When your bank makes a mistake on your account statement, the best way to address it is by sending a quick and detailed notice. Finding billing errors on a bank statement can be extremely frustrating, especially because security and accuracy are such basic obligations for a bank. While there are laws that protect consumers against such mistakes, receiving the full benefit of such protections often requires prompt action.
- What Do Bank Billing Errors Look Like?
- When and How to Dispute a Bank Error
- What Happens When the Bank Finds No Error?
What Do Bank Billing Errors Look Like?
The majority of bank billing errors involve open-end credit, which is consumer credit extended by a bank in which:
- The bank reasonably expects repeated transactions
- The bank may charge occasional fees or interest on an unpaid balance
- The amount of available credit increases up to its original level as the outstanding balance is repaid
The most common example of open-end credit is a credit card or a line of credit. Legally, a bank must send out periodic statements to all customers with open-end credit products. You should always pay close attention to make sure the periodic statement correctly itemizes activity on your account.
Your ability to correct billing errors and be made whole is somewhat dependent upon your catching the errors in a timely fashion. Billing errors include charges by an unauthorized third party, missed credit for payments received, debits for services you didn't receive and simple errors of calculation.
When and How to Dispute a Bank Error
Practically, you should try to inform your bank as soon as possible to maximize your chances of resolving the problem. Legally, you have an obligation to notify your bank of any errors within 60 days of the bank sending you the first erroneous statement. If the error is a failure to post a credit, the 60-day period runs from the sending of the statement in which the credit should have appeared.
You should send a notice about the error to the address provided on your periodic statement. This notice should contain your name and account number or any other identifier that helps the bank identify you. It should also state your belief that a billing error occurred as well as the type, date and amount of the error. Also prepare copies of documents that support your assertion, such as an earlier confirmation of payment.
What Are the Bank's Obligations?
Once a bank receives your proper and timely billing error notice, it must give you a written acknowledgement within 30 days, unless it has completed the billing error procedures during that period. The error must then be resolved, usually within two billing cycles and never later than 90 days from when the bank receives your notice.
Banks are required to respond more quickly if the error involves an unauthorized electronic transfer. In this case, an electronic transfer is any transaction initiated by ATM, telephone or online. Banks must complete their investigation of such errors within 10 business days of receiving a billing error notice, report findings to the customer within three days and issue a final correction within one day of determining the error.
Your Rights as a Consumer
During the dispute resolution process, the bank must follow several rules and respect certain rights that you have as a consumer. For example, you may withhold any portion of the payment related to the disputed amount. If you do so, the bank legally cannot:
- Initiate collection actions for the disputed amount
- Make or threaten to make a negative report on your credit history
- Close, restrict, accelerate or report your account as delinquent
If the bank is unable to complete the dispute resolution process for an electronic transfer within 10 business days, it must provide you a provisional credit for the disputed amount. If a bank finds that your complaint is valid, it must correct the error and credit your account with the disputed amount. Finally, the bank must also repay you any related charges caused by the deficiency, such as an overdraft or a minimum balance fee.
If the bank finds that no error has occurred, it must give you notice and explain why it believes that the alleged error is incorrect. As part of this process, you have the right to request copies of documentary evidence that the bank used in making this determination.
What Happens When the Bank Finds No Error?
If the bank has complied with all of its dispute resolution obligations and found no error, it must promptly provide in writing your payment due date and a breakdown of the total amount you still owe. The bank must allow you a certain predetermined period of time, depending on the type of dispute, to pay the amount due without incurring additional fees.
In most cases, the bank can start to report your account as delinquent 10 days after it delivers the notice. You may be able to delay this by sending further written notice that you still dispute any portion of the billing error. However, there's little guarantee of how banks will respond after an initial finding of no error.