Legal Question in Credit and Debt Law in California

According to CALIFORNIA, the legal rate of interest is 10% for consumers; the general usury limit for non-consumers is more than 5% greater than the Federal Reserve Bank of San Francisco's rate.

My WATER company bill is $43/mo. If I don't pay it on time, they charge me an additional $5. So, if I pay less than the FULL amount each month they charge me $15 extra for three late bills. Plus, they send me a Federal Express notice of impending disconnection and then also bill me $20 for the delivery fee. Also, they charge $40 to disconnect my service and another $40 to reconnect.

I didn't know about their business practices. I never signed any agreement, I took over my mother's service provider/customer relationship when she died.

I have been catching up on the bills every month but rather than just paying the oldest, I have been paying a portion of each bill per month. So, EACH MONTH, they charge me ANOTHER $5 PENALTY per each month bill. This represents almost $12% per late month times the number of late bills.

1st month $43/month + $5 late = $48

2nd month pay $20, they fine another $5 = $25

$43/month

3rd month they fine another $5 for the 1st and 2nd month plus another $43 AND $20 for FED EX

These fines and fees seem OUTRAGEOUS. I was rear-ended by a drunk driver and live on a pittance of general assistance so it is NOT that I am a flake about paying my bills, I just don't have the money. I have tried talking to the Customer Service Manager and she is not sympathetic to my plight.

What should I do and to whom may I complain about the high penalties?


Asked on 12/27/09, 3:09 am

1 Answer from Attorneys
David Gibbs The Gibbs Law Firm, APC

These aren't interest, they a combination of fees, penalties and other charges, which cannot be lumped together to create a "usurious" interest rate. Only that portion of the fees and penalties that are called "interest" can be used to determine if their rate is usurious. You also have to look beyond the California usury laws - the Utilities and the rates they charge (including fees, costs, penalties, etc...) are all regulated by the California PUC. California PUC approval is going to almost certainly trump your claim of usury.

I would contact the California Public Utilities Commission to complain about your treatment and the fees and costs you are being hit with. They might be able to get you some relief. In terms of the claim to have not signed a contract with them - virtually nobody does. So long as you reside in a property served by that Utility, and you actually accept their service, you are bound by their terms regardless of whether you sign something or not. That is why the PUC actually reviews and approves rates, fees and penalties - since you are bound by them whether you like them or not, the PUC tries to make sure they are fair.

*Due to the limitations of the LawGuru Forums, The Gibbs Law Firm, APC's (the "Firm") participation in responding to questions posted herein does not constitute legal advice, nor legal representation of the person or entity posting a question. No Attorney/Client relationship is or shall be construed to be created hereby. The information provided is general and requires that the poster obtain specific legal advice from an attorney. The poster shall not rely upon the information provided herein as legal advice nor as the basis for making any decisions of legal consequence.

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Answered on 1/04/10, 9:10 am


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