Tuesday, August 14, 2007
Credit card late fees and the Constitution
A surprising juxtaposition, one might think. But Seana Shiffrin argues that the Supreme Court's punitive damages jurisprudence leads to the conclusion that such late fees are unconstitutional if they're too high, since they can only be imposed by legislative abrogations of the traditional rule against punitive damages in contract. So while others have decried the consumer protection implications of recent Supreme Court cases, she has turned the argument around against big business, much as some RIAA defendants have claimed that copyright's statutory damages provisions are unconstitutional under the same precedents.
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In Britain high street banks have to date paid out an estimated 499 million GDP (about a billion dollars) to their customers in repayment of charges levied against unauthorised overdraft and bounced cheques.
The Unfair Charges in Consumer Contract Regulations 1999 forbid parties subject to contractual breach from charging counterparties more than the cost they bear themselves through the counterparty's fault. This means that banks cannot use customer overdrafts etc. as a money-making opportunity. The typical estimated cost of bouncing a cheque and notifying a customer is 80p. Bank charges for bounced cheque typically range from 25-40GBP.
In effect these probably illegal charges fund free banking in the U.K.
The banks will argue that their charges represent service fees and thereby avoid falling foul of the Unfair Terms Regulations. But they have coughed up a billion dollars rather than allowing the matter to move to a precedent-setting judgment. The banks have now been strongarmed into a test case by the Office of Fair Trading.
One difference to file-sharing appears to be the contract evidently governing relations between banks and their customers. The consumer revolt against the banks suggests to me that consumers hate them; and that consumers in no way accept the contractual relations offered by banks as providing the forms of intimate or extra-contractual relations promised by banks' advertising.
Anyway, sorry for responding on a marginal subject. I have an anthropology student writing on images and the law (re defamation and religious hatred, not copyright) and was looking for lesbian Barbie.
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