The rise in consumer complaints over the past few years has led to a much welcomed update to the Fair Credit Billing Act. This enhancement also tried to put forth some “fair reporting” rules so that there was a standard. Some companies were reporting people late if they were just one day late paying a bill. This is why there are 30 day and 60 day reporting standards to level the playing field. Credit card companies could also not put rules on merchants they worked with regarding discounts.
Many people forget that credit card companies have a hold on merchants as well because they get a percentage of all sales. Until this act some credit card companies were trying to stop merchants from offering cash or check discounts. Another important protection for the consumer is that credit card companies cannot seize money from checking and savings accounts. This often was debilitating to the financial situation of people and was seen as an unfair way to collect a debt. This helps ward off the junk debt buyers like Midland Funding as well.
Overall this enhancement just served to put forth a few more rules to make it clear what was happening within the credit system. It allows both lenders and borrowers to understand the parameters and know how everything will be handled. Just like with anything new, it was important to establish rules and regulations that made it fair for everyone. While there are still things that could be improved on, this basic plan of action has led to a very successful credit system.
How Did The Fair Credit Billing Act Start?
The Fair Credit Billing Act is an enhancement to the Truth in Lending Act that was added in 1975. As credit became a more popular form of payment, it was clear that loan rules were not the same as what needed to be instituted for those who were working with revolving credit accounts. There needed to be a more thorough layout to how consumers could protect themselves and how the creditor had to respond to such inquiries. Many things have derived from this basic plan including the credit reporting agencies as they stand now with a very specific number program to help creditors determine the safety of particular borrowers.
What it Addresses
The Fair Credit Billing Act set out to help consumers deal with problems when it came to their credit. This includes how to handle charges not made by the consumer or if the wrong amount was charged to the credit card. In the electronic age, consumers can check this more quickly, but back in 1975 you had to wait for your bill. This also was the impetus behind the dealings with calculation errors and failure to properly reflect payments. Again, the savvy consumer checks their bill often so it is easy to rectify these problems. But in 1975 if your payment was not reflected and you were charged additional interest charges it could take months to get everything back on track.
Goods and Services
The act also set out to address problems with goods and services. A way for the credit card to pull money back from companies that never provided the charged goods and services. It was also a way to deal with damaged goods and things that were not delivered as agreed. All of these items protect the consumer from being charged for things that did not go as planned. It also gave the credit card company recourse to get the funds back from the company as well. It helped to force the hands of companies to follow through on their promises.
As the bill was written in 1975, one of the very important provisions was that credit companies must send statements 14 days before the due date of the bill. This gave the borrower time to get the funds together, check the bill and make any calls or requests necessary for wrong charges. This rule applies today and now with electronic payments, it is even easier to ensure your bill is paid on time. It also says that any written notice given to a creditor must be responded to within 30 days and an investigation must be completed within 90 days. This protects you from having to wait years for a resolution to a financial issue.