# Understanding the Fair Credit Billing Act: Consumer Protections Explained

## What Is the Fair Credit Billing Act?

The Fair Credit Billing Act (FCBA) is a federal law passed in 1974 to protect consumers from unfair credit billing practices. It applies to open-end credit accounts, like credit cards and lines of credit, and gives consumers the right to dispute billing errors, unauthorized charges, and charges for goods or services that weren't delivered.

The law, enforced by the Federal Trade Commission (FTC), sets clear timelines, usually within 60 days of receiving the bill, for consumers to file disputes, and it outlines the process that creditors must follow to investigate and resolve them.

### Key Takeaways

*   The Fair Credit Billing Act (FCBA) empowers consumers by allowing them to dispute unauthorized charges and billing errors, offering a structured system to address financial discrepancies on open-end credit accounts like credit cards.
*   Consumers are provided a 60-day window to report and challenge billing mistakes to their card issuers, with a requirement that disputes be submitted in writing, except in cases of lost or stolen cards.
*   The FCBA mandates that credit issuers must respond to billing disputes within specific timeframes, ensuring consumers are not charged interest on, or expected to pay, disputed amounts during investigations.
*   It's important to understand the distinction between the FCBA and the Fair Credit Reporting Act (FCRA): the former focuses on unfair billing practices, while the latter governs how credit information is collected and shared.  
    

## Understanding the FCBA's Protections and Processes

The Federal Trade Commission enforces the Fair Credit Billing Act, which covers [open-end credit](https://www.investopedia.com/terms/o/openendcredit.asp) accounts, such as credit cards, charge accounts, and lines of credit. The Act provides consumers with protection from unfair billing practices such as:

*   Charges not authorized by the consumer.
*   Charges with the wrong date or amount.
*   Charges for goods or services that weren't delivered.
*   Charges for goods or services that were received but were not as described.
*   Calculation errors.
*   Charges for which the consumer needs clarification.
*   Billing statements delivered to an incorrect address.

> **Important**
>
> Consumers can withhold payment only for the disputed amount during an investigation, not the entire bill.

## Consumer Rights Under the Fair Credit Billing Act

*   Consumers have 60 days from their bill receipt to [dispute a charge](https://www.investopedia.com/articles/pf/07/credit-card-dispute.asp) with the card issuer or lender.
*   Charges must be over $50 to be eligible for dispute.
*   Complaints must be filed in writing.
*   However, if a credit card was lost or stolen, consumers may dispute charges by phone rather than in writing.
*   Consumers can ask their card issuer to withhold payment and help resolve merchant disputes.
*   [Unauthorized user](https://www.investopedia.com/articles/personal-finance/102914/7-ways-protect-against-credit-card-hacks.asp) charges limit a cardholder's liability to $50.
*   If a person is authorized to use a card but makes unauthorized purchases with it, those charges are not covered by the Fair Credit Billing Act, and the cardholder is liable for them.
*   Consumers can challenge the results of the lender's investigation within 10 days.

## Obligations of Card Issuers and Lenders

*   The card issuer or other lender has 30 days to acknowledge receipt of a complaint.
*   The lender has 90 days to complete an investigation, during which time it is not allowed to try to collect payment on the disputed amount, charge interest on it, or report it to credit bureaus as late. (It can, however, report it as being in dispute.)
*   If the lender finds that the dispute is valid, it must correct the error and refund any fees or interest that was charged as a result.
*   If the lender decides the dispute is invalid, it must explain its findings and provide documentation to the consumer.

### Note

Though the FCBA caps unauthorized charge liability at $50, many card issuers offer [zero-liability policies](https://www.investopedia.com/terms/z/zero-liability-policy.asp).

## Comparing the FCBA and FCRA: Key Differences and Similarities

The Fair Credit Billing Act is often compared to the [Fair Credit Reporting Act (FCRA)](https://www.investopedia.com/terms/f/fair-credit-reporting-act-fcra.asp). Both are designed to protect consumers from bad credit practices, but the purpose of each law is different.

The Fair Credit Reporting Act is a federal law that regulates the collection and reporting of credit information about consumers. The law governs how a consumer's credit information is collected and shared with others.

The FCBA protects against unfair billing, while the FCRA guards against personal information misuse.

## What Kinds of Credit Does the Fair Credit Billing Act Not Cover?

The Fair Credit Billing Act applies only to open-end credit, the kind that a consumer can borrow from repeatedly. Examples include credit cards, charge cards, and home equity lines of credit. It does not apply to [closed-end credit](https://www.investopedia.com/terms/c/closed_end_credit.asp), such as auto loans, mortgages, and home equity loans. Consumers who wish to dispute a charge involving closed-end credit are covered by other laws. For example, the [Real Estate Settlement Procedures Act (RESPA)](https://www.investopedia.com/terms/r/real-estate-settlement-procedures-act-respa.asp) governs disputes between borrowers and their mortgage companies or loan servicers.

## What Does "Account in Dispute" Mean?

Under the Fair Credit Billing Act, "account in dispute" refers to the 90-day period in which a credit issuer is investigating a consumer's dispute. The credit issuer must either remedy the situation or send a letter to the consumer explaining why it considers the dispute invalid.

## Can a Consumer Dispute a Non-Refundable Charge?

Just like with any other charge, the consumer has the right to dispute a transaction involving a non-refundable charge as long as they believe they have a valid claim. Valid claims include not receiving the product or service or not having signed or authorized the non-refundable charge.

## What Is a Chargeback?

A [chargeback](https://www.investopedia.com/terms/c/chargeback.asp) is the return of money to a customer following the successful dispute of a particular credit transaction. It reverses a money transfer from the payer's bank account or credit card.

## Will a Credit Billing Dispute Affect Your Credit Score?

No. Filing a dispute has no impact on a consumer's credit score. However, the card issuer may report the dispute to one or more of the [three major credit bureaus](https://www.investopedia.com/personal-finance/top-three-credit-bureaus/) while its investigation is in progress and that information may show up in the consumer's credit report.

## The Bottom Line

The Fair Credit Billing Act (FCBA) gives consumers important protections against unfair charges, including transactions, incorrect amounts, and goods or services that were never delivered. It allows cardholders 60 days from the date a statement is received to dispute a charge in writing, unless the card was lost or stolen.

Creditors must acknowledge disputes within 30 days and resolve them within 90, while consumers' liability for unauthorized charges is limited to $50, and many issuers now offer zero-liability policies. Unlike the Fair Credit Reporting Act, which focuses on credit reporting, the FCBA is specifically about billing practices.

Importantly, filing a dispute won't hurt a consumer's credit score, though the account may temporarily show as "in dispute" on their report.

> **Article Sources**
>
> 1.  Federal Trade Commission Consumer Advice. "[Using Credit Cards and Disputing Charges](https://consumer.ftc.gov/articles/using-credit-cards-disputing-charges)."
>     
> 2.  Federal Trade Commission Protecting America's Consumers. "[Fair Credit Reporting Act](https://www.ftc.gov/legal-library/browse/statutes/fair-credit-reporting-act)."
>     
> 3.  Federal Trade Commission Consumer Advice. "[Your Rights When Paying Your Mortgage](https://consumer.ftc.gov/articles/your-rights-when-paying-your-mortgage#Fix%20Problems)."
>     
> 4.  Experian. "[The Effects of Disputing Charges on a Credit Card](https://www.experian.com/blogs/ask-experian/disputing-charges-on-credit-card-account/)."