COURT LEAVES CREDIT-CARD FEES INTACT

                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: TUESDAY, January 12, 1993                   TAG: 9301120049
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A-4   EDITION: METRO  
SOURCE: The Baltimore Sun
DATELINE: WASHINGTON                                LENGTH: Medium
COURT LEAVES CREDIT-CARD FEES INTACT
Efforts to save credit-card users from having to pay as much as $1 billion a year in extra fees when they fall behind in their payments failed in the Supreme Court Monday.
Without comment, the court left intact a lower court ruling that bars states from using consumer-protection laws to rule out or limit late-payment fees for bank credit-card holders.
The court's action in the credit-card case may scuttle widespread attempts to curb banks' rising collection of extra fees from late payers. Eight out of 10 households in the country have one or more credit cards, and an increasing number of card companies are charging late fees in addition to the interest they charge on any debt outstanding on the books.
There are 32 states along with Washington, D.C., and Puerto Rico, that either set ceilings on late fees, or forbid them completely. Most if not all of those limitations probably cannot now be enforced against banks that issue credit cards, in the wake of Monday's Supreme Court action on a case from Massachusetts.
In that case, a federal appeals court ruled in August that a 1980 federal law, permitting national banks to charge late fees to credit-card borrowers, overrides any state consumer-protection law used against late fees charged by state-chartered banks.
A number of the nation's biggest credit-card companies are banks that are licensed to do business by states, such as Delaware and South Dakota, that impose few restrictions on those companies' operations and allow them to impose late-payment penalties.
Massachusetts tried to block late fees charged by a Delaware-chartered bank, Greenwood Trust Co., which issues the Discover card. About 100,000 cardholders in Massachusetts use that card, and the state began threatening Greenwood Trust in 1989 with legal action if it did not stop charging late-payment fees.
State officials contended that such fees violated Massachusetts' consumer-protection law. Greenwood Trust countered that effort by going to court to get the state law nullified, at least as far as it might apply to bank credit card fees.
The appeals court treated late fees the same as any other interest charged on bank borrowings, and said that the 1980 law written to free national banks to charge any interest allowed by state banking laws applies across the board, to state-chartered as well as national banks.
The state of Massachusetts, supported by 28 states as well as consumers groups, took the case to the Supreme Court.

by Bhavesh Jinadra by CNB