SD16 - The Study of Late Fees or Charges on Accounts Delayed in the Mail


Executive Summary:
As requested by the 1995 Virginia General Assembly, the Bureau of Financial Institutions (BFI) of the State Corporation Commission and the Virginia Department of Agriculture and Consumer Services (VDACS) conducted a study to determine if legislation is needed to require that postmarks be considered in determining whether a payment by a consumer was made by the due date in order to assess late fees and other charges, accordingly.

Input was requested from the records of the State Corporation Commission, state and local consumer affairs offices, the American Association of Retired Persons, Virginia Citizens Consumer Council, and the Better Business Bureau.

State and federal laws were reviewed to determine whether or not this issue had been previously addressed, as well as how consumer payments are presently required to be handled.

Key Findings

1. There are few documented complaints with respect to payments not being credited to an account in a timely manner.

2. State and federal laws and regulations exist with respect to many finance charges and other charges and fees.

3. No statutory provision now exists to consider or give consumers credit for payments that are delayed in the mail.

4. There may be some confusion on the part of consumers with respect to:

a. The grace period which is offered by some, but not all, institutions and companies.

b. Payments made at locations different from the location specified in the consumer's contract which may not be credited on the same day, thus possibly incurring a late fee.

5. In most financial institutions, envelopes are machine opened and disposed of. To require that the postmark date of mailing be used in lieu of the date of receipt would result in additional expenses to these institutions.

6. A Bill has been introduced in Congress (H.R. 1963) to address the concerns outlined in Senate Joint Resolution 384.

Recommendations

1. While there are some incidents of consumers being charged late fees on debts owed, there is, at this time, insufficient documentation on file with state and local agencies and other consumer groups with respect to the degree of this problem to warrant a recommendation of additional state legislation.

2. Since federal legislation is now being considered, and since the federal law would most likely preempt any state legislation, it is recommended that further action on this matter be deferred until Congressional action has been determined.

The Virginia Department of Agriculture and Consumer Services and the State Corporation Commission appreciate the opportunity to be of service to the Governor and the General Assembly of the Commonwealth of Virginia.