Unauthorized charges appear on credit card statements all the time. It can be financially devastating, but you have important rights.
I recently had a client who had been a DISH Network customer for years, but had cancelled her subscription in January of 2019 and returned all of their equipment (to the customer service representative who came to her house to close the account and uninstall everything). But then she received that nasty surprise 2 months later: a $500 charge on her credit card statement by DISH Network. She was, naturally, very alarmed at this, and immediately telephoned her credit card company to tell them what had happened. The credit card company did nothing. Fortunately, she came to me and we were able to help her resolve the situation.
If this sounds familiar, don’t be surprised. Unauthorized charges appear on credit card statements all the time. And while it often is the result of identity theft or a compromised account, that isn’t always the case. Fortunately, there is a very important law on the books that protects people in this situation: the Fair Credit Billing Act.
The Fair Credit Billing Act (15 U.S.C. Sec. 1666) was enacted back in the 1970s to protect innocent consumers from being held financially liable for money they didn’t spend. It is the federal law that requires credit card companies to have a “zero fraud liability” policy. But the law doesn’t act on its own: it requires YOU to take certain actions to protect yourself if you’ve been the victim of fraudulent or unauthorized transactions.
The central piece of the Fair Credit Billing Act is its dispute resolution scheme. If you see an unauthorized charge on your billing statement, you have 60 days to send the credit card company a written dispute. The dispute must
A) Be received by the credit card company within 60 days of the statement showing the unauthorized charge; 12 CFR 1026.13(b)(1)
B) identify yourself and the account number; 12 CFR 1026.13(b)(2) and
C) Must state precisely what is wrong with the statement; 12 CFR 1026.13(b)(3).
Once they receive your dispute, they have to acknowledge it within 30 days. This is usually a letter that basically says “Hey, we got your dispute. We’re looking into it.”
They then have 2 billing cycles to resolve the error. 12 CFR 1026.13(c)
During the time that they’re investigating your dispute, they are not allowed to report that you’re delinquent if you refuse to pay the disputed charges. Nor can they close your account if you refuse to pay the disputed charges. Note that this only applies to the disputed portion of the charges. So if your bill is for $600, and you have disputed $100 of charges in writing, then you can pay them $500 and still be treated like you’re current.
Once their investigation is complete, they have to send you a written notice of their findings. The investigation must be reasonable, and they must “make appropriate corrections in the account.” 15 U.S.C. 1666(a)(3)(B). If they determine that no error occurred, they have to give you a written explanation why. If they screw it up, you can sue them in federal court to force them to refund your money.
Don’t think that you have to fork out a ton of money to hire a lawyer, either. The Fair Credit Billing Act is part of the Truth in Lending Act, and creditors who violate this law are opening themselves up to a stiff penalty: up to $5,000 of statutory penalties, plus court costs and attorney’s fees. That’s right: if they do you wrong and you sue them, they have to pay your lawyer if you win. So even if your dispute with the credit card company is over a $200 charge, they could be required to pay thousands in attorneys’ fees if you beat them in court. The reason for this is simple: if they could get away with just refunding your money, then they’d never follow the law, because they’d never get sued. But thanks to the fee shifting provision of 15 U.S.C. Sec. 1640, they have to pay your lawyer’s fees if you win.
An experienced consumer rights lawyer in your area can help you take your case to the courts and get the justice you deserve without charging you anything up front.