Glossary

Fair Credit Billing Act

The Fair Credit Billing Act (FCBA) is a United States federal law enacted in 1974 that provides protections to consumers from unfair billing practices. This act is crucial for credit card holders, giving them the formal right to dispute inaccuracies and billing errors on their accounts. These errors can include charges for goods and services they did not accept or that were not delivered as agreed, mathematical errors, failure to post payments and other credits, like returns, to their accounts, charges that list the wrong date or amount, and charges for which the consumer needs more information.

A significant provision of the FCBA is the establishment of the process for managing disputes between credit card users and issuers, which laid the foundation for the modern chargeback system. Under the FCBA, consumers must send a written dispute letter to the creditor within 60 days after the first bill containing the error was received. The creditor then has 30 days to acknowledge the complaint and must resolve the issue within two billing cycles (but not more than 90 days) after receiving the disputes.

The act allows consumers to withhold payment on the disputed amount during the investigation without impacting their credit score. It's important to note that while the FCBA created the framework for chargebacks, the specifics of how chargebacks are handled are typically determined by the individual credit card networks, which can add their own regulations and procedures on top of the basic rights provided by the FCBA.

This law was designed to promote accuracy, fairness, and accountability in the billing practices of credit card issuers, significantly enhancing consumer rights and confidence in the credit system.

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