The Fair Credit Billing Act protects US consumers from unfair billing practices by creditors for open accounts. Consumers have the right to dispute errors and are not responsible for unauthorized charges or items not received. Disputes must be made in writing within 60 days, and creditors must investigate and resolve the issue within 90 days. Failure to follow guidelines can result in civil action against the creditor.
The Fair Credit Billing Act (FCBA) is a US federal law that was created to protect US consumers from unfair billing practices imposed by creditors. It specifically applies to “open” accounts such as credit cards and revolving billing accounts, as opposed to installment agreements or fixed rate payment plans associated with certain types of loans. In addition, the law provides a venue for resolving disputes for consumers. Because the FCBA is an amendment to the U.S. Truth and Lending Act, specific consumer rights and dispute resolution procedures are described and governed by Title 15 of the United States Code, Section 1601.
Under the Fair Credit Collection Act, there are several collection errors subject to correction by law. This includes errors related to incorrect billing amounts, purchase dates, or failure to apply payments or other credits to the account during the same billing period. Several protective safeguards are also in place. For example, the consumer can only be held responsible for unauthorized charges up to the first $50 dollars (USD) initially, and not at all if the charges are illegal. Furthermore, the consumer cannot be held responsible for charges for goods or services never received or rejected for not meeting expectations. Finally, no charges may apply for items for which the consumer has made a written request for verification or proof of purchase.
To initiate a collection dispute under the Fair Credit Collection Act, the consumer must first inform the creditor of the details of the dispute in writing within 60 days of the invoice submission date on which the error first appeared. . The letter must be sent by certified mail, confirmed delivery, or another method that produces a receipt of delivery or acceptance. It must also be accompanied by copies of any relevant documentation supporting the claim, such as a receipt for payment or returned merchandise. While the consumer is responsible for paying any portion of the invoice not affected by the error, there is no obligation to pay disputed charges.
In response to a collection dispute, the creditor must conduct an investigation as well as confirm receipt of notice of the dispute in writing within 30 days. Thereafter, the creditor must resolve the issue within two consecutive billing cycles, or no later than 90 days after receiving the consumer’s dispute letter. If the creditor fails to follow these guidelines, or imposes or threatens to impose collection procedures during the investigation period, the consumer will have the right to bring civil action against the creditor. Under the Fair Credit Billing Act, a consumer can receive double the amount of finance charges imposed, plus monetary damages and attorney fees.
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