We have a LOC product which charges a $20 fee annually. I have found a few instances where the credit line is assessed the annual fee, then the customer is charged a late fee for failure to pay that fee in a timely manner. For instance, the LOC had a $0 balance last month, this month the annual fee is assessed, then next month a late charge is applied. The only item which could have possibly caused the late fee is the annual fee.

I feel like this is a bad practice, but can't find anything in the statutes which supports my thoughts. Any help or guidance would be appreciated.

I kind of feel like this has the same flavor as pyramiding (I know it doesn't quite fit the definition). The closest I can come to finding anything is KRS 286.3-750:

"In addition to the charges provided in KRS 286.3-740, a revolving credit plan may provide for the collection of fees not to exceed twenty dollars ($20) annually, and in addition, the following enumerated fees, charges and costs: (1) Delinquency charges not to exceed five dollars ($5) each month if payments required by the plan are not made when due;"

The annual fee is a payment required by the plan, but I still don't like the idea of charging a late fee on it. My only real argument so far is that it isn't consumer initiated. Any other thoughts?