Credit Card Late Fees Might Be Unconstitutional?

Over at the Consumer Law & Policy Blog they’ve posted the abstract of a article that considers the constitutionality of credit card late fees. Apparently, there are “constitutional constraints upon the imposition of punitive damages.” Neat. The article by Seana Shiffrin and is called “Are Credit Card Late Fees Unconstitutional?”

State Farm Mutual Automobile Insurance Co. v. Campbell articulated serious and specific constitutional constraints upon the imposition of punitive damages. Justice Kennedy’s majority opinion announced that, apart from exceptional cases, punitive damages should not exceed nine times the amount of the actual losses sustained by the plaintiff and should usually be far lower…

The constitutional standards articulated in State Farm call into question the constitutionality of those statutes and regulations that authorize credit card issuers to charge legally enforceable late penalties but place no significant limitations on their size.

What a lovely idea!

Is Enforcement of Credit Card Late Fees Unconstitutional? [CL&P]