Coloradans’ anger over an increase in late fees for vehicle registration is just a piece of the larger picture, experts say.
“Something like this captures peoples’ imaginations and they go crazy,” said Bob Sullivan, author of “Gotcha Capitalism,” about hidden fees and consumers’ pocketbooks. “But they’re getting soaked in all these other directions, and you can’t get them to care about that.”
In this economy, however, that might be changing.
Consumer-rights advocates are starting to question the huge profits that companies make from fees. Americans pay about $15 billion in penalty fees for credit cards each year.
The Credit Card Accountability Responsibility and Disclosure Act, which goes into effect next month, requires credit-card companies to give card holders a reasonable amount of time to pay the monthly bill — at least 21 calendar days from the time of mailing. The act also blocks late-fee traps, such as weekend deadlines, due dates that change each month, and deadlines that fall in the middle of the day.
In Oregon, lawyer David Sugerman has filed a class-action lawsuit against Comcast, alleging that the company broke state laws with how it charged for cable service.
“It’s the whole ‘death by a thousand paper cuts’ routine,” Sugerman said.
Although customers paid only a $6 late fee, those “fees add up when you hit hundreds of thousands of consumers over the years,” he said.
In California, a consumer-rights law firm is working on a class-action lawsuit against Verizon, Sprint and T-Mobile. It, too, centers on whether state law was broken in the way the companies charge late fees, which are $5 or 1.5 percent of the total bill, whichever is greater.
“These companies have set their fees in such a high place as to be a profit center,” said lawyer Jeff Friedman. “We alleged, ‘Hey, you have to comply with the consumer protection laws. You can’t penalize people, you can only recoup what you’ve been harmed.’ ”
Companies argue that the size of late fees accurately reflect the costs that late payments cause and do not penalize the customers.
In Colorado, the increase in late fees to $100 for vehicle registration has created a strong stream of revenue. In June, the first month it was in effect, county clerks collected $3.6 million in late fees; $2.9 million of that went to the state.
There is a solution to getting socked for late fees, of course.
“Pay your bills on time, and you don’t have to worry,” Sullivan said. “But just because you make a small human mistake doesn’t mean you surrender all human rights.”
Colleen O’Connor: 303-954-1083 or coconnor@denverpost.com
