Understanding Consumer Protections Under the Fair Credit Billing Act

Credit card billing mistakes happen more often than most people realize. Whether it’s a duplicate charge, an incorrect amount, or unauthorized use after a data breach, cardholders have legal safeguards in place. The Fair Credit Billing Act, enacted in 1974, fundamentally changed how card issuers handle disputed charges, protecting consumers from financial penalties when they challenge questionable billing.

The Fair Credit Billing Act stands as one of the most significant consumer protection laws in the United States. Unlike the previous system where disputing a charge could damage your credit score, this federal law gives you the right to contest incorrect charges without fear of credit penalties while your case is being reviewed.

What the Fair Credit Billing Act Protects You Against

The scope of protections under the Fair Credit Billing Act extends beyond simple billing errors. The law covers situations where you’ve been overcharged, charged twice for the same purchase, or billed for items you never received. It also shields you when merchants send the wrong product or fail to deliver promised services.

Data breaches represent one of the most critical protections offered by this framework. “If what’s stolen are credit card numbers, consumers should feel fairly confident that their rights are protected,” explains Chi Chi Wu, a staff attorney with the National Consumer Law Center in Boston. Your liability for fraudulent charges is capped at just $50 under the Fair Credit Billing Act—and in practice, Visa and MasterCard often waive even this amount if you prove unauthorized use.

However, the law has clear boundaries. You cannot dispute a charge simply because you’re unhappy with the product or service quality. As one expert notes, disputing service quality is different from challenging the validity of a charge itself.

Your 60-Day Window to Challenge Billing Errors

Timing is critical when using the Fair Credit Billing Act protections. Once you spot a billing error on your statement, you have 60 days from the date the bill was mailed to formally dispute the charge. This deadline is firm—miss it, and you lose your legal right to a protected dispute, though some issuers may still review your claim informally.

“Don’t assume the charges listed on your credit card statement are automatically correct,” warns Matt Buckalew, an attorney at Looney and Conrad in Houston. “Consumers really need to go over their billing statements with a fine-tooth comb.”

The challenge is that many cardholders don’t discover errors until months later. One credit counselor didn’t catch a recurring unauthorized charge for 11 months. While he was able to dispute it, the issuer only credited back two to three months of charges due to the time elapsed. The lesson: establish a routine of reviewing statements immediately when they arrive.

Documentation and Written Dispute Requirements

Under the Fair Credit Billing Act, your dispute must be submitted in writing—phone calls alone won’t suffice. Send your complaint directly to the card issuer via certified mail, clearly stating your name, account number, the disputed amount, and your reason for believing the charge is incorrect.

If you have supporting documentation like a receipt, include it. A receipt showing the correct charge ($50 instead of the $500 you were billed) strengthens your case considerably. However, you’re not legally required to provide documentation. Even without a receipt, the issuer cannot automatically rule against you, though your case may be harder to prove.

The Federal Trade Commission provides a sample dispute letter template that walks you through exactly what to include. Following this format ensures your complaint meets all Fair Credit Billing Act requirements and cannot be dismissed on procedural grounds.

The Investigation Timeline and Your Rights During Review

Once your card issuer receives your formal dispute, the Fair Credit Billing Act mandates a specific timeline. The issuer has 30 days to acknowledge receipt and inform you that an investigation is underway. The complete investigation must be resolved within two full billing cycles.

During this investigation period, your card issuer cannot report the disputed charge as a late payment to credit bureaus, cannot attempt to collect on the disputed portion, and cannot charge you interest on it. This breathing room is crucial—your credit score remains protected while the matter is being resolved.

“You don’t have to pay the disputed amount while your complaint is being investigated,” explains John Ulzheimer, president of consumer education at CreditSesame.com. However, you must still pay any other legitimate charges on your bill. The Fair Credit Billing Act does not give you the right to withhold payment on your entire statement.

If the issuer determines the charge was indeed made in error, it must correct the billing statement and remove any associated late fees or finance charges. If the issuer concludes you were charged correctly, it must provide a written explanation. You then have 10 days to challenge the issuer’s findings.

Unauthorized Charges and Data Breach Protection

The Fair Credit Billing Act provides different—and more generous—protections for unauthorized charges compared to billing errors. If your card is lost, stolen, or compromised in a data breach, you don’t need to submit a written dispute. A phone call to your card issuer suffices.

The 60-day deadline also doesn’t apply to unauthorized use. Although you should report fraudulent charges as soon as you discover them, the Fair Credit Billing Act still protects you even if months pass before you notice the breach. “Obviously, if you’re aware of unauthorized use, you should do it as soon as possible,” says Chi Chi Wu. “But if you don’t find out about a data breach until months after it occurred, your rights are still protected.”

Your maximum liability for unauthorized charges is $50, and you’re not liable for fraudulent use of your card number online or over the phone—even if the thief never had the physical card. In most cases, major card networks waive the $50 entirely.

One important caveat: if you voluntarily share your card details with someone, you cannot later claim unauthorized use under the Fair Credit Billing Act. For example, if you give your card to a family member to buy groceries and they purchase $400 in clothing instead, that’s considered authorized use.

Withholding Payment for Unsatisfactory Purchases

The Fair Credit Billing Act grants another powerful right: the ability to temporarily withhold payment on a purchase when you have a legitimate complaint about quality or service. This differs from disputing a billing error—it’s a consumer remedy for goods or services that don’t meet expectations.

To invoke this protection, you must first attempt to resolve the issue directly with the merchant. Only after the merchant refuses to work with you can you approach your card issuer and request a chargeback. When you do, your issuer must refrain from reporting your nonpayment to credit bureaus until the dispute is resolved.

There are restrictions on this right. The purchase must exceed $50 and must have occurred in your home state or within 100 miles of your mailing address. If you used a store card from the merchant itself, these geographic and dollar amount limitations don’t apply.

Internet purchases present a gray area. “Internet purchases are a little tricky,” notes Chi Chi Wu. Your right to withhold payment depends on applicable state law. If your state doesn’t recognize this right, the protection may not extend to online purchases.

Critically, you cannot invoke this right after you’ve already paid your credit card bill in full. The moment you pay, your withholding rights disappear.

Enforcement and Legal Recourse Options

If you believe your card issuer has violated the Fair Credit Billing Act, you have multiple avenues for complaint and escalation. You can file a formal complaint with the Consumer Financial Protection Bureau or the Federal Trade Commission, both of which have authority over credit card practices.

For more complex cases, consulting a consumer attorney who specializes in Fair Credit Billing Act disputes may be necessary. The National Association of Consumer Advocates website includes a directory where you can search for qualified lawyers in your region.

The Fair Credit Billing Act remains one of the most effective consumer protections in U.S. financial law. Understanding these seven core principles—from the 60-day deadline to investigation timelines to unauthorized charge protections—ensures you can exercise your rights fully when billing disputes arise. Your credit score and financial wellbeing depend on knowing when and how to challenge questionable charges.