Legal Question in Business Law in California

Re: Late Service Fee's, is it ''usery?''

A late fee is not necessarily all interest. Late fees are usually regarded as liquidated damages for breach of contract. Liquidated damages in this context means an estimate of actual damages that could perhaps be proven in court, but to simplify matters the parties have agreed upon them in advance. Damages for a late payment might include, in addition to some interest at a legal rate, collection and rebilling costs and perhaps consequential damages (creditor didn't have funds he expected, so suffered other harm).

Therefore, since a late fee isn't pure interest, it would be difficult to establish that it was usurious.

Excessive late fees can be challenged on other grounds, however, and often are. In some situations there are statutes regulating late fees, e.g. for self-storage units. Ten dollars on a $20 rental could very well be excessive and therefore unreasonable and legally unenforceable(or maybe not?) but usury it isn't.

California has a comprehensive law and policy on bad checks. There is an excellent explanatory booklet available from the Department of Consumer Affairs, also on their Web site at (if memory serves) www.dca.ca.gov.