Disputing a Credit Card Charge Under the FCBA

A charge appears on a credit card statement that the cardholder did not authorize, or for goods that never arrived, or for an amount that does not match the receipt. The cardholder calls the issuer, explains the problem, and is told the charge will be looked into. That call is not the legal dispute. The Fair Credit Billing Act (FCBA), enacted as part of the Truth in Lending Act at 15 U.S.C. Sec. 1666 and implemented by Regulation Z at 12 CFR 1026.13, establishes a written procedure with fixed deadlines that bind the card issuer. Understanding that procedure, and what it does and does not cover, determines whether a dispute has legal force or is merely a customer service request.

What counts as a billing error

The statute does not use the word “dispute” in the broad sense. It defines a “billing error” in 15 U.S.C. Sec. 1666(b) and Regulation Z Sec. 1026.13(a). The categories are specific:

• A charge that was not authorized by the cardholder, or that was made by someone who does not have actual, implied, or apparent authority to use the card.
• Goods or services that were not delivered to the cardholder or were not accepted as agreed.
• A mathematical error in the statement or in the posting of a charge.
• A payment that was not credited, or was credited incorrectly.
• A failure to send a statement to the cardholder’s last known address, if the cardholder provided that address at least 20 days before the end of the billing cycle.
• A charge for which the cardholder requests clarification or documentary evidence, including a request for a copy of the sales slip or other proof of the transaction.

A disagreement about the quality of goods or services that were delivered as agreed is not a billing error under the statute. Neither is a complaint that a merchant’s return policy was not honored, unless the cardholder can show the goods were not accepted as agreed. Those disputes may be handled through the issuer’s internal processes or through a chargeback network, but they do not trigger the statutory protections described below.

The written notice and the 60-day window

The statutory procedure begins with a written notice from the cardholder. The notice must be sent to the address the card issuer designates for billing error inquiries, which is typically printed on the statement and is not necessarily the payment address. The notice must reach the issuer within 60 days after the first statement showing the error was sent to the cardholder. The date the statement was sent, not the date the cardholder received it, starts the clock. Regulation Z requires the issuer to disclose that address on its periodic statements (12 CFR 1026.7).

The notice need not use any particular form. It must identify the cardholder’s name and account number, state the amount of the suspected error, and explain why the cardholder believes the charge is an error. A copy of the receipt or a description of the transaction is helpful but not required by the statute. Sending the notice by a method that produces proof of delivery is prudent because the cardholder bears the burden of showing the notice reached the issuer within the window.

A telephone call does not satisfy the written notice requirement. Some issuers will accept a call and initiate a dispute, but that is a voluntary practice, not a statutory obligation. The legal protections attach only after the written notice is received.

What the issuer must do after receiving notice

Once the issuer receives a timely written notice, Regulation Z Sec. 1026.13(c) and (d) impose a sequence of duties. The issuer must acknowledge receipt of the notice in writing within 30 days, unless it resolves the dispute within that period. It must then investigate and either correct the account or explain why it believes the charge is correct. The resolution must occur within two complete billing cycles after receiving the notice, and in no event later than 90 days after receiving it.

During the investigation, the cardholder is not required to pay the disputed amount or any related finance charges. The issuer may not report the disputed amount as delinquent to a consumer reporting agency, and may not threaten to do so, while the dispute is pending. If the issuer fails to comply with these requirements, it forfeits its right to collect the disputed amount and related finance charges, up to a limit set in 15 U.S.C. Sec. 1666(e).

If the issuer determines that the charge was correct, it must send a written explanation and, if requested, copies of documentary evidence such as the sales slip. The cardholder then has a period of time to pay the disputed amount before the issuer may report it as delinquent. That period is set by statute and by the issuer’s own procedures; the statement or the issuer’s response should state it.

The statutory dispute versus a chargeback request

The FCBA procedure is often confused with a “chargeback,” which is a network process governed by the card associations’ rules, not by federal statute. A chargeback is initiated when the cardholder asks the issuer to reverse a transaction, and the issuer then presents the claim to the merchant’s acquirer. The merchant may contest the chargeback, and the network rules determine the outcome. The timelines, the grounds for reversal, and the evidentiary standards are set by contract and network rules, not by 15 U.S.C. Sec. 1666.

A cardholder may use both processes, but they are not the same. A phone call to request a chargeback does not satisfy the written notice requirement of the FCBA. A chargeback that is denied does not extinguish the statutory right to a billing error investigation if the written notice was timely. The statutory procedure is the one that carries the protections against adverse credit reporting and the forfeiture penalty for noncompliant issuers.

Debit cards and the Electronic Fund Transfer Act

The FCBA applies to credit cards and to certain credit accounts, not to debit cards. Disputes involving debit card transactions, including unauthorized transfers and errors in electronic fund transfers, fall under the Electronic Fund Transfer Act (EFTA) at 15 U.S.C. Sec. 1693 et seq. and Regulation E at 12 CFR Part 1005. The EFTA has different deadlines and different liability rules. The error resolution procedure under Regulation E Sec. 1005.11 requires notice, which may be oral, within 60 days after the institution sent the statement on which the error first appeared, and the investigation timeline and provisional credit rules differ from the FCBA. A cardholder who uses a debit card and follows the FCBA procedure may miss the EFTA deadlines or fail to trigger the EFTA protections.

Who the law covers and who it does not

The billing-error rules bind creditors on open-end credit accounts, including “card issuers,” which Regulation Z Sec. 1026.2(a)(7) defines as a person that issues a credit card, or that person’s agent. It does not govern third-party debt collectors. The Fair Debt Collection Practices Act (FDCPA) at 15 U.S.C. Sec. 1692 et seq. governs third-party collectors, but it generally does not apply to original creditors collecting their own debts. A cardholder who disputes a charge with the original card issuer is proceeding under the FCBA. A cardholder who is contacted by a third-party collector about a charged-off account is in FDCPA territory, and the FCBA billing error procedure does not apply to that collector.

Similarly, the FCBA does not apply to merchants. A dispute with a merchant about the quality of goods is a matter of state contract law and the merchant’s policies. The FCBA procedure runs through the card issuer. The same separation applies to home improvement purchases, where financing terms and equipment performance are distinct concerns, as eSolarEnergyNews’s eSolarEnergyNews battery guide explains for solar storage systems.

The mistake people most often make

The most common mistake is treating a phone call as the dispute. A cardholder calls the issuer, describes the problem, is told a case has been opened, and assumes the statutory clock is running. It is not. The FCBA requires written notice to the billing error address, and the 60-day window is measured from the statement date. By the time the cardholder learns that the call did not preserve the right, the window has often closed.

This happens because issuers do accept phone disputes for certain types of claims, and the customer service representative may not distinguish between a network chargeback and a statutory billing error dispute. The cardholder has no reason to know that two different processes exist. The result is that the statutory protections, including the right to withhold payment and the prohibition on adverse credit reporting, are never triggered.

A second mistake is sending the notice to the payment address or to a general customer service address rather than the billing error address. Regulation Z requires the issuer to disclose the correct address on its statements, but the cardholder must use it. A notice sent to the wrong address may not be treated as received.

Comparison: when the FCBA procedure does not apply

Where to find the limits

The FCBA limits what a noncompliant issuer may collect, in 15 U.S.C. Sec. 1666(e). A separate provision, 15 U.S.C. Sec. 1643, implemented in 12 CFR 1026.12(b), limits a cardholder’s liability for unauthorized use of a credit card. This page does not restate the amounts; both provisions can be read in full in the U.S. Code and the electronic Code of Federal Regulations.

State law may provide additional rights or different procedures for billing errors, and those vary by state. A cardholder facing a lawsuit or a large disputed sum should consult a lawyer licensed in the relevant state.