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A fraudulent charge was made to my credit card by an unknown party. I signed off the required forms to the company, they canceled my old card, and issued a new card. However, the finance charge attached to the fraudulent charge showed up on my next statement. I have called several times and written two letters explaining their mistake, but they keep sending me payment due notices and now have sent it to collections. What should I do?

There are definite rules and regulations regarding the handling of accounts by creditors. The Federal Fair Debt Collection Practices Act guarantees you specific rights concerning debt collection. These include:

  • The right to receive a full written notice explaining the amount you owe, to whom you owe it, and what action you should take if you believe you do not owe the money.
  • The right to sue in state or federal court if you believe that the creditor has violated the law in its handling of your account (within one year from the date that you believe the violation occurred).

In your case, the fact that the creditor acknowledged the fraud by canceling your card and crediting your account for the fraudulent charges should work in your favor in getting the finance charge associated with the debt removed. However, since your many attempts to rectify the situation have been ignored, you may need to enlist the guidance of outside organizations.

You might consider reporting your creditor to your state Attorney General's office. Many states have their own debt collection laws in addition to the Fair Debt Collection Practices Act, and your Attorney General's office can help you understand your specific rights. The office should be listed in your phone book under "government offices."

In addition, you may wish to file a complaint against your creditor with the Federal Trade Commission (FTC), the government agency that enforces the Fair Debt Collection Practices Act. You may reach the FTC online.

And for more information about the Fair Debt Collection Practices Act itself, visit the FTC's web page summarizing the law.

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