Get To Know The Fair Credit Billing Act

What is the FCBA?

Fair Debt Collection Practices Act

5 min read

The Fair Credit Billing Act (FCBA) was established to protect the average American against common billing errors and unjust billing practices associated with specific types of credit. American consumers are easily targeted by predatory lending practices by big banks and other creditor organizations. However, federal statutes like the FCBA provide a fence around consumer rights and ultimately a consumer’s creditworthiness.

Initially added as an amendment to the 1974 Truth in Lending Act (TILA), the FCBA serves as a federal law that clearly outlines billing errors and offers guidance to both lenders and consumers on how to address them. Additionally, the law provides a protective shield for consumers in case of disputes.

Key takeaways about the protective measures for consumers set forth by the FCBA:
  • The FCBA is an extension of the Truth in Lending Act (TILA).
  • It offers protection to consumers with open-end credit accounts.
  • If the consumer’s dispute is found valid, their bill will be adjusted accordingly.
  • The consumer and creditor must address disputes in a timely manner.

What types of billing errors does the FCBA protect consumers against?

The FCBA provides protection against billing errors that occur on open-ended or revolving accounts, including credit cards, charge cards, and home equity lines of credit (HELOC). However, it does not extend to debit transactions or installment loans, such as auto loans, which have a fixed repayment period. Different laws offer consumer protections for those specific types of transactions.

Examples of billing errors covered by the FCBA:
  • Unauthorized charges appearing on a monthly billing statement.
  • Inaccurate reflection of the date or amount of a transaction on the billing statement.
  • Accounting mistakes made by the creditor.
  • Failure to send a required billing statement to the borrower or not meeting other related requirements.
  • Charges for items that were purchased but not received.
  • Charges for goods or services that the borrower rejected or were not delivered as promised.
  • Absence of a statement credit for returned merchandise or failure to credit a payment made by the borrower.

Notably, the FCBA does not address complaints about the quality of goods or services received from a merchant. Moreover, disputing a billing error under the FCBA differs from requesting a refund due to disagreements about policies, services, or canceled plans.

Here is a link to find more information about the Fair Credit Billing Act:
https://uscode.house.gov/view.xhtml?req=granuleid%3AUSC-prelim-title15 chapter41-subchapter1 partD&edition=prelim

Creditors Beware: The Law That Protects You From Abusive Debt Collection Practices

What is the FDCPA?

The Fair Debt Collection Practices Act (FDCPA) was established to provide legal protection to the average American consumer from abusive debt collection practices. The FDCPA is a federal law that limits the actions of third-party debt collectors who are attempting to collect debts on behalf of another party or entity (the original creditor).

The FDCPA became effective in March of 1978, and was designed to eliminate abusive, deceptive, and unfair debt collection practices.

Here are the key takeaways about the guidelines set forth by the FDCPA:
  • The Fair Debt Collection Practices Act (FDCPA) covers when, how, and which ways a debt collector can contact a debtor/consumer.
  • The FDCPA provides structure that debt collectors can not contact any other party other than the debtor, in certain ways. The FDCPA also ensures that the debt collectors can not harass, threaten, or use any profanity when making an attempt to collect a debt.
  • If the debtor feels as though they are being harassed, or that any of their FDCPA laws are being violated, then the debtor can sue the third-party/debt collector for statutory damages for up to $1,000 per violation.

What types of harassment does the FDCPA protect debtors against?

The FDCPA provides protection against harassment from third-party debt collectors. The FDCPA states that a third-party debt collector can not contact a debtor outside of certain time periods, as well as limiting the amount of calls in a day a debtor can receive. The FDCPA states that a third-party debt collector can not threaten or imply any legal action against the debtor without true intent behind it. The FDCPA also states that the third-party debt collector, can not contact any family members or friends to obtain information about the debtor, other than confirming an address of residency.

Examples of harassment covered by the FDCPA:
  • Receiving phone calls before 8 am or after 9 pm.
  • Receiving 7 calls within 7 consecutive days.
  • The use of any profanity from the third-party debt collector towards the debtor when attempting to collect a debt.
  • Contacting friends and family informing them of the debtor's status with the debt, as well as asking for information on the debtor other than the address of residency.
  • Threatening legal action on the debtor, with no real intent, such as lawsuits or claiming legal enforcement on the debtor, such as an arrest to occur.
  • If a third-party debt collector fails to disclose they are a debt collector while attempting to collect a debt.
  • If a third-party debt collector insinuates that they work for the credit bureaus or any government agency.

It's important to note that the FDCPA does not address harassment when it comes to the original creditor unless in the states of California or Florida. Moreover, the FDCPA is in place to hold third-party debt collectors accountable for harassment when it comes to collecting a debt they originally had no authority over. In the past years, third-party collectors have become more and more aggressive towards the debtors in the attempt to collect debts, and the federal government is working towards protecting debtors everyday.

Here’s a link to find more information about the Fair Debt Collection Practices Act:

https://www.ftc.gov/legal-library/browse/rules/fair-debt-collection-practices-act-text