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Your Rights Under Federal Law

The Fair Credit Billing Act

The Fair Credit Billing Act (FCBA) requires creditors to promptly investigate any disputed charges on billing statements and to fix any valid errors without damaging the consumer's credit rating. The FCBA applies to "open ended" credit accounts, like credit cards and revolving charge accounts. The FCBA does not apply to loans with fixed payment schedules, like car loans and home loans.

Among other things, the act creates a process for resolving errors or mistakes. Here's what happens:

  1. The consumer must file a written notice of a billing error within sixty days of receiving the bill in question. You must provide enough information to identify yourself and the account, along with the error, the date and amount of the error, and the reasons why you believe the billing is not accurate.
  2. The credit card company must then respond to your inquiry within 30 days. The credit card company must resolve the dispute within two billing cycles (typically two months, since most credit card companies bill on a monthly basis), which cannot be longer than 90 days. The credit card company must either explain why the bill is correct, or if it is not correct, fix the error.
  3. During the resolution period the credit card company cannot make collection efforts on the disputed amount, and cannot charge interest on that amount. They also can't report the account as delinquent to the credit bureaus, and can't close or restrict your account because you have failed to pay the disputed amount.
  4. Once the issue is resolved, the credit card company must report the resolution to the credit card bureaus.

If the credit card company does not respond to your inquiry letter, or starts collection proceedings on the amount in question, these are violations of the FCBA and you may have some leverage down the road if you are sued.

Keep in mind that when you dispute a charge the credit card company cannot attempt to collect on the disputed amount while the dispute is unresolved: calls, letters, harassment, and threats to report you to the credit bureaus are all violations under the FCBA. Document them! We'll talk more about documentation a little later.

> The Fair Debt Collections Practices Act

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