The "Late Fee" Scam


How often have you been charged a late fee for a bill that you paid, even though you were sure that you had mailed the payment in plenty of time? No matter how much you complained, your creditor would never even consider waiving the late penalty fee since, "payment didn't arrive before the due date". You knew who to blame, too, didn't you?

The U.S. Postal Service admits that about 22% of all nonlocal mail is delivered late or is lost, altogether. Combine this ineptitude with the huge increases companies have contrived in their late charges, from 10-25% higher in the last two years, while reducing or eliminating grace periods and you have a situation where huge profits are unfairly made at the consumer's expense. In fact, according to Robert McKinley of RAM Research Group, credit card companies alone took in $2 billion dollars just in penalties and late fees in 1996.

This nonsense prompted Rep. John McHugh (Republican, New York) to introduce the Postmark Prompt Payment Act which would have forced banks, utilities, credit card companies and the like to accept the postmark, not the day of receipt, as the date that the bill was considered paid. This House bill acquired twenty consumer friendly congressional cosponsors from both parties very quickly.

Lobbyists representing banks and credit card companies, however, mobilized immediately to kill any such movement. Complaining that the technology to read postmarks would be too great a burden on their multi-billion dollar masters, they hammered the bill and constantly cornered each of the bill's sponsors at every opportunity.

While agreeing that there might be a grain of truth to their arguments, it is obvious that reason and logic played a much smaller role in defeating the bill than that great political lubricant; pure, unadulterated cash contributions. According to the Center for Responsive Politics, a group that follows the trails of campaign contributions, eight of the cosigners to the bill not only eventually withdrew their support but almost immediately received $49,800 from these same lobbyists during the 1995-96 election cycle. In total, these PACs gave $3.6 million dollars in direct and soft money contributions during that time.

Once again, your representatives have sold you out for a miserly sum compared to what you will eventually pay in unfair and unjustifiable penalties forced on you by the ineptitude of the Postal Service and the voracious corporate appetite for more and more profit that is completely undeserved.

The interests of the American people are obviously for sale and quite cheaply, at that. Consider this; with a population of approximately 240 million people, you were sold out to these corporations for about one and a half cents per American citizen. Not worth much, are you?

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