing error and the amount of such billing error, and

(3) sets forth the reasons for the obligors belief (to the extent applicable) that the statement contains a billing error,
the creditor shall, unless the obligor has, after giving such written notice and before the expiration of the time limits herein specified, agreed that the statement was correct

(A) not later than thirty days after the receipt of the notice, send a written acknowledgment thereof to the obligor, unless the action required in subparagraph (B) is taken within such thirty-day period, and

(B) not later than two complete billing cycles of the creditor (in no event later than ninety days) after the receipt of the notice and prior to taking any action to collect the amount, or any part thereof, indicated by the obligor under paragraph (2) either

(i) make appropriate corrections in the account of the obligor, including the crediting of any finance charges on amounts erroneously billed, and transmit to the obligor a notification of such corrections and the creditors explanation of any cage in the amount indicated by the obligor under paragraph (2) and, if any such change is made and the obligor so requests, copies of documentary evidence of the obligors indebtedness; or

(ii) send a written explanation or clarification to the obligor, after having conducted an investigation, setting forth to the extent applicable the reasons why the creditor believes the account of the obligor was correctly shown in the statement and, upon request of the obligor, provide copies of documentary evidence of the obligors indebtedness. In the case of a billing error where the obligor alleges that the creditors billing statement reflects goods not delivered to the obligor or his designee in accordance with the agreement made at the time of the transaction, a creditor may not construe such amount to be correctly shown unless he determines that such goods were actually delivered, mailed, or otherwise sent to the obligor and provides the obligor with a statement of such determination. After complying with the provisions of this subsection with respect to an alleged billing error, a creditor has no further responsibility under this section if the obligor continues to make substantially the same allegation with respect to such error.

(b) For the purpose of this section, a billing errorconsists of any of the following:

(1) A reflection on a statement of an extension of credit which was not made to the obligor or, if made, was not in the amount reflected on such statement.

(2) A reflection on a statement of an extension of credit for which the obligor requests additional clarification including documentary evidence thereof.

(3) A reflection on a statement of goods or services not accepted by the obligor or his designee or not delivered to the obligor or his designee in accordance with the agreement made at the time of a transaction.

(4) The creditor’s failure to reflect properly on a statement a payment made by the obligor or a credit issued to the obligor.

(5) A computation error or similar error of an accounting nature of the creditor on a statement.

(6) Any other error described in regulations of the Board.

(c) For the purposes of this section, action to collect the amount, or any part thereof, indicated by an obligor under paragraph (2) does not include the sending of statements of account to the obligor following written notice from the obligor as specified under subsection (a) if

(1) the obligor’s account is not restricted or closed because of the failure of the obligor to pay the amount indicated under paragraph (2) of subsection (a) and

(2) the creditor indicates the payment of such amount is not required pending the creditor’s compliance with this section. Nothing in this section shall be construed to prohibit any action by a creditor to collect any amount which has not been indicated by the obligor to contain a billing error.

(d) Pursuant to regulations of the Board, a creditor operating an open end consumer credit plan may not, prior to the sending of the written explanation or clarification required under paragraph (B) (ii), restrict or close an account with respect to which the obligor has indicated pursuant to subsection (a) that he believes such account to contain a billing error solely because of the obligor’s failure to pay the amount indicated to be in error. Nothing in this subsection shall be deemed to prohibit a creditor from applying against the credit limit on the obligor’s account the amount indicated to be in error.
(e) Any creditor who fails to comply with the requirements of this section or section 162 forfeits any right to collect from the obligor the amount indicated by the obligor under paragraph (2) of subsection (a) of this section, and any finance charges thereon, except that the amount required to be forfeited under this subsection may not exceed $50.


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