Recent Decisions Support the Legality of “Pay-to-Pay” Fees in Florida
Many mortgage servicers allow borrowers to make loan payments over the telephone, and the servicers charge a small convenience fee for this special service. These telephone convenience fees, or “pay-to-pay” fees as coined by the plaintiffs’ bar, are voluntary and fully disclosed. Despite this, mortgage servicers are currently facing a nationwide spate of lawsuits alleging that the fees violate federal and state consumer protection and debt collection laws. In the past few years, a large number of these cases have been filed in Florida under the Florida Consumer Collection Practices Act (“FCCPA”) and the federal Fair Debt Collection Practices Act (“FDCPA”). Plaintiffs, however, have had limited success in Florida federal courts, with the majority of courts finding that convenience fees are not actionable under the FCCPA or FDCPA.
The FCCPA defines a debt as “any obligation or alleged obligation … arising out of a transaction[.]” Fla. Stat. § 559.55(6). Mortgage servicers have taken the position that the telephone convenience fee is voluntary and not an “obligation,” and, therefore, cannot be a debt under the FCCPA. Florida federal courts overwhelmingly agree, and the majority have not allowed FCCPA claims to survive the pleading stage. See Turner v. Ocwen Loan Servicing, LLC, No. 8:20-cv-137-T-30SPF, 2020 WL 2517927 (M.D. Fla. Feb. 24, 2020); Fusco v. Ocwen Loan Servicing, LLC, No. 9:20-cv-80090, 2020 WL 2519978 (S.D. Fla. Mar. 2, 2020); Estate of Derrick Campbell v. Ocwen Loan Servicing, LLC, No. 9:20-cv-80057, Dkt 30 (S.D. Fla. Apr. 30, 2020); Reid v. Ocwen Loan Servicing, LLC, Case No. 9:20-cv-80130, Dkt 31 (S.D. Fla. May 4, 2020); Lang v. Ocwen Loan Servicing, LLC, No. 3:20-cv-00081, Dkt 21 (M.D. Fla.. July 17, 2020); Kelly v. Ocwen Loan Servicing, No. 3:20-cv-50, 2020 WL 4428470 (M.D. Fla. July 31, 2020); Bardak v. Ocwen Loan Servicing, LLC, No. 19-cv-01111, Dkt 72 (M.D. Fla. Aug. 12, 2020). The Southern District of Florida succinctly explained that, as the borrower “had no obligation to pay the [telephone convenience] fee, it is not ‘a debt under the meaning of the FCCPA.’” Fusco, 2020 WL 2519978 at *5. Just last month, the Southern District also granted a motion for reconsideration which overturned one of the decisions in which a FCCPA claim was not dismissed. See Webster v. Ocwen Loan Servicing, LLC, No. 0:20-60117-CIV-DIMITROULEAS, Dkt 37 (S.D. Fla. Sept. 17, 2020). The few cases in which FCCPA claims survived dismissal did not directly address whether the convenience fees were “debt” under the statute. See Garay v. Select Portfolio Servicing, Case No. 1:19-cv23323-JLK, Dkt 52 (S.D. Fla. Aug. 7, 2020); Alvarez c. LoanCare, LLC, No. 1:20-21837, Dkt 30 (S.D. Fla. Aug. 28, 2020).
A bigger split exists as to whether Florida borrowers can state a claim under the FDCPA. But recent decisions have tipped the split in favor of dismissal of FDCPA claims. The majority of Florida federal courts have found that the telephone convenience fee is not “debt due another” as required under the FDCPA, and thus, not actionable. See Turner, 2020 WL 2517927 at *2; Estate of Derrick Campbell, No. 9:20-cv-80057, Dkt. 30; Reid, No. 9:20-cv-80130, Dkt 31; Lang, No. 3:20-cv-0008, Dkt 21; Kelly; 2020 WL 4428470; Bardak , No. 19-cv-01111, Dkt 72; Garbutt v. Ocwen Loan Servicing, LLC, No. 20-cv-00136, Dkt 29 (M.D. Fla. Sept. 22, 2020); but see Booze v. Ocwen Loan Servicing, LLC, Case No. 9:20-cv-80135, Dkt 12 (S.D. Fla. Mar. 2, 2020); Fox v. Ocwen Loan Servicing, LLC, Case No. 9:20-cv-80060, Dkt 26 (S.D. Fla. Mar. 2, 2020); Fusco, 2020 WL 2519978; Glover v. Ocwen Loan Servicing, LLC 9:20-cv-80053, Dkt 20 (S.D. Fla Mar. 3, 2020); Webster v. Ocwen Loan Servicing, LLC, No. 0:20-cv-60117, Dkt 21 (S.D. Fla. Apr. 30, 2020).
There is no guidance yet from the Eleventh Circuit on whether Florida borrowers can state a claim under the FDCPA or FCCPA based on telephone convenience fees. The issue is currently on appeal in Bardak v. Ocwen Loan Servicing, which should be closely monitored by mortgage servicers. In the meantime, the litigation risk to servicers charging telephone convenience fees in Florida has likely decreased because of the recent decisions in the lower courts.
This document provides a general summary and is for information/educational purposes only. It is not intended to be comprehensive, nor does it constitute legal advice. Specific legal advice should always be sought before taking or refraining from taking any action.