Regulation Z

Regulation Z, codified at 12 CFR Part 1026, implements the Truth in Lending Act (TILA), 15 U.S.C. 1601 et seq. For credit cards, the most consumer-relevant sections are 12 CFR 1026.12 (restrictions on issuance and liability for unauthorized use) and 12 CFR 1026.13 (billing error resolution). The CFPB now administers Regulation Z for institutions with assets over $10 billion; the Federal Reserve still administers it for smaller institutions.

Section 1026.12(b) caps a cardholder's liability for unauthorised credit card use at $50, regardless of the total amount stolen. This is a statutory floor; all major networks (Visa, Mastercard, American Express, Discover) have voluntarily adopted $0 liability policies that go below this floor.

Section 1026.13 is the billing-error resolution right. A "billing error" is broadly defined and includes: a charge for goods or services not accepted or not delivered as agreed (Reg Z 1026.13(a)(3)), a computational error by the creditor, a credit not posted, and an unauthorised charge. The cardholder must submit a written billing-error notice to the creditor at the address designated for notices within 60 days of the first statement showing the error. The creditor must acknowledge within 30 days and resolve within two billing cycles (maximum 90 days).

During the investigation period, the creditor cannot collect the disputed amount, charge interest on it, or report it to a credit bureau as delinquent. This is the single most important practical protection for credit card holders: your bank balance is not affected, and you do not owe the disputed amount while the investigation proceeds.

Real-world example: You subscribed to a streaming service and cancelled in January, but charges continued in February and March. Under Reg Z 1026.13(a)(3), those continued charges are "goods or services not accepted or not delivered as agreed," constituting billing errors. You write to your credit card issuer (at the dispute address, not the general customer-service address), cite the cancellation date, and request a billing-error investigation. The issuer must provisionally credit the account while investigating.