Fair Credit Billing Act - Explained
What is the Fair Credit Billing Act?
Written by Jason Gordon
Updated at April 6th, 2023
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What is the Fair Credit Billing Act?
The Fair Credit Billing Act (FCBA) was passed as an amendment to TILA with the purpose of protecting consumers against unfair billing practices. The FCBA is administered by FTC and applies within the consumers home state or 100 miles of home. These provisions are enforced against banks and other financial institutions insured by the Federal Deposit Insurance Corporation (FDIC). The primary protections of the FCBA limit liability on lost, stolen, or misused credit cards to $50. It also establishes a method for consumers to address billing errors in open-end accounts, such as credit cards and lines of credit. Further, it allows the credit card holder to assert a defense against paying a merchant for shoddy or defective merchandise.
Next Article: Electronic Funds Transfer Act Back to: CONSUMER PROTECTION
What is the Method for Disputing a Debt under the FCBA?
Consumers have authority under the FCBA to dispute errors in open-end accounts. To dispute a bill on the account, the consumer must send written notice to the creditor within 60 days of receipt of the account statement containing the error. There are provisions in place to make certain notice is sent to the correct department. The creditor must acknowledge receipt of the dispute within 30 days. The creditor must then investigate the dispute. This generally means undertaking simple substantiation measures with the individual paid by the account, such as a vendor or service provider. The creditor must either correct the disputed debt or explain to the debtor why it believes the debt is valid. The consumer may request all information collected to substantiate the debt.
How is the FCBA Enforced?
Enforcement of the FCBA is done through private action. That is, failure of a financial institution to adhere to these provisions gives a consumer the ability to bring a private action against the creditor. The FCBA allows for actual damages, statutory damages of twice the finance charges, court costs, and attorneys fees.
Discussion Question
Why do you think federal law provides these consumer protections for clients of federally insured institutions? Should these provisions apply outside of just federally insured institutions? Do you think the procedure for disputing a debt is sufficient to protect consumers?
Practice Question
Mandy has a credit card with 1st Federal Bank and Trust. She generally makes certain that the charges on the card draft automatically from her bank account every month. One day, when reviewing her credit card statement, she notices a series of unexplained charges. She now wants to dispute these charges? What information do you need to know to determine if Mandy is protected from having to pay the charges?
Related Topics
- Consumer Protection Law (Intro)
- What is consumer protection law?
- Cooling Off Rule
- What major federal laws protect consumers?
- What is the Federal Trade Commission
- Enforcement procedures of the FTC?
- Penalties for violating FTC regulations?
- Commercial Practices Prohibited by FTC?
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Unfair Trade Practices
- Predatory Pricing
- Bait & Switch
- Lemon Laws
- Consumer Financial Protection Bureau
- What is the Fair Credit Reporting Act?
- Users of Information?
- Credit Reporting Agency Consumers
- Reporting Agencies?
- Consumer Reporting Agency
- Furnishers of Information?
- Enforcement?
- Truth in Lending Act
- Fair Debt Collection Practices Act
- Fair Credit Billing Act
- Electronic Funds Transfer Act
- Electronic Funds Transfers (EFT)
- Equal Credit Opportunity Act
- Regulation B
- Consumer Credit Protection Act
- Consumer Advisory Council
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Consumer Financial Protection Act
- Consumer Product Safety Act
- Consumer Product Labeling Laws
- Credit Repair Organization Act
- Federal Food, Drug, and Cosmetic Act
- Magnuson-Moss Warranty Act
- Privacy Act of 1974 (Privacy Act)
- Personally Identifiable Information
- Right to Financial Privacy Act of 1978 (RFPA)
- Electronic Communication Privacy Act of 1986 (ECPA)
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