The credit card reform law now prohibits lenders from charging a fee for paying your bill by phone, particularly if you use an automated system. But apparently the same doesn't apply to mortgage payments.
Such practices — let's call them pay-to-pay — are a particularly obnoxious example of ways some businesses reach deeper into customers' pockets with unwarranted or overblown fees.
If you have a mortgage with Chase bank, for example, the company says on its statements that "Chase Fast/Pay is a quick and convenient payment option … with one simple phone call." If you need help from a living, breathing service rep, the charge is $20.
But even if you use Chase's automated phone system, the charge is still $15.
Wells Fargo charges an identical amount. So does Bank of America.
How could that be? I'm no tech geek, but it's hard to believe that the actual cost of processing an automated phone payment could be anything more than a few cents (if that).
Gary Kishner, a Chase spokesman, had no explanation for why an automated transaction comes with such a hefty price tag, except that it's still cheaper than paying a late fee, which typically runs about 5% of the monthly payment.
"That's just the cost we charge," he said.
Los Feliz resident David Campbell, 75, isn't buying that. He's a former economics professor at the University of Idaho and a longtime Chase mortgage customer.
"At $15 to use the automated system, I would guess that's about 99% profit," Campbell said. "How can they charge so much just to pay your bill?"
That's a great question, and it doesn't just apply to banks. Many phone and cable companies also charge customers for the privilege of giving the company some cash.
Beginning Oct. 16, Verizon Communications will charge $3.50 for any nonrecurring payment using a credit or debit card. In other words, if you don't sign up for their regular bill-paying program and prefer to pay each month with plastic, you'll pay more.
And it doesn't matter whether you speak with a service rep, use the company's automated phone system or pay online.
"It's a way to encourage customers to sign up for automated bill pay," explained Jon Davies, a Verizon spokesman.
That's one way of putting it. Another is that it's a way to punish anyone who doesn't give the company what it wants: a steady stream of guaranteed payments.
AT&T is a little better. It charges $5 if you pay by phone with a real, live service rep, but there's no charge for using the company's automated system.
Time Warner Cable charges $4.99 to pay by phone with a human being, but it too charges nothing to use the automated system.
"People pay for a product or service," said Doug Heller, executive director of Consumer Watchdog, a Santa Monica advocacy group. "They shouldn't have to pay again just for the right to pay them."
He said most businesses already factor in their operating costs in the prices they charge customers.
"Companies that make you pay to pay your bill are basically charging you twice," Heller said. "They build everything into their price for a product or service, and then they break it out again as a fee.
"It's deceptive," he said. "And it's not fair."
I wrote last week about some things President Obama's new consumer czar, Elizabeth Warren, should focus on. Maybe this is something to add to the list.
Meanwhile, let me know if there are any other pay-to-pay fees out there. Just post a comment online or shoot me an e-mail.
Speaking of banks, a little heads-up for anyone who recently applied for a Discover credit card:
The company has mailed letters to a number of new plastic holders telling them that "the expiration date for your introductory purchase APR that was disclosed on your pricing schedule was not correct."
The letters say that the introductory 0% annual percentage rate for carrying a balance on stuff you buy "has been extended by one month and will apply until the last day of your billing period" in March 2011.
So what's going on?
Matt Towson, a Discover spokesman, said the company messed up in determining the six-month period that new cardholders would enjoy with a 0% APR before a more eye-opening 15.99% rate kicks in.
"It was a glitch," he said. "We made an error in calculating the dates."
The glitch apparently shortchanged people by a few days. So Discover is making good with an additional month of 0% interest.
That's the way you do it.
David Lazarus' column runs Tuesdays and Fridays. He also can be seen daily on KTLA-TV Channel 5. Send your tips or feedback to firstname.lastname@example.org.