What is Late Fee?

Legal Definition
A late fee, also known as a late fine or a past due fee, is a charge fine against a client by a company or organization for not paying a bill or returning a rented or borrowed item by its due date. Its use is most commonly associated with businesses like creditors, video rental outlets and libraries. Late fees are generally calculated on a per day, per item basis.

Organizations encourage the payment of late fees by suspending a client's borrowing or rental privileges until accumulated fees are paid, sometimes after these fees have exceeded a certain level.

Late fees are widely regarded as an annoyance. In 2005, video rental chain Blockbuster Video capitalized on this perception with a major advertising campaign that touted a revision of its rental policy as "The End of Late Fees".

More recently, in 2006, Rogers Video has used the same technique, except only for movies, and without any restocking fee (due to movies costing much less than video games).

Late fees charged by banks, landlords, and utilities have been heavily criticized as a penalty against the poor, and attempts have been made in some places to outlaw them completely or place caps on them. The argument against them is that the poor will inevitably be forced to pay them as they cannot earn the money to pay their bills by the due date. These people will be forced to pay even higher fees for the same services, and will find making future timely payments to their creditors even more difficult.

Late fees are issued to people who do not pay on time and don't honor a lease or obligation that they are responsible for.

A special use of the term late fee is additional postage that was once required by Post Offices to allow inclusion of a letter or package in the outgoing mail dispatch although having been posted later than the normal closing time for mail. Often a special Late Fee Box was provided.
-- Wikipedia