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Credit card billing rights: Disputing the bill

Rights: You may be thinking that you are liable for unauthorized charges to your credit card. Telemarketers often want you to think you need paid protection. You don't- you're protected by law. Under the Fair Credit Billing Act, you are only responsible for the first 50.00 of fraudulent charges and that's only if you were careless in the cause of the fraud. Credit card companies have insurance coverage for credit card fraud and therefore it is not necessary for you to purchase coverage.

Disputing the bill: At certain times of the year, you may find yourself facing particularly large credit card bills. At those times especially, the Federal Trade Commission (FTC) advises you to review your billing statements with care. Credit card billing errors do occur, but they are simple to resolve if you know how to use the Fair Credit Billing Act (FCBA). Under this law, you must send the creditor a written notice about the problem to avoid paying for any charges you dispute. Many consumers forfeit their rights under this Act because they rely on calling the company to correct a billing problem. You may call if you wish, but phoning does not trigger the legal safeguards provided under the FCBA.

To take full advantage of your rights under the law, this is what you need to do.

1. Write to the bank, the financial institution, or retailer who issued the card. Your letter must be received within 60 days after the issuer mailed you the first bill containing the error. In your letter include: your name and account number; the date, type, and dollar amount of the charge you are disputing; and why you think there was a mistake.

2. Be sure to send the letter to the special address for billing inquiries, as designated by the card issuer. You frequently can find the proper address on your bill under a heading such as "send inquiries to."

3. Do not put your letter in the same envelope as your payment. To be sure the card issuer receives your letter, you may wish to send it by certified mail. If you follow the previous requirements, this is what the creditor is required to do.

4. Acknowledge your letter in writing within 30 days after it is received, unless the problem has been resolved within that time.

5. Conduct a reasonable investigation and, within no more than 90 days, either explain why the bill is correct or correct the error.

6. Include documents showing that the charge was correct, if the creditor states the bill is correct and you asked for "proof" in your letter. Under the FCBA, the card issuer cannot close your account just because you disputed a bill under the law.

If you continue to have problems with the card issuer, you might wish to seek legal advice or contact your local consumer protection agency. For more information about this law, contact the FTC for a free brochure. Write: "Fair Credit Billing," Public Reference, Federal Trade Commission, Washington, D.C. 20580. *

Third-Party Credit Cards
Most of us are familiar with credit cards. Special federal laws protect you when you use a third-party credit card. What is a third-party credit card? It is a card issued by someone other than the seller. A VISA card or MasterCard is a third-party credit card. A card issued by Smith's Department Store, which can be used only at Smith's, is not. Suppose you bought a TV set from Tim's TV for $500 using your VISA card. The set doesn't work, and Tim's won't honor its warranty. Tim's then closes its doors, leaving you with a broken TV set and an unpaid $500 bill. You would have a claim against Tim's, but Tim's is out of business.

Can you make the same claim against the credit card issuer? The answer is yes, if the following conditions are met:

-you have tried to resolve the problem with the seller;
-the price was more than $50;
-and The sale took place in your state, or within 100 miles of your home.
If a problem like this arises and all three conditions are met, do not pay the portion of the VISA bill for that item. You can't get your money back from the credit card issuer once you have paid! Do pay the rest of the bill. Send a letter to the credit card issuer explaining that you are withholding payment because of a disputed claim. Even if you have not met all of the conditions, you should still notify your credit card issuer of the problem. Sometimes the credit card issuer will credit your account and work out the problem with the seller. If all three conditions are not met, the credit card issuer does not have to credit your account and can require you to pay. Then you will have to sue the seller yourself to get your money back.

Billing Errors
Another common problem associated with the use of credit cards is billing errors. Federal law offers you some protection if your credit card bill has a mistake. This applies to bills for credit cards, bank cards, department store charge accounts, and other types of credit. In addition to math errors, the most common billing errors covered by federal law include:

charges that do not tell you where you made the purchase;
charges made by someone else without your approval;
charges for things you have already paid for;
charges for items you never received; and
charges for things you took back.

Check you statement carefully. It may tell you how to get in touch with the creditor if you think there is an error. If you notice an error, send a letter by registered mail to the creditor within 60 days after you receive the bill. The creditor has 30 days to investigate your claim and, if justified, make corrections. Calling or writing a note on the return part of the bill is not enough!

What types of disputes are covered?
The FCBA settlement procedures apply only to disputes about "billing errors." For example:

unauthorized charges. Federal law limits your responsibility for unauthorized charges to $50;
charges that list the wrong date or amount;
charges for goods and services you didn't accept or weren't delivered as agreed;
math errors;
failure to post payments and other credits, such as returns;
failure to send bills to your current address - provided you supply a change of address at least 20 days before the billing period ends; and
charges for which you ask for an explanation, or written proof of purchase along with a claimed error or request for clarification.

To take advantage of the law's consumer protections, you must:

Write to the creditor at the address given for "billing inquiries," not the address for sending your payments, and include your name, address, account number and a description of the billing error. Send your letter so that it reaches the creditor within 60 days after the first bill containing the error was mailed to you.

Read the law about reporting delinquencies while the bill is under investigation Send your letter by certified mail, return receipt requested, so you have proof of what the creditor received. Include copies (not originals) of sales slips or other documents that support your position. Keep a copy of your dispute letter.

Find out more at www.ftc.gov

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