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moneysense.ca, 20/02/07
And I Thought Credit Card Fees Were Bad…
It is astonishing what Governments, which usually accuse private companies of being greedy, can themselves get away with. Case in point is my recent experience with the City of Ottawa. Now, I am normally very prompt with my bill payments, especially hydro bills and water bills because they tend to be relatively small amounts.
When I received a water bill in December, I mistakenly made a payment towards Hydro Ottawa instead of the City for the exact amount of the water bill. Sure enough, exactly one month later, I receive a reminder notice from the City with the following extra charges tacked on to a water bill of $122.89:
Reminder Fee: $5.40
Interest: $3.10
Total: $8.50
The City could justify that its interest charges are a modest 15% per annum but $5.40 for generating a reminder notice? At least it is not as bad as being overdue for two months, which the notice helpfully reminds me will attract an administrative fee of $28 and transferred to the property tax account.
moneysense.ca, 20/02/07
Our town manages it a bit differently. You recieve a 10% discount on your annual water & sewer taxes if paid on time, and pay interest once in arrears. Since the Town Office is just a few steps from the Post Office, many taxpayers just drop by upon receipt of the invoice.
I love small towns!
David – that is the same thing. The “10% off” is the regular rate and the “regular rate” is really a 11% late charge.
Perception is the key. In that case the customers blame themselves for not taking advantage of the discount, in the Ottawa case you are upset they charged excessive fees.
In that case, I’m getting huge discounts from my credit cards by paying my bill every month! 30% Savings! Who needs to invest with rates of return like that!
You might want to look into that further. There was a court case a few years back where Bell Canada was doing the exact same thing (charging interest AND a late fee) to customers who paid late.
The court held that the late fee was a form of interest, and the combined interest rate (fee + interest) amounted to usury. It is illegal in Canada to charge an annualized rate of interest greater than 60%. The charge of $8.50 for being one month late is an interest rate of 83%.
Enbridge Gas was slapped down in a similar case:
http://scc.lexum.umontreal.ca/en/2004/2004scc25/2004scc25.html
I’m not a lawyer, but it’s pretty open & shut.
# Mike Says:
February 20th, 2007 at 9:35 am
David – that is the same thing. The “10% off” is the regular rate and the “regular rate” is really a 11% late charge.
Then should I look at supermarket sales in the same way? The coupon price is the “real” price and list price is a penalty?
The reduction is an encouragement to pay early, and adds some moneys to the town coffers half way through the year. As for perception, you see many folks paying their water tax early, while waiting until the last minute to pay their annual municipal bill. Thus I’d have to agree with ‘Gettingrichtogether’.
David
Bill: Thanks for the info. I don’t know if I’ll be going to court but my councillor is going to hear from me for sure.