Blind woman threatened over unpaid 1-cent bill

[Mark]

I never thought about the rest of those charges. It likely cost them around a dollar all together to collct that penny

[stitch626]

Yeah, brilliant.

[RK_Striker_JK_5]

Very diminished returns, there.

[Teaos]

So then what happens when everyone starts not paying 40c of their bill since they know they dont have to? The council will lose thousands over time.

[Tsukiyumi]

...Imagine if everyone in Attleboro chose not to pay that last cent! The city'd lose out on at least $40!

[Teaos]

...Imagine if everyone in Attleboro chose not to pay that last cent! The city'd lose out on at least $40!

Actually.

Eileen Wilbur told The Sun Chronicle of Attleboro the letter sent her blood pressure soaring, and pointed out that stamps cost 42 cents.

City Collector Debora Marcoccio said the letter was among 2,000 sent out

So people were saying don't send out a letter so long as the amount is less than the cost of a stamp.

So everyone doesnt pay 40c on their bills.

They sent out 2,000 letters (Thats just people who owed money, chances are there are many many more people than that in the area).

2,000 people not paying 40c each = $800

And since you pay power bills monthly lets see what that would be in a year.

800 x 12 = 9,600

$9,600 dollars they would lose out on per year if they decide to let people get away with not paying. A little more that $40 there Tsu.

You can point out that it will cost them just as much if not more by following up on these unpaid bills but it also shows that they wont let people get away with out paying what they owe. If people know they dont have to pay the whole amount most people wont.

[Sionnach Glic]

And that assumes just 2,000 people. If people really could get away with shaving 41 cents off their bills, then virtualy everyone would be doing it. That'd add up to thousands easily.

[Mikey]

True. In a vacuum, this looks as ridiculous as it is, if only considering this one event. To say it shouldn't be done, though, is tantamount to saying that people shouldn't be responsible for their debts. That's what happened to our economy.

[Captain Seafort]

You can point out that it will cost them just as much if not more by following up on these unpaid bills but it also shows that they wont let people get away with out paying what they owe. If people know they dont have to pay the whole amount most people wont.

The solution is to wait until the cumulative debt exceeds the cost of the letter, stamp, etc, and then demand full payment. Not to waste money sending out letters at a net loss.

[Mark]

Remember the sceen in Superman III when Richard Prior writes the program to collect all of those fractions of pennies?

[IanKennedy]

It's not at all silly not to chase it. If it costs say $1 to chase the 1c dept then chasing it is going to cost you more money than you will ever get back. If 2,000,000 people all fail to pay the 40c then yes you do loose out on $800,000, however if it costs you $1 for each person you chase you are spending $2,000,000 to get back the $800,000, that's a net loss of $1.2M. No matter how many people fail to pay the figure it still does not pay to claim it back, unless you can cut the cost of chasing the debt.

One popular method of solving this problem is to do what is threatened in the original article, that is to add a penalty to the late payment. So, the original dept is 1c, and you get a letter that costs $1 to send, however, the letter makes you pay $10.01 for having to be sent a letter. That is the original 1c debt plus a $10 fee for failure to pay. The problem with this is that some courts are banning such practices as they tend to hit those less able to pay in the first place. We've had quite a spate of rulings recently were bank charges for going overdrawn have been removed by the courts.

[Mikey]

Why can't it be treated like a litigation settlement; i.e., the damages plus the cost of collection? In other words, if I owe $25.00, and it costs $5.00 to collect it, then I should be made to pay $30.00. Nobody is truly getting penalized more than they actually owe - no usury is involved - but the collecting agency isn't forced to either lose money or forgive the debt.

[IanKennedy]

Why can't it be treated like a litigation settlement; i.e., the damages plus the cost of collection? In other words, if I owe $25.00, and it costs $5.00 to collect it, then I should be made to pay $30.00. Nobody is truly getting penalized more than they actually owe - no usury is involved - but the collecting agency isn't forced to either lose money or forgive the debt.

They can but generally they like to keep it simple, so they just add a fixed amount and put it in the terms and conditions for the account. Courts are starting to challenge the fact that they're getting interest for the item and £10 for simply sending a letter out to say you've gone overdrawn. They've got away with it for years, but the courts are starting to say that you charge interest why do you need to add a fixed cost also. Once you take the fixed cost into account it get's a very very high 'interest rate equivalent' and thus the orders to pay it back.

[Graham Kennedy]

I had this exact thing happen to me once. I mistyped the amount of a bill when I was paying it, so my payment was 7p less than the bill. I never noticed, but some months later I got a letter demanding the 7p along with a £50 processing fee.

I wrote to them suggesting that a fee that was more than 71,000% of the debt it was levied against might be a little wee bit excessive. They agreed and cancelled it, letting me pay the 7p instead.

Funny thing is, my bank won't make payments of less than £1, so in the end I actually overpaid the bill by 93p.

[Mark]

Did they at least credit the 93p? Sorry, I'm rather anal about stuff like that.