Beware! The Collection of Consumer Debts Can Cost You

When customers fail to meet their obligations, creditors often designate the accounts for collections in the hope that the business will be able to recover the amounts due. Efforts to collect such delinquent accounts could result in costly lawsuits against your business, if you or your designated collectors are not aware of the Florida Consumer Collection Practices Act (“FCCPA”).

The FCCPA applies to any “person,” which includes corporations or other legal entities that collect consumer debts. A consumer debt is defined as debts incurred for “personal, family or household use.” Think of it this way, is the product or service you provide being used for a personal non-business use? If the answer is yes, the FCCPA may apply to your efforts to collect on the account even if you are the original creditor. An innocent error can result in a violation unless the business takes reasonable safeguards, such as implementing training programs and policies established to comply with the FCCPA.

The FCCPA contains a list of 19 subsections describing actions that are prohibited. Every business that collects consumer debts should understand what is prohibited and implement a training program on this law. Both the FCCPA and its federal counterpart are intentionally unfair to creditors. The laws are designed to allow a consumer to sue a creditor over the smallest, most technical, violation of these laws, even when it is a legitimate debt. An innocent error can result in a violation. Violations can occur due to simple mistakes or a failure to establish adequate safeguards. Examples of possible violations are: (1) contacting a debtor directly after an attorney has become involved; (2) disclosing information about the debtor affecting his reputation (and this includes roommates or house guests); (3) or calling with such frequency that can be expected to harass the debtor.

The FCCPA contains a “bona fide error” defense that allows a creditor to avoid liability. The creditor must prove that the creditor’s violation was not intentional and resulted from a bona fide error, notwithstanding the maintenance of procedures adopted to avoid such errors. Training is critical to avoid situations that might result in a claim.

If the creditor loses, it will likely cost the creditor thousands of dollars. A creditor who loses must pay the consumer his actual damages, additional statutory damages of up to $1,000, plus attorneys’ fees and court costs. The creditor will have the privilege of paying its own attorneys to defend the action, and even if the creditor wins, will not be able to recover its attorneys’ fees (except in limited circumstances where the action is deemed to be in bad faith).