Mistakes happen, it’s a learning experience at best or a major headache at its worst. When it comes to your credit card bill, catching an error on it can mean the start of a process where you have to dispute that charge on your bill.
The protection of the accounts of credit cardholders is a major focus of credit card providers. It’s one of the best reasons to get a credit card aside from allowing you to pay for goods and services and allowing you to earn reward points and air miles.
Cardholders don’t have to rely on the goodwill of their provider that their credit card provider will have their back when it comes to billing errors. There’s actually a law that protects consumers when it comes to these errors. Consumers have the Fair Credit Billing Act (FCBA) to protect them if they ever find these errors on their credit card bill, the law has been in effect since 1975.
The FCBA lays out a dispute settlement procedure and it applies to “open end” credit accounts. These accounts include credit cards and department store credit accounts. The law does not cover personal loans and car loans and other types of installment contracts.
Billing Errors Covered By the FCBA Settlement Procedure
The FCBA settlement applies to billing errors that include:
• Unauthorized charges (cardholder responsibility is limited to $50 under the Federal law)
• Wrong amount or date
• Credit card charges for goods or services that you did not accept or were not delivered as agreed
• Failure on the part of the creditor to send the bill to the proper address
• Math errors
Take note though, that the procedure does not cover complaints about the quality of the goods that you bought. These are not “billing errors” so you can’t seek protection under the FCBA settlement procedure if the couch you bought was not the color that you wanted, you can go to the merchant for that. If the couch was never delivered to your home, then you could seek protection under the FCBA.
Undertaking the Dispute Process
A billing error could be a “minor” inconvenience if the amount is so small that you would think twice about going through with the process of disputing the charge, but the error can also be so big that it can take up a huge chunk of your credit card balance and threaten to max out your card that you have to undertake the process to protect your credit. So how do you do this? Let’s run through the things that you can do to dispute the billing error on your credit card.
1. Let Your Creditor Know: If faced with a billing error, the Federal Trade Commission recommends that you write to your creditor. You should send your communication to your creditor’s “billing inquiries” department and not the one where you send your payment to.
2. Use a Copy of a Sample Billing Error Dispute Letter: The FTC has made available a sample letter for disputing a billing error. You can use this sample letter as a template for the letter that you will send to your creditor. In the letter, the disputed amount is included as well as a description of the error. You can include related documents to show that you have a valid claim such as a sales slip or payment record. The letter needs to reach your creditor within 60 days after you received the bill with the error.
3. Withhold Payment on the Disputed Bill: You can withhold payment on the disputed amount but you have to pay the other items on your statement that are not in dispute. At this point, the creditor will start their investigation process on whether your dispute is valid and if whether the bill was truly an error.
4. Wait for Your Creditor’s Response: Your creditor has 30 days to respond to your complaint. The creditor needs to resolve your problem within two billing cycles.
5. Study the Creditor’s Response to Your Dispute: Once your creditor has finished their investigation, they should tell you immediately about their findings and whether you need to pay the payment you’ve withheld on the disputed amount. You have 10 days to write back to the creditor if you disagree with their findings.
6. File a Complaint with the FTC if your Creditor Violated the FCBA: If you find that you have valid grounds to make a complaint about your creditor for violating the FCBA, you can make a complaint with the FTC. If you win a lawsuit against your creditor for violating the FCBA, you can be awarded damages and the court can also order the creditor to pay for your lawyer’s fee and costs.
These are the six things that you can do if you have a billing error on your credit card. The FCBA was put in place to protect consumers from unfair billing practices. The FTC is the agency that is in charge of enforcing the law so any concerns about the protection afforded to you under the law should be addressed to the agency.
Billing disputes are also costly for merchants and creditors so some choose not to undertake the investigation process. However, this is no reason to abuse the system. You could also approach your merchant about the charges so they can reverse the charges if it was made in error. That may also prove to be a quicker way to resolve the billing error.
Protecting you from fraudulent charges is also in the interest of your credit card provider so letting them know about the error can help them determine if the error is really not a fraudulent charge on your card. Just remember that there are certain conditions in order for the situation to be able to be covered under the FCBA settlement procedure. The FCBA does not cover consumer complaints about the quality of goods and services so make sure that your complaint is based on the unfair billing practice.