Credit Card Chargebacks (Fair Credit Billing Act)

Key takeaways

• You have 60 days from the statement date to dispute a billing error in writing to preserve your FCBA rights
• The FCBA covers unauthorized charges, billing mistakes, and goods or services not delivered or not as described
• While the law requires purchases over $50 within your state or 100 miles for quality disputes, card networks typically waive these limits
• A chargeback is initiated through your bank, while a refund is requested directly from the merchant
• Debit card disputes are covered by different rules under the Electronic Fund Transfer Act, not the FCBA

What the Fair Credit Billing Act Covers

The Fair Credit Billing Act is a federal law enacted in 1974 that limits consumers' liability for unauthorized purchases, protects them from unfair billing practices and allows them to dispute billing errors on open-ended credit accounts. The FCBA sets out a dispute process to help you get those mistakes fixed on credit cards and revolving charge accounts (like open-end credit accounts). This dispute process is for billing errors on credit cards and other types of revolving credit.

You can dispute charges for products or services that weren't delivered as promised: When you place an order, you expect your items to arrive within a few days. But delivery mishaps, inaccurate inventory counts and other snafus may mean your order gets damaged or never arrives. Billing errors also include unauthorized charges, incorrect amounts or dates, and mathematical errors on statements.

The 60-Day Dispute Window

Consumers have at least 60 days after receiving a bill to dispute a charge. This dispute must be received by the creditor within sixty days of the statement date on the account statement that first contained the billing error. This time limit is critical and strictly enforced.

Notice given by telephone is not sufficient to trigger the protections of the FCBA; a consumer can only protect their rights under the Act by sending a written notice, or online if the creditor indicates to consumers that it will accept notices electronically. You must send your dispute to the billing inquiries address shown on your statement, not the payment address.

The $50 and 100-Mile Rule (And Why It Rarely Applies)

For disputes involving the quality of goods or services, for example, the FCBA lets consumers withhold payment if the purchase exceeds $50 and the transaction occurred either within the consumer's home state or within 100 miles of their billing address. The buyer also has to make a "good faith attempt" to resolve the issue with the merchant before invoking this right.

This would technically mean most eCommerce transactions are not eligible for protection. Of course, card networks typically make rules that are more consumer-friendly than basic legal requirements. In practice, major card networks like Visa and Mastercard have expanded protections far beyond what federal law requires, so cardholders can usually dispute charges regardless of location or amount.

How to File a Dispute

To preserve your FCBA rights, send a written letter to your card issuer's billing inquiries address within 60 days of the statement date. Include your name, account number, a description of the error, the disputed amount, and why you believe it is incorrect. Send the letter by certified mail with return receipt requested to prove timely delivery.

Upon receiving the dispute, the creditor must acknowledge it within 30 days and complete an investigation within 90 days. Credit card companies must acknowledge disputes within 30 days and resolve them within 90 days. While the issuer is investigating your complaint, you can withhold payment on the disputed amount and any finance and related charges. But you're expected to pay any part of the bill not in question, including finance charges on the undisputed amount.

Chargebacks vs. Merchant Refunds

A refund is when a merchant chooses to send a shopper their money back. It is initiated by the merchant. A chargeback when a cardholder disputes a transaction with their bank or card issuer, bypassing the merchant. It is initiated by the customer. Both result in the customer receiving funds back, but the processes differ significantly.

The main differences between chargebacks and refunds are who the cardholder contacts in the first instance, the length of the process and its cost. For chargebacks, the cardholder contacts their card issuer. For refunds, the cardholder contacts the merchant directly to request a refund. A refund is typically faster and keeps the merchant in control of the resolution process, while a chargeback involves the bank investigating the dispute and can take weeks or months to resolve.

Note that debit cards fall under different federal rules. The Electronic Fund Transfer Act and Regulation E govern debit card disputes, which provide more limited protections for merchant disputes compared to credit cards under the FCBA.