15 U.S.C. § 1666
Fair Credit Billing Act
The Fair Credit Billing Act (“FCBA”) was passed by the U.S. Congress to provide consumers with a way to challenge errors that appear on their credit card and other credit statements. However, the time deadlines imposed by the law to challenge mistakes on your credit card or other statements are very short (at least in the realm of legal deadlines) and are strictly enforced by the courts. Therefore, if you do not act right away after discovering a billing error, you could lose your rights to challenge that mistake on your credit card or other credit statement.
What is a Billing Error
The FCBA defines a billing error appearing on a credit card or other statement as any of the following:
Fraudulent charge or other charge not made by the account holder;
Incorrect amount for a charge or an incorrect amount for any other extension of credit;
A charge for goods or services that were not accepted by the account holder or that were never delivered to the account holder;
Creditor’s failure to properly credit a payment made by an account holder or to properly list a credit (i.e. refund) made to the account holder’s account;
A computation or mathematical error made by the creditor; or
A creditor’s failure to send a statement to the last address of the account holder that was disclosed to the creditor, unless the account holder disclosed the new address within 21 days of the statement being sent.
Certain other mistakes on your credit card statement or other credit statement could be considered billing errors as well but the above list covers the majority of billing errors covered by the FCBA.
How to Challenge a Billing Error
In order to challenge a billing error on a credit card or other credit statement, a creditor must receive a written dispute letter–termed a “notice” in the FCBA–from a consumer challenging a billing error within 60 days of the creditor transmitting the first statement containing the billing error to the consumer. The written dispute letter must also be sent to a specific address designated by the creditor, which is normally located on your statement or can be found on the creditor’s website.
The written dispute letter must clearly state the following:
The name of the account holder;
The account number;
State that the account holder believes that an error exists on his/her statement and the amount of any such error; and
Provide an explanation of why the account holder believes that a billing error exists on his/her statement.
The consumer should send this dispute letter via certified mail return receipt requested so that he/she can prove that a dispute letter was sent, the time when the dispute letter was sent, and the time the creditor received the dispute letter. The consumer must also save a copy of the dispute letter that was sent to the creditor.
The timelines to send a dispute letter in the FCBA are strictly enforced and are relatively short. Therefore, you need to act immediately when you receive a statement that contains a billing error. The 60 day clock starts running when the creditor transmits or mails the statement with the first billing error to you, not when you receive the statement and not when you first notice the error on the statement. Additionally, the creditor must receive your letter challenging the billing error before the 60 day clock expires. Therefore, you must send your dispute letter at least a few days but preferably weeks prior to the expiration of this deadline in order to comply with the FCBA.
Always Send Written Dispute Letter
Many times, people call a creditor to try to resolve the billing error. While creditors do sometimes resolve a billing error easily via telephone or other medium, if the creditor drags its feet or slows down the process, you will miss your deadline to legally challenge the billing error. A phone call alerting the creditor of the billing error is not enough. The creditor must receive a written challenge to the billing error at the specific address it provides or the challenge is invalid. Therefore, even if you are communicating with your creditor via telephone or other medium, you must still send a written dispute letter to preserve your rights in case the creditor does not resolve the billing error in a fair manner. If the creditor tells you that it is investigating the billing error after you notify them via telephone and your 60 day deadline passes, you will not be able to challenge the billing error.
The Creditor’s Obligations after Receiving a Dispute Letter
Within 30 days of receiving the consumer’s dispute letter, the creditor must send the consumer a letter acknowledging receipt of the dispute letter. The creditor than has two billing cycles or a maximum of 90 days after receiving the consumer’s dispute letter to either make appropriate corrections to the consumer’s account or to send a written explanation to the consumer setting forth the reasons why the creditor believes a billing error does not exist.
Prior to denying a billing error challenge and sending the consumer a written explanation of the reasons why the challenge was denied, the creditor must conduct a reasonable investigation into the alleged billing error. The creditor cannot simply deny the consumer’s challenge to the billing error without investigating the facts and circumstances surrounding it.
During this investigatory period, the creditor is not permitted to attempt to collect the amount of the alleged billing error.
After a creditor complies with the above stated requirements, it has no further responsibility under the FCBA if the consumer continues to allege the same billing error.
What Happens if the Creditor Does Not Comply with the FCBA
If the creditor fails to comply with the FCBA, denies your billing error challenge inappropriately, or denies your billing error challenge without conducting a reasonable investigation, you can file a lawsuit against the creditor to enforce your rights.
15 U.S.C. § 1640 provides that a creditor who violates the FCBA is liable to the consumer for the following:
Any actual damages sustained as a result of the violation;
Twice the amount of any finance charge associated with the billing error with a minimum of $500 and a maximum of $5,000 in statutory damages or a higher amount if an established pattern or practice of FCBA violations can be demonstrated;
Reasonable attorney’s fees incurred by the consumer.
Since the FCBA provides that the creditor must pay the consumer’s reasonable attorney’s fees and costs if the consumer is successful, Lampman Law generally agrees to take possible FCBA cases on a contingent basis, which means our clients have to pay little or no money up front for attorney’s fees and we only get paid when we win.
Statute of Limitations
The Truth in Lending Act provides for a one-year statute of limitations for FCBA claims. That means that a person has one-year from the date of the violation to file an action for a violation of the FCBA. Since there are so many time deadlines in the FCBA, it is important to evaluate when the statute of limitations will run in FCBA cases. Therefore, in addition to the strictly enforced deadlines for disputing billing errors, FCBA lawsuits also have a short and strictly enforced statute of limitations.
Contacting an Attorney
If you believe that there is a billing error on your credit card statement or other credit statement, contact us today for a free consultation. As described above, the deadlines for an FCBA claim are short and strictly enforced by the courts so do not delay. If you miss the 60 day deadline to send in your billing error challenge you could lose your rights to challenge that billing error.