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  1. #1
    Join Date
    Sep 2016
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    1

    Default Charging a Late Fee on an Unpaid Late Fee

    My question involves collection proceedings in the State of: California

    I had a balance of $50 dollars with a certain bank, with a payment due date on July 16 and I had made the complete payment of $50 on July 19 and thus charged a late fee of $27. As I did not pay the late fee, I was charged another late fee for the late fee in August for another $27, totaling $54. My question is if this practice is legal?

    As per regulation AA: Unfair or deceptive acts or practices 12CFR227

    Section 227.15 Unfair late charges
    Prohibits the practice of assessing a delinquency charge on a full payment that is made in a timely manner if the only delinquency is attributable to a late fee or delinquency charge assessed on an earlier installment (referred to as "pyramiding late charges").

    Would this be a clear example of pyramiding late charges? As it was clear that the only balance I had due was from the previous $27 late fee. Furthermore, I had received a letter from the company stating that they could charge interest on the two late fees, would this violate any other laws?

    Any insight on this situation would be much appreciated.

  2. #2
    Join Date
    Mar 2013
    Posts
    18,340

    Default Re: Charging a Late Fee for a Late Fee

    Would this be a clear example of pyramiding late charges?
    Sure looks like it.

    What did the people at the bank say when you pointed this out to them?

    Furthermore, I had received a letter from the company stating that they could charge interest on the two late fees, would this violate any other laws?
    If the second late charge is illegal, then interest on it should also be illegal, but interest on the first late charge would be OK.

    If you don't want this kind of hassle in the future, pay your bills on time. You should have paid the first $27 as soon as you saw it and you wouldn't be having this problem.

  3. #3
    Join Date
    Sep 2005
    Location
    Behind a Desk
    Posts
    98,846

    Default Re: Charging a Late Fee on an Unpaid Late Fee

    Quote Quoting istay808
    View Post
    I had a balance of $50 dollars with a certain bank, with a payment due date on July 16 and I had made the complete payment of $50 on July 19 and thus charged a late fee of $27. As I did not pay the late fee, I was charged another late fee for the late fee in August for another $27, totaling $54. My question is if this practice is legal?
    Did you pay your August bill on time or within a contractually designated grace period? This is a payment that arises from the extension of credit -- i.e., you're making payments on a loan?
    Quote Quoting istay808
    Unfair or deceptive acts or practices 12CFR227
    Although you can complain about violations of 12 CFR 227 to a federal agency that exercises oversight, that section does not create a private cause of action.
    Quote Quoting istay808
    Furthermore, I had received a letter from the company stating that they could charge interest on the two late fees, would this violate any other laws?
    Are we talking about a loan from a bank, or a debt of some sort to an as-yet-undefined company?

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