On April 21, 2021, the Eleventh Circuit Court of Appeals issued a decision in the case of Hunstein vs. Preferred Collection and Management Services. The Court found that the debt collector’s use of a third-party mail vendor violated the Fair Debt Collection Practices Act. This ruling resulted in an increase in lawsuits against debt collectors (third-party agencies) and raised serious compliance concerns for creditors under the Florida Consumer Collections Practices Act.

On Wednesday, November 17, 2021, the Eleventh Circuit Court of Appeals issued an order vacating the previous decision. Additionally, the Court issued an order to rehear the case before the full Court panel. The original case was heard before a panel of three judges.

The case was reheard before the full panel of judges for the Eleventh Circuit Court of Appeals. The court issued their latest opinion on September 9, 2022. The court has reversed the original decision. The court found that the Plaintiff did not have standing to bring the lawsuit because the Plaintiff had not suffered a “real” injury. The court focused on the fact that the Plaintiff had not suffered any harm. It is important to note that the court did not get to the issue of whether the use of third-party mail vendor violated the FDCPA.

The effect of the Court’s action is that the prior opinion of the court is no longer valid and does not have authority over lower courts. The Plaintiff could seek to appeal this decision to the U.S. Supreme Court, or the Plaintiff could refile the suit in state court in Florida. Florida law provides a different standard for standing that may allow the case and allegations to move forward. We will continue to monitor this matter and will provide updates as this case moves forward.

On Friday, July 29, 2022, the CFPB and Justice Department issued a Joint Letter reminding auto lenders of their responsibilities to recognize important legal protections for military families under the Servicemembers Civil Relief Act (SCRA). This letter comes months after the CFPB issued a compliance bulletin on repossessions. The CFPB also addressed repossession compliance issues in its Spring 2022 Supervisory Highlights.

The Joint Letter was a reminder to lenders of key provisions within the SCRA, including:

• Wrongful vehicle repossessions: The SCRA prohibits a lender from repossessing a motor vehicle during the borrower’s military service without a court order. The letter reminders lenders that a violation of this law can lead to criminal penalties.
• Failure to terminate vehicle leases without penalty: The SCRA allows servicemembers to terminate motor vehicle leases early and without penalty in certain situations.
• Violations of auto loan interest rate benefits: The SCRA limits interest rates on loans incurred prior to military service to no more than 6% per year. This cap on interest includes a cap on most fees. If servicemembers make a proper request, a creditor must forgive any interest greater than 6%. Any interest already paid must be refunded to the borrower.

A copy of the Joint Letter can be found here.

In light of the CFPB’s focus on repossessions, if you have not recently reviewed your Policies and Procedures related to repossession, especially involving those protected by the SCRA, we recommend you review those policies and procedures now. If you have questions or need a legal review, please do not hesitate to contact a lawyer at Sorenson Van Leuven.