A major advantage of using a credit card is that you’re not putting up your own money upfront and can enjoy legal protections in case anything goes wrong.

For instance, if a merchant bills you for the wrong amount, you can dispute the charge. Then, your card issuer is obligated to look into the matter and resolve the issue in a timely manner.

The Fair Credit Billing Act provides an actual timeframe for the issuer to resolve disputes, and it can’t stretch out its investigation indefinitely. So, how long can an issuer take to resolve your billing error dispute?

Types of billing errors

There are specific purchase situations that the FCBA considers to be billing errors. These include:

  • Charges that you did not authorize
  • When your charge is for an incorrect amount or has the wrong date
  • When you did not accept a good or service
  • When your purchase was not delivered as agreed
  • Errors related to math
  • When your statement does not credit you for a payment or for returns
  • An issuer not sending your statement to the right address, after you have notified it of a change, at least 20 days before the end of your billing period
  • If you request a clarification about a specific purchase

If you have an issue about the quality of a good or service, that does not qualify as a billing error under the FCBA.

Dispute timeframe

Before you take recourse to a billing error dispute, it would be best to sort the issue out with the merchant. That could help you resolve it faster than going through a dispute process with your issuer.

To put in for a dispute with your card issuer, write a letter to the address it provides for billing inquiries, not to the address you send your payments to. Use certified mail so that you can ask for proof of receipt. Provide relevant information, including copies of receipts and any other documentation.

You should send this letter within 60 days of when the issuer mailed you the first statement with the disputed charge. Within 30 days of getting your letter, the issuer should acknowledge receipt of the communication (unless the issue has been sorted out by then).

And the issuer should look into the matter and resolve the issue within two billing cycles, but not more than 90 days, after getting your letter.

Resolving the matter doesn’t necessarily mean you’ll always get your money back, though. Without finding sufficient evidence of the error or incorrect charge, for example, your issuer may still deny your disputed charge.

Penalties for tardiness

The FCBA also comes to your rescue in case an issuer does not stick to this mandated timeframe for resolving your credit card billing error dispute.

If you sue the issuer and win, you could be awarded damages. The issuer could also find itself paying you twice as much as any finance charge it assessed you. That fine is typically capped at $5,000. It could run higher in case the issuer has a history of going against the rules. A court could also ask the card issuer to take care of your attorney bills.

If you take legal action, find an attorney who will take on your case for a fee that is not more than any damages the court will award you.

You may find that your ability to sue an issuer is limited by a mandatory arbitration provision that is part of the fine print of your card application.

You can also take recourse to certain claims and defenses in case the billing error relates to products and services that are not delivered or have a defect. However, this only applies to charges of more than $50 made within a 100-mile limit of your home address. And you should sue on the basis of “claims and defenses” within a year of when you made the purchase.

You could also put in a complaint with the Consumer Financial Protection Bureau or the Federal Trade Commission in case an issuer does not complete an investigation in a timely manner.

The bottom line

If you have an issue with a billing mistake on your credit card, you can file a dispute with your card issuer. A card issuer has to resolve this matter in a timely manner, adhering to the requirements of the Fair Credit Billing Act. There are penalties for not meeting deadlines.

However, before taking recourse to dispute with your issuer, see if you can sort out the matter with the merchant. That’s likely to provide a faster resolution to your issue.

Contact me at pthangavelu@redventures.com with your credit card-related questions.