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Credit Law

Credit Laws on Your Side

I Didn’t Charge That:  Your statement arrives in the mail (or by email) and you discover a charge that you didn’t make. Under the federal Truth in Lending Act, you are not responsible for more than $50 in unauthorized purchases if you report the error within 60-days of receiving the account statement. You will have a difficult time getting the credit card company to investigate if you wait. Your best bet is to call the card issuer to let them know that a thief is using your card. Always follow up that phone call with a letter sent certified mail so you have a record that it was received. By the way, most credit card issuers waive the $50 “co-pay” if you notify them promptly after your card was compromised. And if your card number was stolen and used without presenting the card (over the Internet, for example), you cannot be held responsible for that $50 under the same law.

The Bill is Not in the Mail:  If your credit card bill doesn’t arrive by mail (or email) as scheduled, don’t just assume you are off the hook for that month. If you notify the issuer in writing within sixty days of the date it should have been sent to you, you’ll be protected by the Fair Credit Billing Act (FCBA) and the issuer won’t be able to charge you interest solely as a result of the error. If you call the issuer, remember to follow up in writing or you aren’t protecting your rights. Your letter should be sent to the address for billing errors and inquiries on your statement and should never be sent with a payment.

The Goods Aren’t in the Mail: Also worth mentioning is your right under the FCBA to dispute a charge if the goods or merchandise you ordered are not delivered as promised. Let’s say you order a laptop online and it never arrives. Or perhaps it is different than what was promised. Either way, you can “assert a billing error,” which means you can write to the card issuer at the address for billing errors and inquiries (usually this address is printed on your bill) and get them involved in the dispute. They will contact the merchant for an explanation and either tell you that they have credited your account or get back to you with the merchant’s reply to your dispute. You don’t have to pay the disputed amount while this investigation is underway, but you do have to pay the rest of your bill (either partially or in full). Remember: you must put your dispute in writing. A phone call doesn’t protect your rights.

When the Debt Collector Comes Calling: Maybe you pay your bills on time, or maybe you’ve been through a rough patch and bills fell through the cracks. Either way, if you get a collection notice in the mail, the panic sets in fast. Relax…at least for a few minutes. Under the federal Fair Debt Collection Practices Act, you have the right to ask the debt collection agency to verify your debt. The collectors have to stop their work if you dispute the bill. Disputing also gives consumers protection if the collector reports the inaccurate account to the credit bureaus. To exercise this right, send a letter to the collection agency via certified mail asking it to verify the debt. The “verification” may be sketchy (especially if you didn’t pay because you were fighting over a bill), so be sure to gather your evidence in the meantime, if you have any.
Tip: If you believe you owe the debt, you may want to skip this step and just make payment arrangements before the debt appears on your credit report. Many collectors will give you a short window of time to pay before they report. Just make sure they first agree in writing that they won’t report it.

Old Debts Don’t Last Forever: Every state has a statute of limitations for different types of debts. If a debt is too old and lenders or collectors try to sue, you can raise the statute of limitations as your defense and they probably won’t succeed. If you are contacted about a debt that’s more than a couple of years old, request verification (as we just discussed), then find out your state’s statute of limitations for that debt. If it is too old, send a certified letter explaining that you know it’s outside the statute of limitations and ask the collector to leave you alone. Keep a copy for your records, in case it pops up later with another agency. Watch out: don’t send a token payment just to make a debt collector leave you alone. Paying or agreeing to pay on a debt may start the statute of limitations over again.

Yes, it’s Truly Free: Under the Fair and Accurate Credit Transactions Act (FACTA), you can get a free annual copy of your credit report from each of the three major credit reporting agencies once a year. It’s fairly easy, and they are truly free. Whether you stagger them out and check one every few months, or order one from all three agencies at the same time, the price is right. So why not take advantage of it?

Debit Card Protection:  If your debit card is used by a thief, you’ll want to act quickly. If you do, the Electronic Funds Transfer Act is on your side. If you report the loss or theft within two business days after you discover it, by law you’ll be out no more than $50 (and most issuers won’t hold you responsible for the first $50 if you report the theft right away). Wait longer and you could be held responsible for up to $500 in fraudulent withdrawals. If you don’t notify your financial institution of the loss within 60 days after your statement is mailed to you, you could be out your entire account – plus any overdraft line of credit! Make sure you keep the phone number for contacting your issuer handy in case someone uses your debit card without your permission.

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