Legislators debate taking on credit card late fees, feds

The South Carolina House Labor and Commerce Banking Subcommittee began discussion Wednesday on a bill that would bar credit card companies from charging late fees that exceed an outstanding balance. South Carolina Bankers Association senior vice president Neil Rashley told the committee that although the measure is backed by good intentions, late fees are a part of business. Rashley says rules governing credit cards issued by banks and other lending institutions comes under the jurisdiction of federal law which includes the Truth in Lending Act, the National Bank Act and the FDIC Act. Rashley cited a 1996 U.S. Supreme Court ruling involving a consumer in California challenging late fees and that California law should control them.
“The U.S. Supreme Court, in a unanimous decision, ruled that the National Bank Act controls that late fees were held under a definition that were allowed to be able to charge whatever state you’re in and then furthermore, the FDIC has also said that because our provision is similar to the National Bank Act, the U.S.. Supreme Court will also follow that.”
Rashley says it is not prudent for the General Assembly to pass rules that they in no way can enforce.
Main bill sponsor Beaufort County Representative Bill Herbkersman says he’s seen cases where some persons in his district may have a balance on an account of only 14 cents, but are charged a $35 dollar late fee. Herbkersman says this is an occasion where South Carolina should challenge the federal government.
“I think it is incumbant on us as legislators to care of our people here in South Carolina,” says Herbkersman.”We’ve got a lot of them and a lot of them coming in and this is a problem that simply is not going to go away on the federal level because it’s been here so long. Sure if we pass this bill they will be lawsuits on this from the federal government down to the state governments, but sometimes I think this is worth it.. We are here to protect our people and it’s not being done on the federal level.”
Herbkersman says banks are simply not cooperating with people like they should during these tough economic times.
Oconee County Representative Bill Sandifer is a co-sponsor of the measure and he says he agrees with its purpose. However he is not ready to put the state in a legal tussle over the issue. Sandifer says state lawmakers can’t legislatively fix a problem in an arena that involves interstate commerce.
Sandifer says the state’s congressional delegation should be involved in pushing the issue in Congress and “that we introduce a resolution memorializing Congress to take the action that we are proposing in this legislation, and it be forwarded to the delegation that we send to Washington, so that this in fact can be enacted nationwide rather than us getting into a court battle I don’t think we would ever win.”