terms-of-service
Can a company make a late payment charge that is greater than the maximum permitted by law?
<p>A reasonably large online services provider includes the following in their Terms of Use (my emphasis).</p>

<blockquote>
  <p>If Your credit card is declined, You agree to pay Us the fees within
  thirty (30) days of notification from Us, and pay (at Our discretion)
  a late payment charge of 1.5% per month, or the maximum permitted by
  law, <strong>whichever is greater</strong>.</p>
</blockquote>

<p>By accepting these terms, am I accepting that they can make a late payment charge (of 1.5% per month) that is greater than the maximum permitted by law?</p>

<p>Terms of a contract that are opposed by a law or statute are invalid to the extent that they require a breach of said law or statute.</p>

<p>Thus: the maximum in law is the highest payment they can ask for, because that is <em>by definition</em> the highest payment they can legally expect. Stating that you must pay some arbitrary amount and maximums be damned, may be grounds for a consumer law action. However, IANAL, so specific details for your region should be discussed with someone there who is.</p>

<p>This is a truly bizarre condition. Many states have maximum rates on loans, but this isn't a loan. But then you would have to look at the exact wording of the state's usury law. In Washington, one reads <a href="http://apps.leg.wa.gov/RCW/default.aspx?cite=19.52&amp;full=true" rel="nofollow noreferrer">RCW 19.52</a>. Even though the intent was to limit interest on loans, what it actually says in 19.52.020 is</p>

<blockquote>
  <p>(1) Any rate of interest shall be legal so long as the rate of
  interest does not exceed the higher of: (a) Twelve percent per annum;
  or (b) four percentage points above...</p>
</blockquote>

<p>(complex jibber-jabber regarding T-bills omitted). However in Arizona (where LeadMD operates), <a href="http://www.azleg.state.az.us/FormatDocument.asp?inDoc=/ars/44/01201.htm&amp;Title=44&amp;DocType=ARS" rel="nofollow noreferrer">ARS 44-1201(A)</a> says</p>

<blockquote>
  <p>Interest on any loan, indebtedness or other obligation shall be at the
  rate of ten per cent per annum, unless a different rate is contracted
  for in writing, in which event any rate of interest may be agreed to.</p>
</blockquote>

<p>which means that there is no upper limit. The maximum amount permitted by law is infinity. The state statute does not say that the 10% figure kicks in just in case a contract fails to explicitly name the numeric percentage: I'm willing to bet that the courts would disallow an infinite interest rate, as an absurdity.</p>

<p>Idaho <a href="http://www.finance.idaho.gov/FAQ.aspx" rel="nofollow noreferrer">repealed its usury law</a> in 1983, so there is no upper limit and there is no "X or as stated in the contract" law in Idaho. So the maximum legal rate is infinity, the alternative rate is 1.5% per month, and infinity is greater than 1.5% per month. In this case, one could use an <a href="https://law.stackexchange.com/a/9623/4501">unconscionability argument</a> to void the contract. In which case, the company would probably opt to interpret the limit as 1.5% per month.</p>
