SC Bill: 'Check's in the Mail' Is OK Excuse

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South Carolina credit card holders would be protected from questionable late fees under a state Senate bill introduced this month that banking direct marketers have deemed harmful to business.


The bill, called the Postmark Prompt Payment Act, would guarantee that consumers could not be assessed late fees if payments are postmarked by the bill's due date, regardless of when the creditor receives it or when the payment is processed. The bill is sponsored by state Sen. Phil Leventis, D-Sumter.


"If the companies are going to charge the amounts of money they do for late fees, then the public has to be protected when they meet their obligations," Leventis said.


Leventis also said his intention is not to blame the USPS for any negligence.


"The post office gets about 1 billion pieces of mail per day," he said. "If they mishandled one-one-hundredth of 1 percent of this mail, that means 100,000 pieces of mail a day are misdirected. So, misdirecting is not unusual. The bill just allows consumers to not have to pay these fees if they are meeting their obligations."


Leventis said the USPS often is not the only culprit for consumers receiving unanticipated late fees.


"Companies regularly post bill payments at their convenience, as opposed to immediately upon receipt," he said. "So, a piece of mail may come in on the 20th, but it may get posted on the 22nd."


Bankers and direct marketers said the bill would hurt business. Though it is a state bill, it would affect all banks doing business with consumers in that state. And it would require companies to redesign payment-processing techniques and systems.


"The bill is totally unworkable," said Mathew Street, associate general counsel for the American Bankers Association. "The amount of time varies from mailing to delivery, so it would require people to systematically go back and follow the flow of an item into a credit card processing center. They would have to know if it was mailed before or after the processing center deadlines, which vary a lot. It would be extremely difficult to abide by."


Indeed, Leventis said this also would create costs for the banks. He said banks would have to get machines that can read the barcodes on the mail and associate a barcode with the check inside the envelope.


This is the second time Leventis has introduced the legislation. In 1998, the bill went nowhere. He is hoping for a reversal. In addition, about six states have introduced similar bills in the past three years.


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