Cable TV, phone firms push to lift court limit on late fees

Measure would void millions of dollars in pending claims

General Assembly

March 01, 2000|By Timothy B. Wheeler | Timothy B. Wheeler,SUN STAFF

Business lobbyists and lawyers for consumers sparred in Annapolis yesterday over legislation that would lift court-imposed restrictions on the late fees Maryland firms can charge their customers.

Seeking to reverse a Court of Appeals ruling that forced the return of $6.7 million in cable television late fees, business groups have agreed to put some limits on what they can collect as the Senate prepares to debate the issue today.

As originally introduced, the measure would have let businesses charge whatever late fees they wanted as long as they were previously disclosed to their customers.

But proponents bowed to political reality as lawmakers sought safeguards against exorbitant penalties.

As amended by the Senate Finance Committee, the bill would permit a broad array of businesses to charge tardy customers up to $10 per month or 10 percent of the overdue amount, whichever is greater, for up to three months. Alternatively, firms could dun late payers 1.5 percent a month for an unlimited period.

These amendments reflect the practices of the world," said W. Miles Cole, vice president of the Maryland Chamber of Commerce.

The chamber, along with the cable and telephone industries, has made late-fee authorization one of its top legislative priorities this year.

Consumer advocates continue to oppose the amended bill, which received a hearing yesterday before the House Economic Matters Committee.

The advocates want tighter restrictions on late fees than those agreed to by business interests.

They also say the bill would wipe out millions of dollars in pending claims from customers who sued cable and telephone companies contending that they were charged excessive penalties for lateness.

This is a rip-off of unbelievable proportions, said Phil Foard, a Towson lawyer with the Citizens Rights Coalition, a group of lawyers representing low-income consumers.

Foard and other critics contend the pending late-fee legislation would mainly benefit Bell Atlantic and the states cable TV networks, which have been targeted by class action lawsuits over their dunning practices.

The high-stakes fight over late fees was sparked by a Court of Appeals ruling in July. It upheld a Baltimore Circuit Court judges decision ordering United Cable Television of Baltimore LP to return $4.50 of every $5 penalty it assessed on overdue bills between 1992 and 1997.

Businesses were stunned by the high courts majority opinion, which said the state Constitution forbids charging any more than a half-percent per month unless the General Assembly specifically authorizes some other penalty.

The ruling could apply to small and large companies alike. Business representatives contend some late charges are needed to get customers to pay on time.

Were not seeking to get anything that hasnt been done for the last 20 years, said Wayne ODell, president of the Cable Telecommunications Association of Maryland, Delaware and the District of Columbia. Other businesses charge even higher late fees, he said.

The Maryland State Bar Association has objected to the amended bill because it doesnt contain an overall cap on late fees or on the timing of their imposition.

The state bar also opposes retroactive application of the bill, arguing that it is a bad precedent despite a favorable opinion by the state attorney generals office.

Lawyers with class action suits contend that the cable TV and telephone industries should be limited to the same late fee of 18 percent annually that regulated utilities can levy under a separate state law.

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