Fair Credit Billing Act
What Is the Fair Credit Billing Act (FCBA)?
Fair Credit Billing Act (FCBA) is a U.S. federal law that protects consumers from unfair billing practices and provides a process for resolving credit billing errors.
The law was enacted in 1974 as an amendment to the Truth in Lending Act (TILA). It applies primarily to credit card accounts and other revolving credit accounts.
FCBA establishes rules for how consumers can dispute billing errors and how creditors must respond to those disputes.
Common billing issues covered by the law include:
- Unauthorized charges
- Incorrect billing amounts
- Charges for goods or services not received
- Mathematical errors on statements
The law ensures consumers have a clear method to challenge incorrect credit charges.
Why It Matters
Fair Credit Billing Act helps consumers resolve credit card billing disputes without immediately damaging their credit standing.
The law protects consumers by:
- Limiting liability for unauthorized charges
- Establishing dispute timelines
- Requiring creditors to investigate billing errors
These protections give consumers confidence when using credit cards and other revolving credit accounts.
How Fair Credit Billing Act (FCBA) Works
Fair Credit Billing Act allows consumers to formally dispute billing errors with their creditor.
Example: A credit card holder notices a charge on their statement for a product they never purchased. The consumer can submit a written dispute to the creditor within the required timeframe.
The creditor must acknowledge the dispute and investigate the issue.
During the investigation, the creditor generally cannot attempt to collect the disputed amount or report the amount as delinquent.
If the error is confirmed, the creditor must correct the billing mistake.
FCBA vs Fair Credit Reporting Act
FCBA → Addresses billing errors on credit accounts
FCRA → Governs the accuracy of credit reports
Both laws protect consumers in the credit system but focus on different areas.
Related Terms
