Lenders who operate in Florida should already know that they are subject to consumer protection laws that are broader than the Federal counterpart. Under the current Federal Fair Debt Collection Practices Act (FDCPA), creditors are not considered debt collectors and are therefore not subject to the FDCPA rules and prohibitions. However, the Florida Consumer Collection Practices Act (FCCPA) applies equally to both creditors and third party debt collectors.
One of the specific prohibitions of the FCCPA is that “in collecting consumer debts,” a creditor may not communicate with a debtor if the creditor knows the debtor is represented by an attorney. For years this prohibition has created problems for unsuspecting creditors who have automated systems in place that send standardized form notices to their borrowers when their loans are past due. If the creditor was notified that the borrower was represented by counsel before the automated notice was sent, the creditor opened itself up to potential claims under the FCCPA for statutory damages. To further complicate things for the creditor, the borrower’s notice that he or she is represented by an attorney does not have to be in writing, but could be as simply as the borrower telling his or her loan officer on the phone that he or she had an attorney. The absolute rule of the FCCPA, combined with the case law that applied it, caught many creditors in a situation where they had to pay statutory damages and settle cases even though they did not intentionally or maliciously contact a represented borrower.
There is a glimmer of hope for creditors. One Circuit Court in Florida has ruled that certain notices to the debtor that are informational only are not attempts to collect debts and are therefore not enough to trigger a violation of the FCCPA, even if sent to a represented borrower. The notice that was the subject of this lawsuit notified the borrower that “Your loan is 13 payments past due, with a total amount due of $13,804.66.” The notice concluded by saying “We urge you to contact us at the phone number in the account information box above to confirm the amount to reinstate your loan,” and notifying the borrower that he could contact a Home Preservation Specialist with any questions. The Judge ruled that the letter was purely information and not an attempt to collect a debt.
In the end, although it may be possible to avoid liability in cases where notices can be seen as “for informational purposes only,” the result is still uncertain since other Florida courts may interpret the law differently. The best way for a creditor to avoid risk is to take care to make sure they have a procedure in place to identify accounts where the borrower has notified someone that he or she is represented by an attorney and stop the automated notices from being sent.
My practice includes the representation of financial institutions, banks, insurance companies, business owners and other corporate clients. I have a growing and focused practice dedicated to helping financial institutions navigate the complex and expanding area of government regulation and compliance with federal and state laws. This includes working with financial institutions to prepare best practices policies, procedures, and forms, as well as advising financial institutions as to avoiding litigation. When necessary, I will also represent those same institutions in court. I enjoy keeping current with the news and issues that affect banks and financial institutions in their business, and sharing that information along with my thoughts on the issue from a legal perspective based upon my experience.
My firm, Zimmerman, Kiser, & Sutcliffe, P.A.* is a full-service law firm located in Orlando, Florida. Established in 1984 and consistently recognized as one of the largest firms in Central Florida, our firm maintains a respected reputation within the southeast U.S. business and legal community. Our more than 30 attorneys provide comprehensive legal representation in an extensive range of practice areas including corporate, tax, real estate, litigation, banking and financial institutions, structured finance, bankruptcy & creditors’ rights, estate planning & probate, and workers’ compensation.
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