Mediacom's 1000% Interest Late Payment Fee

It takes a lot of money to survive in this economy if you're an unemployed single mother, trying to raise a couple of kids -- or working multiple jobs at the minimum wage or less. Millions of American men and women of all ages confront similar challenges.

How's that?

Dependent on public transportation, poor folks may end up paying convenience store prices for their groceries, rather than the cheaper prices (for more nutritious food) at Costco or mega-supermarkets. When there's "too much month at the end of the money" they have to borrow, paying interest on the money they use to pay their bills. If the bank won't loan to them, the interest on a "payday loan" to pay off the last payday loan may end up costing hundreds of dollars more than they initially borrow. Annual percentage rates of 400% are not unusual. If they're lucky enough to have a checking account, but unlucky enough to not have enough money in the bank, they may end up owing the bank $30 for each "insufficient funds" check -- plus another $30 to each of the merchants they were trying to pay, depending on merchants' charges for returned checks. [Photo credit: Nick Graham, staff, Dayton Daily News.]

These are expenses with which the wealthy are unfamiliar, because they've never had the experience of dealing with them.

However, there is one more expense analogous to Anatole France's observation that, "La majestueuse égalité des lois, qui interdit au riche comme au pauvre de coucher sous les ponts, de mendier dans les rues et de voler du pain." ("The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread.") Le Lys Rouge, ch. 7.

Rich and poor alike are subject to the penalties for late cable bill payments.[fn 1]

Of course, like laws criminalizing the theft of bread, late payment fees fall heavier on some than others. The wealthy don't fail to pay their bills on time because they don't have the money. It's because they were on holiday in Europe when the bill arrived, put it in a pile of paper that they didn't go through in time, someone pays their bills for them, or they just don't care. For their poorer cousins it may mean one more payday loan.

I'm not wealthy. And I didn't major in STEM courses. But I do know enough math to work the numbers.

Here's an example of what I mean. Our City water bill is something less than $60 a month. What would it cost me, I wondered, if I just kept a balance of $60 with the City? These days it's hard to get more than 1% a year return on invested cash. So if I put that $60 in a savings account or CD it would produce 60 cents at the end of the year. That would be my cost, my loss, my "insurance policy" premium, for letting the City hold my $60 for a year. In exchange, I would never have to pay a single late payment fee (5% of the bill, plus unspecified "service fees" plus an additional fee for turning water back on). Such fees would be, in total, for a single offence, multiples of the 60-cent annual cost of avoiding them. And so long as I didn't fail to pay the bill for over two months I wouldn't have to worry about precise due dates.

It worked. No more risk of late payments fees. I started maintaining a balance with others. Except for the cable company, Mediacom. I tried it, but they seemed unable to handle the concept of a positive balance, so I gave up and tried to remember to pay promptly. Until this past month, when their bill got lost in a stack of paper, and they introduced me to their version of a late payments fee.

Now there's a little background you need.

• (1) To the best of my recollection I had a record of prompt cable payments every month for 28 years.

• (2) Very significant in this case, the cable company bills in advance. That is, I was charged a "late payment" fee for not paying in advance promptly enough for service I hadn't yet received (and is of often of unacceptable quality -- a technician is coming this morning to deal with broken signals[fn 2]).

• (3) Not knowing of the late payment fee that had been assessed on April 24, I had paid the amount due when the bill was discovered on April 26, in a check that cleared on April 27.

• (4) Thus, on the assumption that had I paid two or three days earlier the penalty would not have been imposed, what had the company lost? It had lost what it could have earned on $76.19 for (let us be most generous) four days. What would that have been at an annual percentage rate of 1%? Slightly less than one penny.

• (5) And how much was the penalty for this loss of 8/10ths of one cent? $8.50. And what is the annual percentage rate represented by $8.50 for four days use of $76.19? Roughly 1000% per year -- for paying a bill in full, four days late, for services not yet received. Rates like that make the pay-day-loan business look like a public charity.

Thirty years go this year (September 14, 1987), I was asked by an organization of cable company executives (CTAM) to participate in a debate with former FCC Chair Dick Wiley regarding the state of the cable industry. Here is a brief excerpt of my comments on that occasion. Although a bit harsh, they were delivered in good humor and received as such by the executives present. The question today is, just how much better has the industry become during the intervening years? Is it enough that they aren't dragging customers out of their recliners and onto the streets, airline style? Shouldn't we demand a higher standard?



[fn 1] I should make clear that the objection I advance in this post addresses the amount of the penalty for late payment, not the existence of such fees. The value of money, a payment, or a debt, is always a function of time. I would not deny for a moment that creditors are entitled to that value. I would strongly disagree that they are entitled to 400% (payday loan) or 1000% (cable company fee) returns during that time.

[fn 2] In fairness I should report that the two techs who came (and resolved the problems) were excellent in every way. They arrived at 10:00 for a 10:00 appointment, combined a friendly demeanor with a professional, experienced, serious approach to the challenges at hand, diagnosed more difficulties than they anticipated. Stuck with it until the problems were resolved, and left me a happy customer.

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Sleepless in Iowa City

August 20, 2013, 10:27 a.m. [Now with August 21 update.]

La majestueuse égalité des lois, qui interdit au riche comme au pauvre de coucher sous les ponts, de mendier dans les rues et de voler du pain. [Roughly translated: "The Iowa City ordinance, in its majestic equality, forbids the rich as well as the poor to sleep in the Ped Mall, beg, or watch over their possessions."]

-- Anatole France, Le Lys Rouge (1894), ch. 7, wikiquote.org

If Jesus Christ were to show up in downtown Iowa City, would he hang out with jewelers, politicians and sorority girls? Or would he hang out with people who were poor, hungry, and mentally ill? . . . [M]any of these people have serious needs – mental illness, disabilities, homelessness, hunger, unemployment, addiction, and more. They are not getting the help they need.

-- Johnson County Supervisor Rod Sullivan, "War on Poor Downtown," Sullivan's Salvos, August 20, 2013

The behaviors targeted by this ordinance aren't the problem, they're a mirror. . . . [W]hy not talk about the real problem itself?

-- Jennifer Hemmingsen, "Proposed Iowa City Ordinance Misses the Mark," The Gazette, August 18, 2013, p. A9

What’s needed, more than anything, is for all of us to wake up to the realities of mental illness and its all-too-frequent partner, substance abuse. . . . The other part isn't so much about homelessness as it is house-lessness -- actual physical structures. . . . That is called "treating the cause instead of the symptom," . . ..

-- Downtown restaurateur Kurt Michael Friese, "Treating City's 'Problem' with House-lessness," Iowa City Press-Citizen, August 20, 2013, p. A7; from his Web page, Chef Kurt Michael Friese, "My Take on the Ped Mall 'Problem,'" Real Food for All, August 16, 2013

What next? A dress code? Reservations? A hefty user fee? . . . Clearly, some people won't be satisfied until rough-hewed residents are scrubbed from downtown city streets. But no one has a right to prevent others from the peaceable enjoyment of our public space.

-- Editorial, "Enough Already -- Again," The Gazette, August 16, 2013, p. A5

The Iowa City Council will consider new ped mall restrictions at its meeting tonight [August 20]. Supporters say the ordinance will curb disruptive behavior, but some opponents say the regulations are misguided.

-- Adam Sullivan, "Proposed ped mall rules come under fire; Ordinance would fine those lying on benches during the day," Iowa City Press-Citizen," August 20, 2013, p. A1

[Photo Credit: Benjamin Roberts/Iowa City Press-Citizen.]

Each of the quoted sources is worth reading in full. That's why I've provided the links for anyone who would like to do so.

But the first of them to come to my attention (aside from the Anatole France quote that has been a favorite of mine since childhood) was Rod Sullivan's. It is also the only one not generally available online. His Sullivan's Salvos is a regularly published and email-distributed contribution to community understanding -- to which you can subscribe (for free) by emailing him at rodsullivan@mchsi.com with "subscribe" in the subject line.

So that is why I am reproducing it in full below.

Next Day [Aug. 21] Update: Rod Sullivan's piece was published the next day as Rod Sullivan, "City Needs to Stop the War on the Poor Downtown," Iowa City Press-Citizen, August 21, 2013, p. A13.

The evening of August 20 the City Council met for the first (of required three) readings of the ordinance. Its ultimate approval would appear to be a done deal.

It addresses use of public electric outlets, horizontal use of benches between 5:00 a.m. and 10:00 p.m., and amount of possessions (unless, one presumes, they are bulky purchases from those merchants who have lodged the complaints). The most vocal Council supporters are those with the self-interest of owning/operating businesses near the Washington/Dubuque Streets intersection near the north end of the Ped Mall.

Council member Jim Throgmorton noted the rush to ordinance, before thorough investigation and discussion by the Council, was a little unseemly.

Opponents arguments at the Council meeting were similar to those linked to, above. See, e.g., Adam B. Sullivan, "Council debates ped mall rules; Supporters cite inappropriate behavior; opponents say rules won't fix issues," Iowa City Press-Citizen, August 21, 2013, p. A1.

The quantity of readers' online comments following yesterday's Press-Citizen story, and the comments' emotional content, indicate that this is an issue about which many residents have strong opinions. See comments following Adam Sullivan, "Proposed ped mall rules come under fire; Ordinance would fine those lying on benches during the day," Iowa City Press-Citizen," August 20, 2013, p. A1.

There is a remarkable similarity in the reactions of these different individuals -- a public official, an award-winning journalist, a downtown business person, and I might add, myself. It is, essentially, "If you want to do something about homelessness -- and you should want to do something about homelessness -- it is far more effective, cheaper, and humane to treat the causes than the consequences."

As Rod Sullivan puts it, below, "The lack of innovative thinking here is very, very sad."

How true this is with regard to so many of the challenges confronting our public and private institutions -- and ourselves. I know that I have not been as innovative as I might have been with regard to managing my nutrition and exercise.

Based on our ACT scores, recently reported, we seem to be doing something right with K-12; but have we been as innovative as we might have been in our institutional governance, special education challenges, or bringing forward the best from every child? See, Karen W., "Thinking Beyond Buildings: Diversity Policy," Education in Iowa, August 22, 2013, IowaEd.wordpress.com.

Have the federal, state, and local governments been as innovative as they might have been in creating a full-employment economy? See, "No Such Thing as 10.2% Unemployment; I Can CCC Our Way Out of Recession," November 27, 2009.

Has higher education fully responded to the innovative opportunities (and challenges) brought on by the MOOCs (massive open online courses)? "Higher Ed's Triumph of Hope Over History; Why Pay $100,000 or More for What's Available For Free?" August 18, 2013.

It is also a challenge of sorts with regard to that portion of past Johnson County Justice Center proposals that identify the problem as "jail overcrowding" and then offer as a "solution" building "more jail cells." See, "Attorney General Holder's Lessons for Johnson County," August 12, 2013 ("our 'prison problem' is not that we have too few cells but that we unnecessarily have too many prisoners." Or, as I quote Holder as saying, "[T]too many Americans go to too many prisons for far too long and for no good law enforcement reason . . .. [With an ] economic burden — totaling $80 billion in 2010 alone — and . . . human and moral costs that are impossible to calculate.” ) (The County Supervisors are currently holding public sessions exploring the alternatives to incarceration they are already using and what additional innovative thinking may be possible.)

The same can be said regarding our "homeless problem" -- and is being said by those quoted here. Running the homeless and mentally ill out of the Ped Mall, whether into jail cells or to makeshift cardboard "homes" under our bridges, is also both the most costly, and the least effective and humane, response to homelessness.

So here (with, of course, his permission) is Supervisor Sullivan's innovative take on the issue, in his own inimitable style:

War on Poor Downtown
County Supervisor Rod Sullivan
Sullivan's Salvos
Dated August 20, 2013, distributed August 16, 2013
There is a War on the Poor going on in Downtown Iowa City. We have these about every five years. In every case to this point, these efforts have been misguided.

Look, I know something about this. For one, I spend a lot of time downtown. I understand that there are lots of people down there who are dressed badly, smell badly, and are looking for money. They are not pleasant people to be around. Their appearances are different, and can scare little kids and old ladies. I’d prefer not to sit by them.

On the other hand, I spent twenty years working in human services. I understand that many of these people have serious needs – mental illness, disabilities, homelessness, hunger, unemployment, addiction, and more. They are not getting the help they need.

I have seen former clients down there begging – people who are smart and able-bodied, yet choose this lifestyle. I know they have homes. I’m disappointed in them, and when I see them, I tell them so.

I also rarely give money to beggars. We DO give very generously to health and human services agencies – Melissa and I give ten percent of our annual income. We prefer to invest our money in attempts at systemic change. (Meanwhile, how much giving comes from those advocating for “cleaning up” downtown?)

If people break laws – littering, using drugs, assault, theft – whatever – then by all means, enforce the law. My sense is that this is less about laws being broken, and more about aesthetics.

Every previous approach has led to laws that take away civil rights. These laws are then applied arbitrarily and capriciously. Do you look scary to an old white lady? Sorry, buddy. You are coming with me!

This group of people is an easy one to pick on. They lack money and influence. They are unlikely to speak out. Sometimes they are rude and obnoxious. They do not look, sound, or behave like “we” do. Not many people will stand up for them.

As a matter of fact, I am already being criticized for this stand. I am now anti-family, anti-business, and anti-safety. All the influential people in town “want something done.” This issue ain’t a political winner – trust me! Local Libertarians? I’ve heard crickets. They are happy to let me fight this fight alone. They are only concerned with their OWN liberties; not those of the poor. I don’t even personally approve of the message the downtown street folks send; I am simply defending their right to send it.

There is also a move underway to privatize our public space. While Iowa City has more and better public space than most, it is going away. A big chunk is now being used as construction staging; interesting how that has coincided with these perceived “problems.” Privatization means the “undesirables” are on the way out; private property rights rule.

How about a more humane approach? If someone is doing something you don’t like, try asking him/her to stop. Perhaps the DTA [Downtown Association?] could invest in a social worker rather than a cop. How about a rapid re-housing program? Those have had significant success in other areas. How about a “wet” shelter? That is a definite need. Are we really this lacking in creativity? Other cities have tried many different approaches, while we default to one. The lack of innovative thinking here is very, very sad.

Secondly, let’s talk about this as it relates to my role as a County Supervisor. Some have said I have no right to comment as to what goes on downtown. I beg to differ. I’ve lived in Iowa City for 30 years. I am a resident, citizen, voter, and taxpayer.

From a County perspective – we don’t need people jailed for vagrancy. We just don’t. We have no space, it costs too much, and it does not alter behavior. So this “crackdown” that is being called for will cost the County dearly.

The County also spends a LOT of money on human services. Not as much as we should, but many times more than all cities combined. Now, if cities chose not to use TIF, thereby shutting the County out of any new taxes – perhaps we could better address the needs that exist downtown. Or perhaps the cities could use TIF money to house those without housing. Maybe the 10-15 people who cause the bulk of the problems downtown could live in the 14-story tower next door?

Finally, let’s look at this through the lens of morality. If Jesus Christ were to show up in downtown Iowa City, would he hang out with jewelers, politicians and sorority girls? Or would he hang out with people who were poor, hungry, and mentally ill?

I hope the Iowa City Downtown District and Iowa City Council address this issue in a new and better way. But I expect that instead they’ll just tell their friends about how out of touch I am.

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It is not the purpose of this blog essay to address the legal issues involved in curtailing the activities of the homeless. Indeed, as one of the "Disclaimers" in the right hand column explains, "No Legal Advice: Nothing posted on this blog is intended as, constitutes, nor should be taken to be, 'legal advice,' nor as creating an attorney-client relationship."

But I thought the following excerpt from a law review article I stumbled upon (while preparing for a class on another subject) of sufficient relevance to be worth inclusion here:

What is emerging—and it is not just a matter of fantasy—is a state of affairs in which a million or more citizens have no place to perform elementary human activities like urinating, washing, sleeping, cooking, eating, and standing around. . . . The rules of property prohibit the homeless person from doing any of these acts in private, since there is no private place that he has a right to be. And the rules governing public places prohibit him from doing any of these acts in public, since that is how we have decided to regulate the use of public places. So what is the result? Since private places and public places between them exhaust all the places that there are, there is nowhere that these actions may be performed by the homeless person. And since freedom to perform a concrete action requires freedom to perform it at some place, it follows that the homeless person does not have the freedom to perform them. If sleeping is prohibited in public places, then sleeping is comprehensively prohibited to the homeless. If urinating is prohibited in public places (and if there are no public lavatories) then the homeless are simply unfree to urinate. These are not altogether comfortable conclusions, and they are certainly not comfortable for those who have to live with them.

Jeremy Waldron, Homelessness and the Issue of Freedom, 39 UCLA L. Rev. 295 (1991); from "Trespass: Resolving Conflicts Between the Right to Exclude and the Right of Access."

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