It can happen to anyone. Your credit card statement has a mistake on it. Do you know how to handle credit card disputes?
If you discover a billing error from one of your creditors, you can do something about it. The provisions of the Fair Credit Billing Act can help you settle any errors and disputes you may have with your creditors. Keep in mind it only applies to revolving credit accounts such as credit cards, department store cards, and overdraft protection for your checking account.
Review your credit card statements as soon as you receive them each month to ensure that you identify billing errors if they occur. You might want to keep a file for each creditor and compare your receipts to the statement. Examples of a billing error include:
For general advice on finding and fixing billing errors, read the ConsumerWatchdog.org article Protecting Against Billing Abuse – A Consumer Guide.
You have 60 days after receiving the creditor’s statement to report a billing error to the creditor. Your letter should be sent to the address for billing inquiries printed on the creditor’s statement. It’s a good idea to send the letter certified, return receipt requested, so you have proof the creditor received the letter. The letter should include:
The good news is that, while the billing error is being investigated, you don’t have to pay the part you’re disputing (but you’re responsible for paying any undisputed amount). See the State of California legal guide How To Correct a Credit Card Billing Error for more information.
The creditor has 30 days to respond to you in writing after receiving your letter. The correspondence should include:
Don’t expect immediate results. The creditor has two billing cycles (up to 90 days) to make the credit dispute remediation. This is another reason you should monitor your statements closely each month. If you’re not looking at them, you won’t know if the creditor has corrected the error.
Besides having recourse with a billing error, you have other rights under the Fair Credit Billing Act. During the credit card dispute process, for example, the creditor cannot begin collection procedures on the disputed amount or report you to the credit bureau as being delinquent in your payment. Also, if the creditor doesn’t follow the dispute process exactly, you’re not liable for the amount of the billing error, even if it turns out to be accurate. In other words, if the creditor doesn’t respond to your letter within 30 days, you don’t have to pay.
Even though you’ve followed the steps exactly, the creditor may not agree with you. If the creditor tells you in writing that what you’ve described as a billing error is, in fact, correct, you can take one more step. You have 10 days to tell the creditor about the credit card dispute, in writing, that you disagree with their findings, and you can refuse to pay the amount in question. The creditor may begin the collection process and will probably report any delinquency to the credit bureau. If this happens to you, make sure your credit report reflects that the delinquency is due to a billing dispute.
It’s good to know that you have rights when you find an error on your credit card bill. But, if you never review your statement, you may never know if something goes wrong. So make sure you regularly review your credit card statements.
For more information, see the U.S. Federal Trade Commission factsheet about Fair Credit Billing and the State of Indiana’s article Fair Credit Billing, Your Credit Card Rights. You can also read the related articles in the CareOne Credit Knowledge Center.