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.