Fair Credit Billing Act

Last Updated: May 24, 2018

Definition - What does Fair Credit Billing Act mean?

The Fair Credit Billing Act (FCBA) is a federal mandate enacted in 1974, an amendment of the Trust in Lending Act, which protects credit card consumers from unauthorized or erroneous charges applied to their account. When cardholders find a discrepancy connected with questionable transactions, fraudulent activity, a misplaced or stolen card, or related penalty fees, credit card issuers are required to handle the matter following FCBA established guidelines and rules once notified by the consumer. Because disputes are relatively common, credit card issuers carefully observe the circumstances surrounding customer complaints to determine the validity of different scenarios.

WorkplaceTesting explains Fair Credit Billing Act

Incorrect or erroneous billing charges can appear on billing statements for a number of reasons, which can be frustrating for consumer credit card users. The Fair Credit Billing Act (FCBA) requires card issuers to examine these cases to determine their legitimacy and remove charges (with some limits) found to be erroneous or fraudulent. In the course of pending unauthorized charges, consumers are exempt from paying the disputed amount in question, but they are still obligated to pay their normal outstanding balance on legitimate charges made within their usual monthly billing cycle period, regardless of the outcome to any disputed charge(s) investigated and resolved by the credit card issuer.

Some legitimate billing disputes can include rendered charges by a merchant for shipment on products and/or services not received, or in some cases, a commercial good that is clearly defective, fraudulent charges by a third party without consumer authorization, keystroke errors where a small purchase was accidentally charged as a much higher rate, and recurring subscriptions after the consumer cancelled a service. However, there is no guarantee that a credit card issuer can compensate credit back to an account for a faulty product or service, especially if insufficient evidence proves unfavorable.

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