In legal terms, a credit billing error can refer to a variety of different errors that may appear on a consumer’s credit report. A credit billing error may be:
- A note on a consumer’s credit report or statement of an extension of credit that has not actually been made by the consumer or by someone with actual, implied, or apparent authority to use the consumer’s credit card;
- A note on a consumer’s credit report or statement of an extension of credit for property or services that was not accepted by the consumer or their designee or not actually delivered to the consumer as agreed;
- A failure of a creditor to properly credit the consumer for a payment that they made;
- Any other errors of a computational or accounting nature that are reflected on a consumer’s credit report or statement; and/or
- Including an extension of credit on a consumer’s credit report or statement on which the consumer has requested clarification.
If any credit billing errors negatively impact a consumer or are false, then the consumer may take steps to correct the errors under consumer protection laws.
What Are Consumer Protection Laws?
Consumer protection laws are government regulations, both state and federal, which protect consumers from fraud or abuse by salespersons, shopkeepers, or manufacturers. The purpose of consumer protection laws is to ensure that consumers are protected against unfair practices in the marketplace.
Federal consumer protection laws are comprehensive and cover a wide range of goods, services, and transactions. Examples of well-known consumer protection laws include:
- The Fair Credit Reporting Act: This federal law regulates how a consumer’s credit information is used by ensuring that information on a person’s credit report is accurate;
- The Fair Debt Collection Practices Act: This federal law regulates how debt is collected to avoid abusive and deceptive practices by debt collectors; and
- The Fair Credit Billing Act: This federal law allows consumers to dispute and correct billing errors made by a creditor, such as a credit card company.
The Federal Trade Commission (“FTC”) is the foremost regulatory body that enforces consumer protection laws. The FTC ensures that anyone who violates consumer protection laws is penalized. At the state level, additional consumer protection laws add additional protections for consumers within that jurisdiction. Local consumer protection laws will vary. Although each state has laws prohibiting deceptive practices, consumer protection might be even more strictly regulated depending on your state.
What Are Some Other Consumer Protection Laws?
In addition to the laws mentioned above, other consumer protection laws are enforced by the U.S. Department of Justice, both civilly and criminally. For example, after the 2008 financial crisis, the federal government formed the Consumer Financial Protection Bureau (“CFPB”) in order to protect people from deceptive and exploitative practices such as predatory lending.
The CFPB covers financial transactions such as:
- Money transfers;
- Bank accounts;
- Credit cards;
- Credit reports;
- Mortgage, auto, student, payday, and personal loans; and/or
- Money transfers
As can be seen, numerous federal and local agencies provide assistance and protection to consumers, including correcting credit billing errors. As such, it is important to research your local state’s laws regarding contesting credit billing errors or credit errors that appear on a credit report or statement.
What Should I Do If There Is an Error on My Credit Card Bill?
If you believe that there is a mistake on your credit card bill, then you should take steps immediately to fix the mistake. It is important to note that there are various time limits associated with federal and local laws regarding when a consumer can dispute a charge on their credit account.
If you ignore the mistake or take too long to notify the company, the incorrect debt may become permanent and get assigned to a collection agency if you fail to pay it. Taking your time to correct a credit billing error can make it very difficult to correct the mistake successfully. Additionally, the error could negatively affect your credit score until the mistake is fixed.
As mentioned above, numerous federal and local laws protect consumers from credit billing errors. One of the main federal laws is the Fair Credit Billing Act. The Fair Credit Billing Act is enforced by the FTC and provides consumers that utilize credit card and charge accounts with protection from unfair billing practices, such as:
- Credit charges that were not actually authorized by the consumer;
- Credit charges that have the wrong date or are for the wrong amount;
- Credit charges still present on the account for goods or services that weren’t delivered or performed;
- Credit charges for goods or services that were received, but they were disputed and not as described; or
- Credit charges for which the consumer requests clarification.
The Fair Credit Billing Act establishes a process to correct mistakes on your bill. To challenge a charge on a bill under the Act, you must do the following:
- Within 60 days of receiving your credit card bill, you must dispute the charge by notifying the company or card issuer in writing. You can dispute a charge when:
- The charges were over $50 in total. Charges must be at least this amount to be eligible for a dispute under the Act;
- The charges were for a good or service that was not delivered;
- An unauthorized user made the charges;
- Additionally, the charges must be unauthorized, display the wrong date or amount, or contain accounting errors;
- You must address the letter to the billing inquiries address that is shown on your bill; and
- You must then send the letter via certified mail with a requested return receipt, which will provide proof that the letter was sent and received.
After completing all of the above steps, the company will investigate your dispute. If the dispute outcome is favorable, no further actions need to be taken. If the dispute is not favorable, then consumers can challenge the results of the investigation within 10 days.
It is important to note that if the credit dispute is with a merchant, you can ask your card issuer or charge account issuer to withhold payment and request their assistance in resolving the issue. Additionally, if the charges were made due to a stolen or lost card, you may dispute the charges via the phone instead of submitting the dispute in writing.
What If an Incorrect Debt Has Already Been Sent to a Collection Agency?
Once a collection agency begins efforts to collect on a debt, it can be very difficult to convince them that the debt is invalid. As such, it is very important to catch credit billing errors early and avoid the hassle of dealing with a debt collection agency.
Once again, the Fair Debt Collection Practices Act is the federal law regulating how debt is collected. If a collection agency contacts you regarding a debt you believe you do not owe, you should send the collection agency a letter within 30 days disputing the debt.
Once you have sent the collection agency a dispute letter, the agency cannot contact you without providing proof of the debt. However, a simple copy of the original bill will meet this requirement. This is true even when the debt results from a creditor’s mistake.
Then, the debt collection agency can continue contacting you. In this scenario, you must convince the original creditor or your credit company to correct the mistake with the collection agency.
Do I Need a Lawyer for Help With Credit Billing Errors?
As can be seen, numerous federal and local agencies are responsible for protecting consumers. Successfully navigating through the various agencies is often a complicated task. As such, it is important to understand how those laws affect you as a consumer, especially if you are experiencing consumer protection law violations, such as credit billing errors.
If you are in a situation governed by the protection of a consumer protection law, you should first contact the FTC to submit your consumer complaint. You may also wish to contact an experienced financial lawyer to help you file and defend your claim.
An experienced financial attorney will be able to help you navigate through the entire dispute process, as well as represent you at any in-person court proceeding, if necessary.
