Dana George has a BA in Management and Organization Development from Spring Arbor University. For more than 25 years, she has written and reported on business and finance, and she's still passionate about her work. Dana and her husband recently moved to Champaign, Illinois, home of the Fighting Illini. And though she finds the color orange unflattering on most people, she thinks they'll enjoy Champaign tremendously.
Our Credit Cards Expert
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In 1974, Congress passed the Fair Credit Billing Act (FCBA), designed to protect consumers from unfair billing practices and limit their liability. The FCBA gives you the legal right to address everything from a fraudulent charge or a billing error to a creditor changing your billing period. This consumer protection act allows you as the account holder to stand up to a credit card company or home equity lender when you face an issue that could unfairly cost you money or impact your credit rating.
The FCBA covers open-end credit accounts, like a credit card, home equity line of credit (HELOC), or a charge card. Other types of accounts, like home or auto loans, are not covered. Here are some of the rights the FCBA grants consumers:
Let's say your Discover card is stolen. You report the theft as soon as you realize the card is gone. Two weeks later, you open your credit card statement and see charges you did not make. Before the FCBA, it was up to you as the cardholder to prove that those debts were not yours. But since the FCBA became law, your total liability is limited to $50 -- even if the unauthorized charge was for thousands of dollars.
Your credit card issuer may go one step further by imposing zero liability on unauthorized charges as a form of customer service. And the best news yet is that you don't have to worry about the fraudulent charge showing up on your credit report. It is as though the disputed charge never happened at all, so your credit score is untouched.
Important note: If you authorize someone to use the card and they make unauthorized charges, that is not covered under the FCBA, and you are responsible for payment.
You also have the right to dispute when the wrong amount is charged to your card account. Imagine you're in a diner and use your Chase card to cover a $23 purchase. You open your credit card bill later and see that the charge is now $123. Maybe it was credit card fraud, and someone at the diner added a one, or perhaps it was a simple case of human error. Whatever the reason for the change, the FCBA gives you the right to dispute the difference.
According to the FCBA, you must first make a good-faith effort to deal with the problem by contacting the merchant. In this scenario, you would contact the diner. It's in the diner's best interest to help you out, because if the financial institution that issued the credit card gets involved, the restaurant must pay a fee to investigate the charge. Retail establishments typically find it easier (and less expensive) to help a customer sort it out before the card issuer becomes involved.
If the diner won't help, it's time to dispute the charge with Chase. The credit card company removes the charge during the dispute process, so you aren't expected to pay until a decision is reached. If an investigation finds in your favor, the credit card company issues a chargeback, which reverses the transaction and returns the funds to you.
If you make a purchase using your credit card and the seller doesn't deliver the product or service, the FCBA gives you the right to dispute the charge to your credit card.
You may not be sure about a charge, particularly if it was made while you were on vacation or otherwise distracted. The FCBA grants you the right to request written proof of a purchase if you're suspicious that it may be an error or even identity theft.
Let's face it: at one time, creditors had all the power. They set their own rules and enforced them in a way that benefited them. Due to FCBA, creditors are now required to:
How you dispute an issue depends on the situation you're facing. For example:
If someone uses your card without your permission, contact your credit card company right away. While sending a physical letter as a follow up is a good idea, the most important thing is to make sure that the card account is frozen and cannot be used again without your permission.
It's easy to picture nothing but partisanship and in-fighting when you think of lawmakers. But through the years, Congress has initiated some powerful consumer protection tools, including the Fair Credit Billing Act. If you use consumer credit, you do yourself a favor when you understand your rights.
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