The 'Late Fee' Game

[pgtr]

The 'Late Fee' Game

I have 2 issues regarding how a specific company assesses late fees and would like some fact based feedback on rules or laws that may be applicable. First let me say this is not about 'float' or trying to 'play it close' - but more about one specific company who may be 'working' their late fees across a large customer base. I certainly have no problem with paying reasonably in advance of a due date. And I'll pay a late fee if payment is LEGITIMATELY late. Typically I send payment for all my bills at least 5 business days before due. In this one case I'm up to 10 business days early - and sometimes that's STILL not enough...

The company's apparent method (relayed to me via email) defines their due date to be inclusive of:

1) Physical delivery of payment check to their location
2) Company depositing of check in their bank
3) Their bank receiving check, scanning it, processing it and receiving funds from my bank
4) Company receiving verification from their bank that check is 'good' (from my bank)...

My traditional understanding has always been that due date was the day in which a check is physically received (#1 above) - and that was it.

Typically I as a payer would account for the potential variations of US Mail. All of this however makes for a number of add'l variables outside of the payer's control some of which is specifically within the payees control.

While I can keep sending payment earlier yet to avoid this issue with this one specific biller - this company's practice has caught my attention. I believe their 'policy' to be questionable. And I think they are possibly receiving the benefit of late charges across their customer base. And a certain % of people are simply not going to complain or fight it.

QUESTIOH: What exactly is appropriate to include in defining 'due date'? Are there any specific laws or regulations that apply here? Do I have a case in filing a complaint with someone such as a state AG?

QUESTION: So are there any regulations that may govern this? Check 21 Act? Other?

QUESTION: Or is this just 'normal' and just send checks to this one payee earlier and earlier...?

thanks

[neatdesign]

I used to work in a credit card call center and often got calls from customers complaining that the company held onto their payments just to make them late. They felt the same way you did -- that the received date was sufficient. Others thought the postmark on the envelope was enough. Neither is correct.

The steps you point out above sound right to me, with a small exception being #4. If someone's payment is due on March 1st and their check is received and processed on or before March 1st, but then is later returned from the cardholder's bank due to insufficient funds, then that definitely would (and should) result in a late fee. If a payment is returned, that's the same thing as if it never happened in the first place.

Consider that your credit card company receives hundreds of thousands of payments every day. It would be impossible to ensure that the payment would be considered on-time until the check is scanned and applied to your account.

There are some additional details you didn't mention in your post. Are you writing your FULL account number on your checks (not just the last four digits)? Are you including the completed statement payment stub with your check? The omission of either one of those things can result in the payment posting being delayed.

Are you mailing in multiple checks for multiple accounts in the same envelope, without OR without the statement stub? Are you mailing one check with instructions to divide the payment among several accounts? (Yes, people do this!)

Lastly, I'll just say what I would tell any customer who mailed payments in by check and ended up with a late fee: Once you drop your check off at the post office, it is out of your hands -- and also out of the control of the credit card company.

Your best bet is to either pay online at the company's website (take note of the processing times and same-day payment deadlines) rather than mailing in a physical check. Another option is to pay by phone, but most credit card companies charge for that so online payments are usually better in that regard.

~ Jenney

[pgtr]

Thanks for the response.

Yes I agree. Postmarking doesn't count (except for the IRS). A bounced check would definitely result in a fee.

On the other hand I've dealt with many (most?) companies who explicitly accepted receipt of check as the payment date with respect to late fees. No they haven't actually received the funds - but accepting a paper check - they've accepted a good faith promise to pay. This even goes back to the era of much longer float times before modern scanning and computer communications have reduced check processing times down to 1-2 days. If they receive the check on the due date - the account is marked as 'paid' or at least 'received/pending' like that. Should the check later prove to be 'bad' - then of course that on-time status would be 'undone'.

Anyway this one company is rather unique in that I'm up to at least 10 business days in advance and even that will potentially be cutting it close. The other 15 or so monthly billers with whom I do business seem to have no problem with sending payment 5 business days before. Not for as long as I can remember.

All this just seems to make this one biller's definition of 'due date' somewhat of an anomaly.

FYI this one biller also assesses that late fees the morning of the due date. Technically that means the due date is really the day before the due date to avoid a late fee.

Thanks again for the reply!

[disneysteve]

That's ridiculous. What type of bill is this? If it is a credit card, I'd get rid of it. If it is a utility or other necessary bill, I'd certainly file a complaint. There is no possible way for you to know how long processing will take on their end. They shouldn't be penalizing you for something beyond your control.

[simpleyme]

i get sick of companies saying they can't control the mail and you could not possibly know if they got it on time even if you sent it in the day you got the bill

Texaco pulled that on me over 10 years ago and i quit using their card
do not do business with a company that treats you bad

[pgtr]

If it were anything discretionary I would have ceased doing business with them years ago. Unfortunately it's the only internet provider avail to me short of Satellite which runs 25% more expensive (and I've SERIOUSLY contemplated). They've been problematic since the beginning - the late fee game is just their latest 'thing'.

I'm not unique. They have a poor BBB rating I've recently noticed. I have disgruntled neighbors paying the satellite premium.

I'm OK with taking responsibility for the mail delivery time. And if the mail has a problem I'll take the hit with any biller if necessary. And I'm even OK with taking all the other 'processing' stuff into the due date calculation if they spelled it out in the contract. But all they officially say is payment is due on the "due date".

Between the 'early' late fee and their liberal interpretation of 'due date' I've contemplated filing a complaint with the AGs consumer office. But I'd like to have some specific rules to cite/reference should I complain.

At least I get to take every opportunity to warn potential customers when they ask.

[disneysteve]

A few thoughts:

Must you pay the bill monthly? Many providers offer an option to pay for a year upfront for a discounted fee. That way, you'd only have to deal with this once each year.

Do you have to pay by check? Why not pay either through your online banking or directly at their website? I don't pay any bills by check anymore - haven't for a few years.

Is there an option to have the monthly fee automatically billed to your credit card or drawn from your checking account?

[simpleyme]

I'm OK with taking responsibility for the mail delivery time. And if the mail has a problem I'll take the hit with any biller if necessary. And I'm even OK with taking all the other 'processing' stuff into the due date calculation if they spelled it out in the contract. But all they officially say is payment is due on the "due date".

really? even tho everything else manages to get through the mail? I would also never take responsibility for a businesses lack of ability to properly do business as i have no control over that

I get that you just want to know the rules and are willing to put up with them you just want to know what they are.

I am with Disney steve just pay for a year at a time or the other option is just count the late fee as part of the price and see if it is still cheaper than the alternative.

[snafu]

On the other hand...I don't think I would pay one year upfront for a service whose management have a poor BBB rating and other complainants you know about.

Does your internet provider offer the option of automatic payment plan so that a set amount is taken from your a/c on a set day? On-line payment is becoming the most popular payment system. Security has markedly improved and it truly reduces the probability of error. You are totally in control, able to set up payment to process in advance or on the appropriate business day with the sums transfering directly to the receiver's a/c with proof.

To keep control in a familiar way, continue to use your cheque transaction register as always, adding the verification number that appears on completion of the process. Keep a container to your desk and throw in the change to cover the cost of mailing all payments. There will be enough for a nice treat by the end of the year! The amount of agro/stress saved is priceless!

[ksluis62]

Do I have a case in filing a complaint with someone such as a state AG?

Yes, I would submit a complaint to anybody who would listen. The State AG seems like a good place to start. I would also submit a complaint to ConsumerAffairs.com: Knowledge is Power! Consumer news, reviews, complaints, resources, safety recalls, something I've done before. They will have a real human look at it and determine if an attorney should be involved. They will at least publish the complaint to help warn other consumers.

I know this isn't a credit card company, but new fed rules for 2010 will abolish morning due 'times'. Also, the Credit Cardholders Bill of Rights, hopefully to pass this year, will consider a postmark 7 days in advance to be paid on time. I would think companies that don't conform to these standards would have some explaining to do, and may put themselves at risk for a class action suit.

[Caoineag]

Ick on it being an internet provider. I have known a couple of credit card companies where 2 weeks in advance wasn't enough to avoid late charges (got rid of them very quickly) but never had an issue with my utilities. I would go for automatic bill pay in this regard. Most companies can set you up over the phone even if you have an issue of not wanting your information online.

[paladin]

I do an automatic payment to my credit card - bill is paid in time, plus I get my rewards.

[Seeker]

I sometimes have this problem with my Homeowners Association fees. We're not likely to get rid of this business in any form. The problem arises whenever there's a legal Holiday around the first of the month.

We get our bills from the HOA postmarked anywhere from the 26-30th at the end of each month; the due date is the 1st of each month. There are no online payments (they are not online); there's no account number per se. I have paid by writing a personal check and also going online and having my bank (which is normally how I pay all bills) cut them a check. Cannot pay by CC either.

The past 4th of July, this check was mailed as soon as I rec'd the bill. They did not post it until July 14th. Okay, maybe the US Postal service has a holiday, but 16 days to mail something that literally goes less than 5 miles from where I live? I was not charged a late fee that time because they actually "allow" to the 15th.

But come Labor day.... same situation. It cleared the bank after the 15th of the month and on the next bill, I was charged a late fee. I called the bank who cut the check... it was mailed out according to their records on 9/3 (the day after Labor Day); they can take 5 days to manually cut a check for these people, since there's no online with that company. The late fee was lifted, but it took my e-mailing them, calling the bank to have them speak on my behalf, and my leaving them a phone message as well.

Now the beginning of this year, we all (the whole complex) receive these rules modifications/updates saying essentially that we will be charged a late fee regardless of when the bill is sent to us. We are to be responsible for getting the payment into them on time.

So beginning last month, I'm gave the order to have my bank pay the Feb dues like the 25th of January. I got the bill on Jan 28th and guess what? I've overpaid by a slight amount. Now what?!?!?!

So I'm not sure what's going on, except there should be a little bit of a credit on my next billing, but I'm in this no-win situation of trying to figure out how to get the Association fee to them without any possibility of it being late.

What is to prevent someone in their accounting dept from taking a week vacation during these holiday days and the payment mail just sitting there?

There needs to be a legal consistency with these practices and if the IRS recognizes the postmark date... what makes other businesses immune to that date???

Why should I be responsible for something that is also beyond my control???

Aside from driving down there and handing them a check... we have absolutely no control over the mail. We also have no control over when they actually process the check either.

There SHOULD be a legal standard of "postmark date" simply because we do not control that date. The US Post Office is a gov't entity and if it was mailed "in time" that should be the universally recognized date.

[simpleyme]

theses companies are just fee harvesting and they seem to do everything they can to get a fee out of you

in the early 90's if you were late on a credit card or about any other bill it was not a big deal they would charge you 5 bucks and that was the end of it and you had to be really late like more than 2 weeks!

[Like2Plan]

I agree with the others that this is absurd to charge a late fee based on the amount of time it takes for a company to process a payment. That is company controlled and company driven.

Back in the "olden days" (before EFT), we sent our mortgage payment via certified mail, return receipt (with a signature and date) sent two weeks before the due date. It was expensive, but the mortgage was our biggest payment at the time and I didn't want to take the risk of a late payment/late fee due to a misdirected/lost mailing. I had the proof that the payment was made in a timely manner with the return receipt. Plus, if I didn't get the card back I would know to look into the matter before the payment was late. (Thank goodness for EFT. )