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Ralph Nader > In the Public Interest > Keating, Legislature Stick Cable Users

Across the country consumers are displeased with the high cost and poor service provided by the cable industry. Oklahomans now have a new reason to be dissatisfied. The Oklahoma Legislature recently passed, and Gov. Frank Keating signed, S.B. 1091, which contains an amendment allowing a state-wide cable late charge of $6.00 or 5%, whichever is greater, on unpaid balances of $12 or higher. The amendment also impedes consumers from filing lawsuits challenging excessive cable fees in the future, and was clearly designed to benefit the cable industry, and that industry alone.

It is clear that a late charge of the greater of $6.00 or 5%, sanctioned by the amendment, far exceeds the cable companies’ costs of processing late payments and results in the continuation of large windfall profits for these corporations. In a recent class action case against TeleCommunications Inc. (TCI) before the Circuit Court of Baltimore, Judge Gary Strausberg concluded that the cost of processing a late charge is on average 38 cents, far less than the $5.00 that TCI was charging. Clearly, Oklahoma’s minimum charge of $6.00, providing a minimum profit of $5.62, is completely unfair.

Oklahoma’s $6.00 or greater late charge marks the institutionalization of a penalty that is exorbitant when compared to that of other utilities. The greater of $6.00 or 5% is a much greater proportion of the basic monthly cable charge than the late charges assessed by other utilities, customarily one to one-and-a-half percent of the monthly charge billed to customers. If a customer has an unpaid cable bill balance of $12.00, the $6.00 late fee will represent a 50% penalty charge.

The institutionalization of an exorbitant late charge in Oklahoma is just the latest assault on consumers by the cable industry throughout the country. In Illinois, the industry managed to push a bill allowing for a $5 late charge through the House of Representatives. Negative publicity blocked the bill in the Senate. The amendment’s sponsor, Rep. Joel Brunsvold, admitted that the measure was written by the Cable Television and Communications Association of Illinois, the organization that lobbies for the cable industry. The Association, in turn, admitted that the legislation was written purely in response to lawsuits against cable companies in that state, and that the industry conducted no studies to justify the $5.00 late charge that they sought to codify.

Californians are not as lucky; the California legislature passed a bill in 1996, similar to the one defeated in Illinois, authorizing late charges of $4.75, and effectively limiting future lawsuits.

The industry has now prevailed in Oklahoma, and with a minimum late charge of $6, and impediments to challenging excessive fees in court, Oklahomans are clearly the worst off. Staff Attorney Mark Ramsey, who authored the Oklahoma bill, told an associate of mine, “the industry asked for this [institutionalized late charge], and we gave it to them. We’re providing the industry with a safe harbor.” James Walker, executive director of the Oklahoma Cable TV Operators Association, in comments to The Daily Oklahoman extolling the virtues of S.B. 1091, made it clear that the cable industry got just what it wanted in Oklahoma.

Clearly, the Oklahoma and California laws on cable late fees should be repealed. However, cable late fees are just the tip of the iceberg when it comes to billing overcharges. Medical facilities, mortgage lenders and credit card companies, just to name a few industries, all gouge consumers with unjustified fees on a regular basis. In fact, the amendment instituting a $6.00 or greater late fee in Oklahoma is attached to legislation removing legislative caps on credit card charges issued by Oklahoma banks. The body of the legislation will make Oklahoma’s credit card law similar to those of Virginia or Delaware, where credit card issuers regularly charge $25 for late payments, even if the unpaid balance is only 1 4, resulting in mind-boggling interest rates on late payments.

Overcharges, and other forms of billing abuse, need to be challenged across the board. In order to document overcharges and other forms of error and fraud on consumer’s computerized bills, I have started a project, The Bills Project. The Bills Project has been collecting bills from all over the country and will incorporate them into a report documenting billing problems and proposing solutions. If you receive an erroneous or fraudulent bill, please send a copy of the bill, along with a brief explanation to: The Bills Project, P.O. Box 7160, Santa Monica, CA 90406.