Your Rights Under the Fair Credit Billing Act
Ever had a dispute with your credit card company? Has your credit card company ever failed to credit a payment to your account? Did you ever get charged for a service or product that you didn't receive? If so, the Fair Credit Billing Act (FCBA) applies to you. To take advantage of the law, consumers (obligors) must write to the credit card company at the address given for "billing inquiries," not the address for sending payments. You must include your name, address, account number and a description of the billing error. The letter must be sent so that the credit card company receives it within 60 days after receipt of the first invoice containing the error. A letter complaining of "unsatisfactory service" from a vendor is not adequate if the alleged error is never timely articulated. In the 9th circuit case of Edwards v. Wells Fargo & Co. (2010), the terms "consumer" and "obligor" were given close scrutiny. In Edwards, The Court concluded that a credit card issuer does not owe a duty to communicate with a non-obligor on the account. The Court's analysis was complicated by the tension between defined terms in the FCBA and Regulation Z, its implementing regulation. Under the FCBA, a card issuer's duties run only to an "obligor" on the account. However, under Regulation Z, the billing dispute process is triggered by communication from a "consumer." Regulation Z defines "consumer" as a "cardholder or natural person to whom consumer credit is offered or extended." After detailed analysis, the Court concluded that the plaintiff was not a "consumer" under Regulation Z. Because the plaintiff was neither an "obligor" under the FCBA nor a "consumer" under Regulation Z, Wells Fargo had not duty to respond to his billing disputes. Note that a cardholder billing inquiry can result from the unauthorized use of your credit card. A cardholder's liability for unauthorized use of their card is generally limited to $50. Unauthorized use is use by someone other than the cardholder, without actual, implied or apparent authorization for the use, and providing no benefit to the cardholder. A credit card company must acknowledge your complaint in writing within thirty days after receiving it. Additionally, it must resolve the dispute within two billing cycles (but not more than ninety days) after receiving your letter. During the investigation, you may withhold payment on the disputed amount (and related charges). However, you must pay any part of the bill not in question, including finance charges on the undisputed amount. The credit card company may not take any legal action (like assigning the account to a collection agency or collection law firm) to collect the disputed amount and related charges during its investigation. If your bill indeed contains an error, the credit card company must explain to you in writing the corrections that will be made to it. The credit card company must also remove all finance charges, late fees or other charges related to the error. If the credit card company investigation determines that the bill is correct, you must be informed in writing how much you owe and why. However, credit card companies are also required to do a reasonable investigation, including independent assessment of information provided by both the merchant and cardholder, before concluding that the bill is correct. Many credit card companies simply do not conduct a reasonable investigation. Additionally, if the creditor fails to follow the settlement procedure, they cannot collect the amount in dispute, or any related finance charges, up to $50, even if the bill turns out to be correct! You can sue a credit card company that violates the FCBA and be awarded damages, plus twice the amount of any finance charge - as long as it is between $100 and $1,000. The FCBA also permits a court to order the credit card company to pay your attorney fees incurred to fix the billing error.