Legislature(2007 - 2008)BELTZ 211
01/31/2008 02:00 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| Achia Update | |
| HB226 | |
| SB153 | |
| SB187 | |
| SB197 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 153 | TELECONFERENCED | |
| *+ | SB 187 | TELECONFERENCED | |
| *+ | SB 197 | TELECONFERENCED | |
| + | HB 226 | TELECONFERENCED | |
SB 197-PAYMENT DATE FOR CREDIT CARD PAYMENTS
3:18:27 PM
CHAIR ELLIS announced SB 197 to be up for consideration.
SENATOR WIELECHOWSKI, sponsor of SB 197, said this bill stems
from an irate constituent who related that he had mailed his
payments to his credit card company at least a week ahead of
time, and for whatever reason, had not received them on time. So
he thought why not do it the way the IRS, the State of Alaska,
the Municipality of Anchorage do, which is "the bill is received
the day it is mailed."
SENATOR WIELECHOWSKI explained that people who have their credit
card payments received late often have their rates tripled. In
some cases, the late payments are tied to higher mortgage and
auto insurance rates. This can have devastating impacts on one's
job application because employers often look at credit reports.
He said the fees can amount to hundreds of dollars because you
are charged interest on the full amount; he was shown a credit
card statement where someone was charged a 399 percent interest
rate for being one day late along with a $39 late fee. It was
due on a holiday, which was a Monday, the day before was a
Sunday; so there was no mail on Sunday. The credit card company
got the payment on Tuesday. The particular problem people in
Alaska have is that it takes longer for mail to get here and
longer for it to get sent back. It's bad for people in
Anchorage, but it's even worse for people in the Bush.
He had done extensive research on this issue and hadn't found
any other state attempting to address this. He has gotten more
positive feedback on this bill than almost any other bill he has
filed. He hoped it had been narrowly crafted enough so that it
didn't have any preemption issues with federal law. He explained
that states cannot regulate rates, fees or price related items,
but this bill doesn't do that. A state cannot regulate if it's
something that's overly burdensome, but this bill doesn't do
that either. He reiterated that every state, the municipality of
Anchorage, and the federal government, when they accept payment
from you, it's the date you have it postmarked. Electronic
payments are that way as well. That's all this bill says.
CHAIR ELLIS said he is an enthusiastic co-sponsor because he
thought Alaskans were being scammed by some of the major credit
card companies. He thought the system was set against consumers
and Alaskans in particular. So if this can be documented, he
hoped to make some progress.
SENATOR BUNDE said he shared his goal and concerns, but maybe
considering the time value of money, they could be encouraging
Alaskans to mail their payments on the due date, when it's post
marked, but now it doesn't arrive at the company for a week and
the company is now losing money. That doesn't seem fair either
and would, of course, be added to the overhead which will come
back on us all. He asked if the sponsors had given any thought
to applying this only to payments mailed before the due date.
CHAIR ELLIS responded that was a good question and asked him to
hold it for the next hearing.
3:22:41 PM
STEVE CLEARY, Executive Director, Alaska Public Interest
Research Group (AKPIRG), enthusiastically supported SB 197. It's
a great help to consumers who are paying their bills on time to
receive credit for that. He agreed with what can happen to
consumers if they send their payments on time, but are still
considered late.
3:23:47 PM
DAVID LAWER, Senior Vice President and General Counsel, First
National Bank of Alaska, said this legislation will not achieve
Senator Wielechowski's objective. It would result in becoming
the law of the state where payment is received and First
National Bank of Alaska and Alaska USA would be the only banks
in Alaska it would affect. He explained that First National
could comply with it with respect to payments made from accounts
with the bank to credit cards with the bank. Otherwise they are
not able to identify the date and source of the computer
authorization for payment or the date of a telephone
authorization for payment. In most cases, he explained, an
electronic or a phone authorization is made to an intermediary.
So when that intermediary ultimately sends payment to him on
behalf of its customer, they simply send a name, an account
number and an amount. The bank is unable to ascertain the date
when the call was made.
As to the post mark payment, as matters are now when they
receive payment in the mail, that is processed by their lock box
system which mechanically opens the envelope and sorts the check
and the payment stub from the envelope. The payment stub and
check are then sent for processing. If the bank had to record
the date of post marking that would have to be done by people,
which would entail a cost they couldn't bear given their margins
in connection with their issuing business.
MR. LAWER explained that the law of payment can be varied by
contract and his bank only credits payments made across the
counter if received by 2:00 p.m. Any payment received later is
treated as being received the next day. If this bill was changed
to prohibit alteration of the law by contract, First National
would simply go out of the credit card issuing business. Then
Alaska constituents would be left with no one to do business
with except the credit card companies that are doing business
and receiving payments outside of the state of Alaska and who
would be unaffected by this law.
3:29:07 PM
BILL SCANELL, representing himself, supported SB 197. He said
while he understands most of this stuff is federally regulated,
something needs to be done in Alaska. When his wife, who is
fanatical about paying her bills, was a day late, it took them
both 5.5 months to pay off the credit card and their insurance
rates went up. The phone calls alone took up literally half a
day and that just isn't right. Getting a post mark is valid
proof of service, he said. If credit card companies are charging
working people 18, 20, 30 and 50 percent, they can afford to pay
for opening envelopes.
3:31:27 PM
JOHN FARLEIGH, representing himself, supported SB 197. He
testified how he cut up his Chase credit card and sent it back
when his interest rate reached 24.9 percent because of a series
of late payments. He explained that last November 27 he mailed
payments to both Chase and American Express. Three days later on
November 30 American Express posted his payment, but Chase
didn't post his payment until December 10. He called customer
service and they agreed to take away the $35 charge, but refused
to repost it to a more reasonable date.
He expounded that not only is this legislation needed, it needs
an amendment because of what happened to him after he complained
- Chase retaliated on him. His next month's bill was received in
his home on December 24 with a due date of January 5 and he
declared, "If they are claiming it takes two weeks for the mail
to get there, that makes if physically impossible to make that
payment."
He related that he started wiring payments through Western
Union, but now Chase doesn't accept wired payments, so they are
taking away his ability to pay on time. This is a calculated
strategy, he exclaimed, to allow them to raise his interest
rates. So the amendment he suggested was to require credit card
companies to give people a 30-day window to pay from the time
they issue the bill.
CHAIR ELLIS thanked him for his testimony and said they would
hold this bill for further work.
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