Disputing Credit Card Charges
Have you been billed for merchandise you didn’t receive, or previously returned for credit? Have you been charged twice for the same item, or noticed an incorrect amount or date in the listing of charges? Have you been billed for a purchase you didn’t authorize? Have you made a payment to your account, and didn’t receive credit for it?
Such incidents can be frustrating; however, these types of errors have a good chance of being resolved in your favor with a little patience and knowledge. The federal Fair Credit Billing Act (opens new window) (You will be leaving NCUA.gov and accessing a non-NCUA website. We encourage you to read the NCUA's exit link policies. (opens new page).) (FCBA) provides dispute settlement procedures for consumers and credit card companies. The law also applies to companies offering revolving charge accounts, like department stores.
Credit Billing - Rights for Consumers
This toolbox provides a variety of helpful considerations and resources for consumers to better understand their rights when a billing error occurs, and the settlement procedures prescribed under federal law.
Valid Billing Errors
The FCBA protects you against billing errors. Under qualifying circumstances, your liability is limited to $50, though most major credit card companies waive any liability. Qualifying errors include:
- Charges with the wrong amount or date.
- Charges for goods or services you didn’t accept or that weren’t delivered as agreed.
- Math errors, such as the wrong total after adding a tip.
- Failure to post payments or credits.
- Failure to send bill to your current address – assuming you provided it to the company at least 20 days before the end of the billing period.
- Charges for which you ask for clarification or proof of purchase.
Two of the more common billing errors are: unauthorized charges; and deceptive recurring charges for subscription services. Unauthorized charges could be fraudulent, made by someone who obtained your card number. But they could also be charges made by a legitimate merchant and without your approval. Recurring charges often apply to goods or services you never intended to accept beyond a free trial or one-time purchase. In this case, you may have forgotten to cancel the subscription, found the opt-out process confusing or difficult to understand, or the vendor ignored your order not to continue beyond the trial period.
Write a Letter
To open a credit card dispute, send a letter to your credit card company explaining the situation and provide copies of receipts, sales slips or other documents supporting your claim. Use the company address designated for “billing inquiries,” not the address for sending payments. Include your name, address, account number, and a description of the error. The Federal Trade Commission (FTC) website includes a sample letter (opens new window) (You will be leaving NCUA.gov and accessing a non-NCUA website. We encourage you to read the NCUA's exit link policies. (opens new page).) you can use for mistakes on billing statements.
Send your letter timely. It should reach the credit card company within 60 days after the first bill with the error was mailed to you. You may want to send it by certified mail and ask for a return receipt so you have proof of what the credit card company received. The company must acknowledge your dispute, in writing, within 30 days after receiving your letter, unless the matter has been resolved.
The Investigation Process
Upon receipt of your dispute, the company contacts the seller or merchant and investigates the transaction. During the investigation, you may withhold payment on the disputed amount plus any related charges. You must pay any part of the bill not in question. The creditor may not take any legal or other action to collect the disputed amount and related charges. Your account can’t be closed, though the disputed amount can be applied to reduce your credit limit. The creditor may not threaten your credit rating or report you as “past due” for exercising your FCBA rights to dispute a credit card charge. However, the creditor may report that you are challenging a billing statement.
The creditor must resolve the dispute within two billing cycles (not to exceed 90 days) after receiving your letter.
If the company decides a valid billing error occurred, it’s required to give you a written explanation of the correction to be made to your account. The creditor must remove the charge and any interest, fees or other costs related to the error.
If it decides the bill is correct, the creditor must also send you a written statement about the amount you owe and why. You may ask for copies of relevant documents supporting the company’s decision.
If you disagree with the results of the investigation, you may write to the creditor within 10 days after receiving its decision. You may indicate that you refuse to pay the disputed amount. At this point, however, the creditor may begin collecting the debt. If the company reports your account to a credit bureau as “past due,” the report must also state that you don’t think you owe the money. The creditor must tell you who gets these reports.
Product Quality or Service Issue
If you’re unhappy or dissatisfied with the quality of a product or service you paid for with a credit or charge card, your dispute is not a qualifying “billing error” and the FCBA settlement procedures don’t apply. Nonetheless, you can take the same legal action against the card issuer as you can against the seller or merchant.
To exercise this protection, the product or service must cost more than $50, the purchase must occur in your home state or within 100 miles of your current billing address, and you must first make a good faith effort to resolve the issue with the seller. If the seller is also the card issuer, or the two have a special business relationship, the dollar and distance limitations don’t apply.
Keep receipts and other records of transactions. Contact the merchant to ask for a refund or replacement. Send an email or write a complaint letter seeking corrective action. Keep a copy of any correspondence.
If you’ve made a good faith effort to resolve the issue with a merchant, and the merchant won’t assist you, contact your credit card company for assistance and seek a chargeback. Give the necessary information to the credit card company. You may be asked to complete a form and supply documentation. Act quickly! You can’t withhold payment after paying your bill.
Additional Billing Rights
Companies that offer credit cards and revolving charge accounts also must give you a written notice at account opening and periodically, describing your right to dispute billing errors. They must provide a statement for each billing cycle in which you owe or received more than one dollar, or have incurred a finance charge during the period. They must send your bill at least 21 days before your payment is due, or at least 14 days before a minimum payment is due to avoid being late.
All payments must be credited to your account on the date they’re received, unless no extra charges would result if posted later. If your account has an overpayment amount of more than one dollar, the company must promptly credit or refund the amount owed to you. While you may request a refund of a credit balance at any time in writing, the company must make a good faith effort to refund a credit balance that has remained on your account for more than six months.
If you believe a creditor (other than a credit union or other financial institution) has violated the FCBA, you may file a complaint with the Federal Trade Commission (opens new window) (You will be leaving NCUA.gov and accessing a non-NCUA website. We encourage you to read the NCUA's exit link policies. (opens new page).) who enforces the law for most creditors. For banks and other financial institutions that are credit card issuers, you should file a complaint with the primary regulator (opens new window) (You will be leaving NCUA.gov and accessing a non-NCUA website. We encourage you to read the NCUA's exit link policies. (opens new page).) or the Consumer Financial Protection Bureau (opens new window) (You will be leaving NCUA.gov and accessing a non-NCUA website. We encourage you to read the NCUA's exit link policies. (opens new page).) .