'Admin fees' on late payments (B2C)

[arcon5]

I've got a couple of outstanding invoices (3 months old). In my terms, under payment terms in states

'Your invoice will become due on the 15th of each month (unless otherwise agreed or stated), payment is therefore due within 5 days of the due date.'

'Where payment is not completed in full within the required timeframe, we reserve the right to charge a £10 administrative fee every 30 days the balance remains unpaid in relation to chasing the outstanding balance. We also reserve the right to charge interested on outstanding balances at 8% above base rate.'

I've never actually had to enforce this term and the particular accounts in question are infact consumers (not business transactions) so i'm curious before I actually add the fees whether it would actually be enforcable in court....?

One account is infact only £20, the other account is about £260.

- on the first account with it being such a small number, if I made a claim in court for £50 which includes 3x monthly admin fees -- would a judge accept this or consider it to be an 'unfair term' as the charges by far outweight the debt ?
(I won't be wasting much time on this mind, but curious nontheless as to your thoughts...)..............

- would it be considered fair to charge both the admin fee and interest simultaneously?

I'd quite like to be able to add as many charges to the latter account as possible tbh, as i'm sure he will pay the second a LBA comes through and just dragging it out as far as possible.

 

[arcon5]

any thoughts guys..

 

[termsandconditions]

It's our experience that such late payment charges/fees are neither unreasonable nor unfair. However, the terms relating to such late payment fees need to be written in plain and clear English to help avoid being judged unfair. I hesitate to outline a flaw in your terms wording but there are two obvious shortcomings:

"...We also reserve the right to charge interested on outstanding balances at 8% above base rate.'

In this sentence 'interested' is misspelt and there is no period attached to the interest rate i.e. 8% per annum? 8% per month? 8% per day?

Once these errors are corrected you could even go further by making the client liable for debt recovery costs (thereby giving you a free collection service if payment recovered in full).

The value of such clauses lies not in the courts but in the leverage they give you when collecting money from debtors, day-to-day. Far better not to levy them at all but to threaten to levy them in a structured, timed fashion so that you collect what is owed to you sooner from all your clients.

Best Regards

 

[Clarkmans]

Hi

If you write to the consumer claiming this sum they may just pay it or you could write pointing out this is payable under the contract and unless it is paid within say 7 days these additional sums will be added. This may push them to pay the original outstanding sum.

For consumers OFT guidance says that interest of 3% above base rate is not likely to be considered unfair, provided it is in contract and clear, but they have not stated what will be considered unfair.

I hope you get paid.

 

[arcon5]

Thanks for the responses. It's certainly good to hear that these fees aren't frowned upon by the courts for B2C.

I did in the end use the website DebtCollectorOnline to send my 7-day LBA to both customers, the demands included the charges (they had been warned many times they will be added).
And mysteriously, both have now sent me an email saying the cheque has been posted and to "call of your solicitor". However, BOTH have said they are not paying the late charges and the cheque is for the original amount!!!

Hopefully i'll get the money soon, but it would have been nice to have got the late fees also to cover the endless time spent chasing them up (well, the larger one more so).
Although once the cheques are received I will consider the matter closed... I do wonder, if for each month late I added the fee (therefore £30) how a court would look on it if a claim was filed to recover this amount........? Or whether it would be simply thrown out....?

 

[Clarkmans]

Your claim would not get thrown out however a consumer may defend the charges element of the claim.

 

[termsandconditions]

The best any of us can do is to enshrine our rights and terms in our contract documentation so that's when there's a dispute or things go wrong, our businesses are protected. But it is the courts that uphold such rights.

So the only way that you'll find out for sure if your clients will pay the late payment charges is to issue VAT-free invoices for them, pursue payment and take them to court for the amounts owed. Your clients are gambling that you will not do this because of the cost of lodging the court claim in relation to the amount likely to be recovered. At the moment, it looks like they are gambling correctly.

If your trading terms and conditions form part of a valid and enforceable contract with your clients then your chances of successful, respective court claims for the late fees look fairly good albeit from my detached and therefore uninformed view.

Try something for me on the larger amount outstanding and let me know what happens:
i) Immediately after the larger debtor's cheque clears for the principal, send a letter saying that they still owe the late fees which are calculated as £x and attach a VAT-free invoice for the same. Add that if no payment is received within 7 working days then you will take legal action. Add that successful legal action will mean that your client won't be able to buy anything on credit for the next 6 years.
ii) fill out out a court claim form for £x
iii) If, after 7 days, no payment is received for the late fees, then share a copy of your completed court claim form (all bar the signature) with your debtor, confirming that the claim is 'good to go' if payment is not received within 48 hours.

You can dip out of this process at any stage but for the debtor it means, at the very least, a recalculation of his gamble that you won't pursue the late fees. And this might just get you one more cheque!

Best Regards

 

[Steve Sellers]

iii) If, after 7 days, no payment is received for the late fees, then share a copy of your completed court claim form (all bar the signature) with your debtor, confirming that the claim is 'good to go' if payment is not received within 48 hours.

And break the law in the process!

 

[termsandconditions]

And break the law in the process!

You'll have to share more details with a comment like that Steve. Which law are you referring to?

 

[Rhodes100]

I would suggest that these late payment fees may be thrown out as they could be regarded as being penalties.

They would only be allowed if you showed that you had suffered these losses as a result of non payment.

As to whether it would be deemed unfair it really depends on the rest of your contract.

A friend who has a business went to court last year on the same basis, the whole claim was kicked out as the judge regarded the whole contract to be unfair, despite the person having actually received the benefit of the services.

So be careful.

 

[Steve Sellers]

Yes sorry, it would help. Section 40 of the Administration of Justice Act in tandem with OFT Code of Guidance.

 

[arcon5]

Yes sorry, it would help. Section 40 of the Administration of Justice Act in tandem with OFT Code of Guidance.

What part of section 40 inparticular?

This seems to be the only part that could be fitting as the rest seems to refer to makng false representations:

a)harasses the other with demands for payment which, in respect of their frequency or the manner or occasion of making any such demand, or of any threat or publicity by which any demand is accompanied, are calculated to subject him or members of his family or household to alarm, distress or humiliation;

However, this bit is extremely ambiguous and could be applied to so many situations. Particularly where collection agencies are concerned.

 

[Steve Sellers]

What part of section 40 inparticular?

This seems to be the only part that could be fitting as the rest seems to refer to makng false representations:


However, this bit is extremely ambiguous and could be applied to so many situations. Particularly where collection agencies are concerned.

The OFT guidance puts flesh on the bones in regards to sending incomplete claims forms - Section 40(d) applied. (i think)

 

[arcon5]

The OFT guidance puts flesh on the bones in regards to sending incomplete claims forms - Section 40(d) applied. (i think)

Ah fair enough, I can't find the OFT guidelines, is it anywhere particular?

In the past i've sent a screenshot of the moneyclaim website via email if payment was coming forthwith, maybe i'll twice before doing that again.

 

[Steve Sellers]

See http://www.oft.gov.uk/shared_oft/consumer_leaflets/credit/OFT664Rev.pdf with particular reference to page 17.

A better technique that can still scare debtors but cannot be viewed as illegal is to include Citizens Advice leaflets about debt with your letter.

 

[termsandconditions]

See http://www.oft.gov.uk/shared_oft/consumer_leaflets/credit/OFT664Rev.pdf with particular reference to page 17.

A better technique that can still scare debtors but cannot be viewed as illegal is to include Citizens Advice leaflets about debt with your letter.

So exactly which part of page 17 of the OFT's guidelines renders my advice, if taken, illegal then Steve?

 

[paulears]

Look up the European Late Payment Directive - you are entitled to at least 40 euros compensation and a fixed percentage above base rate for over 30 days late.

 

[Steve Sellers]

So exactly which part of page 17 of the OFT's guidelines renders my advice, if taken, illegal then Steve?

I detect the distinct whiff of sarcasm in that response. Perhaps you could indicate whether, after reading the OFT Guidelines and relevant legislation, you still think it is legal and not a reprehensible debt collection technique?

 

[termsandconditions]

I detect the distinct whiff of sarcasm in that response. Perhaps you could indicate whether, after reading the OFT Guidelines and relevant legislation, you still think it is legal and not a reprehensible debt collection technique?

Sorry about the whiff but I guess that I am struggling to see the basis of your challenge to the advice I have given. I respect the OFT guidelines and if my advice has fallen foul of them I'll be the first to put my hand up, retract any dodgy advice and apologise to the OP.

But you'll need to help me to point out the error of my illegal and now reprehensible advice. You're the challenger here Steve. Illegal and reprehensible are strong words. On the one hand I'm thinking 'Hey this guy knows his stuff and has the courage of his convictions'. On the other I'm thinking 'Well, where's the basis of his challenge?'.

So, on balance, and without any whiff whatsoever, I think the onus is on you Steve to point out the specific rule on page 17 of the OFT guidelines where you think my advice has crossed the line; or on any other page.

Best Regards

 

[Steve Sellers]

Sorry about the whiff but I guess that I am struggling to see the basis of your challenge to the advice I have given. I respect the OFT guidelines and if my advice has fallen foul of them I'll be the first to put my hand up, retract any dodgy advice and apologise to the OP.

But you'll need to help me to point out the error of my illegal and now reprehensible advice. You're the challenger here Steve. Illegal and reprehensible are strong words. On the one hand I'm thinking 'Hey this guy knows his stuff and has the courage of his convictions'. On the other I'm thinking 'Well, where's the basis of his challenge?'.

So, on balance, and without any whiff whatsoever, I think the onus is on you Steve to point out the specific rule on page 17 of the OFT guidelines where you think my advice has crossed the line; or on any other page.

Best Regards

I believe I made my points quite clear, it is up for you and others to research and make your own decision. This is not a Court of law and there is no onus on my to repeat my comments because you are trying to weasel out giving your opinion. Further to this you are not the sole arbitrator of fact, and I am not challenging you. I am giving my opinion, you are giving yours. This is a forum.

If you think sending incomplete claims forms to debtors is legal then I suggest every time you do it to CC Trading Standards in and see what happens. However from what you have wrote you are clearly a person who is involved in civil litigation on a daily basis, so I must be wrong.


"But you'll need to help me to point out the error of my illegal and now reprehensible advice." - Maybe this is an issue with grammar. I didn't say your advice was illegal of reprehensible, I said doing the actions suggested are illegal and reprehensible.

 

[Charlie B ACS]

Look up the European Late Payment Directive - you are entitled to at least 40 euros compensation and a fixed percentage above base rate for over 30 days late.

Paul, it referes to B2B transactions, not B2C

 

[Geoff T]

OP- file it, they can only say "no" (but I doubt it...)

 

[arcon5]

OP- file it, they can only say "no" (but I doubt it...)

I'd love to. These two particular clients are too big for their boots and need kicking off their pedestal. More so the smaller amount, i'm pretty sure they was confident I wouldn't take it any further until they received the LBA. But as much as i'd love to, they live many miles away so it wouldn't just involve the court fee, but also travelling to court & the hearing fee if they dispute it (which i'm sure they would). Doesn't really make it very attractive for £30 in late payment fees.

 

[internetspaceships]

I'd love to. These two particular clients are too big for their boots and need kicking off their pedestal. More so the smaller amount, i'm pretty sure they was confident I wouldn't take it any further until they received the LBA. But as much as i'd love to, they live many miles away so it wouldn't just involve the court fee, but also travelling to court & the hearing fee if they dispute it (which i'm sure they would). Doesn't really make it very attractive for £30 in late payment fees.

On occasion the defendant has the choice to have the hearing in their own location so don't bank on them having to travel.

 

[arcon5]

On occasion the defendant has the choice to have the hearing in their own location so don't bank on them having to travel.

That what I meant, it would mean a round trip of circa 250 miles.

Isn't it always the case the hearing is in the defendants region?

 

[internetspaceships]

Sorry Arc , I misread it to be the other way around mate.

 

[Steve Sellers]

That what I meant, it would mean a round trip of circa 250 miles.

Isn't it always the case the hearing is in the defendants region?

It is for individuals.

 

[termsandconditions]

Isn't it always the case the hearing is in the defendants region?

It's not always the case, no. If your clients agree in advance where court cases will be heard, then it's our experience that the judge will usually uphold the pre-agreed choice. Depends if you have the generic England & Wales jurisdiction clause in your terms and conditions or something more tailored.

Best Regards

 

[Steve Sellers]

It's not always the case, no. If your clients agree in advance where court cases will be heard, then it's our experience that the judge will usually uphold the pre-agreed choice. Depends if you have the generic England & Wales jurisdiction clause in your terms and conditions or something more tailored.

Best Regards

Not always, but it takes additional written confirmation for such a clause to be binding(tick box confirmation is insufficient). Making customers (especially consumers) jump through hoops is not exactly making it easy for them to make the purchase. Jurisdiction clauses for specific courts are not the norm for consumer contracts, nor should they be.

 

[termsandconditions]

... I didn't say your advice was illegal of reprehensible, I said doing the actions suggested are illegal and reprehensible.

Steve, you have failed to support your argument here and simply repeating illegal and reprehensible just won't wash. There's nothing in either the law and OFT guidelines on prohibited credit management techniques that could possibly render my suggested action as illegal.

My suggestion to the OP may well be unorthodox and you may not like the advice I have given. But saying that it is illegal and reprehensible, if carried out, is nonsense and unsupportable.

I am prepared to stand corrected but I don't see your proof in the form of any relevant legislation, guidelines or legal precedent.

Best Regards

 

[Steve Sellers]

Steve, you have failed to support your argument here and simply repeating illegal and reprehensible just won't wash. There's nothing in either the law and OFT guidelines on prohibited credit management techniques that could possibly render my suggested action as illegal.

My suggestion to the OP may well be unorthodox and you may not like the advice I have given. But saying that it is illegal and reprehensible, if carried out, is nonsense and unsupportable.

I am prepared to stand corrected but I don't see your proof in the form of any relevant legislation, guidelines or legal precedent.

Best Regards

Your suggestion isn't unaothodox its ILLEGAL. Sending court documents that may lead a individual to believe court action has been taken when it hasn't is clearly illegal. I specifically quoted the legislation and guidance on the matter, yet you can see 'nothing'. Seen as though you are denying what is so palpable I shall copy and paste it for you

Administration of Justice Act 1970 s 40 Punishment for unlawful harassment of debtors.

(1)A person commits an offence if, with the object of coercing another person to pay money claimed from the other as a debt due under a contract, he-

(a)harasses the other with demands for payment which, in respect of their frequency or the manner or occasion of making any such demand, or of any threat or publicity by which any demand is accompanied, are calculated to subject him or members of his family or household to alarm, distress or humiliation;

(b)falsely represents, in relation to the money claimed, that criminal proceedings lie for failure to pay it;

(c)falsely represents himself to be authorised in some official capacity to claim or enforce payment; or

(d)utters a document falsely represented by him to have some official character or purporting to have some official character which he knows it has not. - ie sending a claim form which hasn't been stamped and therefore is unissued.


3.5 of the Code of Guidance

e. falsely implying or stating that action has been taken when it
has not
For example, stating that civil action has been taken when it has not
or that a court judgment has already been obtained when it has not
been.

Your position is simply untenable.

 

[Jenni384]

Steve, I can't see how showing someone a completed claim form with no signature is falsely representing anything. It's showing you have the claim form filled out and ready to send, nothing more. The way I read John's advice was not to pretend the form had already been sent, but as a visual nudge that the OP was serious; "pay up and I won't sign this form and post it, but continue your behaviour and this is getting filed at court." I can't see the problem with that.

 

[Steve Sellers]

It's falsely representing it because your average person will see the claim form and believe proceedings have already started. Why would you send a claim form unless you had the intention of making the consumer believe proceedings have started? That is exactly how the authorities see it, and this is why you do it at the risk of falling foul of the provisions stated above.

All the details would be in the LBA, so there is no need to send an incomplete claim form - the 'nudge' you refer to won't be seen as a 'nudge' by a DJ.

Apart from that not only does the above cover John's suggestion, it is in practice how the authorities see it. As stated, if your not sure contact Trading Standards. Just to reitterate the OFT's view on it

"" THOSE CONTACTING DEBTORS MUST NOT BE DECEITFUL BY MISREPRESENTING THEIR AUTHORITY AND/OR THE CORRECT LEGAL POSITION."
This includes:
Claiming to work for the court or be a bailiff
Implying action can be taken that is not legally possible such as implying they could take your property
Using a business name or logo that implies they are a government body
Implying that court action has been taken against you when it hasn't"

 

[arcon5]

But what if in the letter you said

'Please do not ignore this notice, we have prepared court papers and attached a copy of the case, if payment is not forthcoming these papers will be filed with the county court.'

Wouldn't that get round the misrepresentation issues?

 

[Steve Sellers]

Possibly, but why would you bother? There is no tactical benefit from doing what was suggested.

In a LBA the very last line will always be something along the lines of "......if this is not settled within x amount of days we shall issue proceedings without further notice to you.". Why would you then send a further letter, again demanding payment, except this time with an incomplete claim form? No credible litigator would make such a move.

It has no tactical benefit, if you say you are going to issue in your LBA if you don't get paid, then issue.

Don't continue to send letters, because it makes you look weak and desperate. Don't get involved in cowboy tactics.

 

[Jenni384]

But what if in the letter you said

'Please do not ignore this notice, we have prepared court papers and attached a copy of the case, if payment is not forthcoming these papers will be filed with the county court.'

Wouldn't that get round the misrepresentation issues?

Logic says yes it would, I don't see why not.

Possibly, but why would you bother? There is no tactical benefit from doing what was suggested.

Depends on the recipient. Everyone is different, and to some people seeing court papers as opposed to just a threatening LBA might give them more of a kick up the bum. Who knows? I wouldn't personally do it, but I don't see the harm in it.

On a more practical note, small claims are easiest raised online; I'm not sure how 'scary' the draft pages would look printed out as opposed to an official paper form, which would look more formal (which would be the whole point of the exercise) but would be more laborious to fill out.

 

[Steve Sellers]

Depends on the recipient. Everyone is different, and to some people seeing court papers as opposed to just a threatening LBA might give them more of a kick up the bum. Who knows? I wouldn't personally do it, but I don't see the harm in it.

You have just proved my point. Thank you.

 

[Steve Sellers]

See also County Courts Act 1984: section

136. Penalty for falsely representing document to have been issued from county court

(1) It shall not be lawful to deliver or cause to be delivered to any person any document which was not issued under the authority of a county court but which, by reason of its form or contents or both, has the appearance of having been issued under such authority.

(2) If any person contravenes this section, he shall for each offence be liable on summary conviction to a fine of an amount not exceeding level 3 on the standard scale.

 

[Charlie B ACS]

See also County Courts Act 1984: section

136. Penalty for falsely representing document to have been issued from county court

(1) It shall not be lawful to deliver or cause to be delivered to any person any document which was not issued under the authority of a county court but which, by reason of its form or contents or both, has the appearance of having been issued under such authority.

But if it is clearly marked as "Draft" or that it will be submitted if payment is not received, then it does not contravene the act!!!

 

[Steve Sellers]

But if it is clearly marked as "Draft" or that it will be submitted if payment is not received, then it does not contravene the act!!!

Yes but that was not was originally suggested! Sounds like you have read the dummies guide to litigation then!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! (looks like mine got stuck too)