Credit card companies and the merchants they do business with aren’t infallible, and sometimes machine or human error causes inaccuracies to appear on your credit card statement. This can be irritating and distressing, especially if the error involves a large sum of money. Fortunately, cardholders can appeal improper charges and fees and have them reversed.
Under the Fair Credit Billing Act, consumers have the right to dispute credit card purchases. This law permits cardholders to challenge what they believe to be billing errors by submitting a written notice of the dispute to their credit card issuer. This notice triggers card issuers’ duties to investigate and resolve the dispute.
The cardholder must submit a disputed item to the credit card issuer within 60 days of the statement date on the billing statement that contains the alleged error. Once the credit card issuer gets notice of the dispute, the company must acknowledge it, conduct an investigation, and either make corrections or notify the customer that no error occurred within 90 days. Credit card issuers who deny the claim must submit documentation supporting the bill’s validity to consumers upon request.
There’s a variety of disputed items that the FCBA covers. The FCBA covers unauthorized charges, that is charges made to your account by an unauthorized user, charges that incorrectly list dates or amounts, charges for goods and services that you didn’t order or that were not delivered as you and the merchant agreed, mathematical errors by the card issuer, failure to credit payments and other items such as returns to the account, failure to send bills to the proper address if the cardholder has sent appropriate change of address information to the card issuer, and some other charges.
In order to use the consumer protection provided by the FCBA, you’ll need to find the credit dispute information on the back of your credit card statement and submit a written account of the alleged error along with your name, address and account number. (NOTE: The billing dispute address differs from the payment address.) You may want to send the notice via certified letter, so you’ll have later documentation to prove that you sent it in a timely fashion.
Once you’ve sent in your letter, the credit card company has 30 days to send you a response acknowledging the dispute, and 90 days in which to resolve it.
While the claim is being investigated, you’ll need to continue paying parts of your bill that are not in question, such as finance charges, annual fees and interest on the undisputed balance of your account. Your creditor will not be able to take you to collections for the disputed charges while the claim is being investigated, but the credit card company may apply the disputed amount against your available credit limit. The credit card company may not threaten your credit rating or report your account as being delinquent while your claim is being investigated. The law also prohibits other lenders from discriminating against borrowers who exercise their FCBA rights.
If your bill is found to be incorrect, your creditor must make adjustments and notify you in writing of the corrections. The creditor must remove the disputed item and remove all charges applied to the erroneous amount. If your creditor finds that you owe part of the disputed amount, you must also get a written explanation and can request documentation of the charges.
If your bill is found to be correct, your credit card company must inform you in writing and provide documentation on request. You’ll be assessed for the disputed amount, along with any finance charges that accumulated while the claim was being investigated. You may appeal this decision within 10 days of receiving the written explanation, but your credit card company can begin collection action at this point and report the debt as delinquent.
If the credit card company fails to resolve the dispute in a timely fashion, or acknowledge the dispute in the timeframe required by law, the company may not collect the disputed amount or any charges related to the amount.
Cardholders can pursue similar claims against credit card companies if they used their cards to buy unsatisfactory goods or services in order to prevent payment to the seller. Before taking this action, the cardholder must attempt to resolve the situation with the seller.
The Federal Trade Commission enforces the FCBA. To report credit card companies that violate the FCBA, cardholders should visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357). Cardholders may also sue credit card companies that violate the FCBA and recover damages, court costs and up to double the amount of the finance charge.