Over the holiday period and during the sales, you will probably use your credit cards to make dozens of purchases. You also might return items and have amounts refunded to your credit card, and purchase items online. In an age of identity theft, it is more important that ever to keep track of your purchases and returns and to pay attention to your account statements ensuring that no mistakes have been made. The good news is that a federal law, the Fair Credit Billing Act, gives you valuable rights if there are billing errors on your credit card or department store accounts. Your lawyer can give you more information about the act and advice on the steps to take if you notice major billing mistakes on your credit card statements.
What are Billing Errors?
The Fair Credit Billing Act requires credit grantors to correct billing errors promptly. The act defines billing errors as
- unauthorized charges; these include charges made by someone not authorized to use your card, and automatic charges you authorized for a service or subscription that you have since cancelled;
- charges that are not properly identified on your monthly statement or that are for amounts different from the actual purchase price; or
- charges for something that you refused to accept on delivery because it was unsatisfactory or that the supplier did not deliver according to your agreement.
Billing errors may also include
- errors in arithmetic or multiple charges for a single transaction;
- failure to reflect a payment that you made or other credit to your account, such as a return; or
- failure to mail a billing statement to your current address (if the credit grantor received notice of that address at least twenty days before the end of the billing period).
Keeping Track of Your Bills
Of course, you’re unlikely to notice any billing errors if you do not check your credit card statements against a record of your purchases. Your statement usually gives only the date of purchases, the price, and the store from which you bought each item. Credit card statements can be difficult to decipher when the statement only includes a merchant’s corporate name (such as “ABC, Inc.”) rather than the store name (such as “Candy’s Groceries”). It’s a good idea to check your statement against sales receipts. If you keep sales receipts, you may also return an item in the event that it is defective, damaged, or the wrong size or color.
Reporting Billing Errors
If you notice any billing errors, you should write or telephone the card issuer promptly. As a practical matter, most consumers would prefer to call the card issuer’s 800 number for billing questions, and most disputes can be settled in this way. (You can find the correct 800 number on your billing statement.)
However, the Fair Credit Billing Act only protects written―not telephone―inquiries, so making a written inquiry will better preserve your legal rights. Do not include written inquiries about billing errors with your payment. Instead, you should check the billing statement for the correct address for where to send billing questions. The letter should contain your name, address, and account number. State that you believe your bill contains an error, specify the charge at issue and explain why you believe it is wrong, and include the date and suspected amount of the error. Include copies of any sales receipts or other documentation that may be relevant. It’s also a good idea to send your letter by certified mail requesting a return receipt, so that you have proof that you sent the letter to the correct address.
Either a written or telephone inquiry must be made within sixty-days of the statement date. The sixty day time limit is very important; if you fail to observe it, you may forfeit your rights under the Fair Credit Billing Act. After you have notified a creditor of a billing error, the law requires the creditor to acknowledge your letter within thirty days (unless the credit grantor can fix the billing error in less time). The credit card issuer must resolve the dispute within two billing cycles (but not more than ninety days) after receiving your letter.
Following the Rules
If the credit grantor does not follow each of the time limits and other requirements in the Fair Credit Billing Act, then it cannot collect the disputed amount or related finance charges, even if the disputed bill turns out to be correct and the amount is thus money you truly owe. For this reason, it’s important to keep track of the dates on which you sent correspondence to the creditor, and the dates on which you received replies.
If the Bill Is Incorrect
If the creditor determines that your bill was in fact incorrect, then you obviously do not have to pay the contested amount. In addition, the Fair Credit Billing Act provides that you do not have to pay finance charges or late fees related to the contested amount.
If the Bill Is Correct
If the credit grantor finds that the disputed bill is correct and you do not want to take the matter further, then you must pay the bill and any related finance charges or late fees. You may ask for copies of relevant documents. If you fail to remit payment, then the credit grantor may take action to collect the amount and may report you to credit bureaus as overdue for the amount in question.
If you still disagree with the credit grantor’s finding, you should notify the grantor of your views in writing within ten days. If you refuse to pay the disputed amount, then the creditor may begin collection procedures and may report you to a credit bureau. However, in its report to the credit bureau, the credit grantor must state that you do not believe you owe the money. Remember, if a creditor reports negative information about you to a credit bureau, it can affect your credit score and make it more difficult for you to get credit in future.
If you are unable to resolve the dispute to your satisfaction, you may want to consult a lawyer.
Complaints and Litigation
The Federal Trade Commission enforces the Fair Credit Billing Act for most creditors. To file a complaint or to get free information on consumer issues, you can use the complaint form at www.ftc.gov.
It is also possible to sue a creditor who violates the Fair Credit Billing Act. Courts have the ability to award twice the amount of any finance charges between $100 and $1000 (i.e., a maximum of $2000) and may also award damages in some cases. Your lawyer can give you more information about pursuing litigation under the act.
Effect on Your Credit Rating
A credit grantor may not threaten your credit rating because you failed to pay a disputed amount, a related finance charge, or other charges while you’re trying to resolve a billing dispute. Once you have taken the steps described above by writing down the details of the billing dispute and sending them to the credit grantor, the law prohibits the credit grantor from reporting the account as delinquent because you have not paid the disputed amount or related charges. Until the credit grantor answers your complaint, the law forbids it from taking any action to collect the amount in dispute. You must, however, continue to pay any undisputed amounts.
In addition, the Equal Credit Opportunity Act prohibits creditors from discriminating against people who have exercised their rights under the Fair Credit Billing Act when they are applying for credit. Simply put, you cannot be denied credit simply you’ve disputed a bill. If you think a mistake has been made, you have nothing to lose by making an enquiry.