Department of Banking and Finance, State of Fla. v. Credicorp, Inc.
| Decision Date | 31 October 1996 |
| Docket Number | Nos. 86601,86624,s. 86601 |
| Citation | 684 So.2d 746 |
| Parties | 21 Fla. L. Weekly S475 DEPARTMENT OF BANKING AND FINANCE, STATE OF FLORIDA, Appellant, v. CREDICORP, INCORPORATED, etc., et al., Appellees. CREDICORP, INCORPORATED, etc., et al., Petitioners, v. DEPARTMENT OF BANKING AND FINANCE, STATE OF FLORIDA, Respondent. |
| Court | Florida Supreme Court |
Paul C. Stadler, Jr., Assistant General Counsel, and Robert A. Fox, Assistant General Counsel, Office of the Comptroller, Tallahassee, for Appellant/Respondent.
William E. Williams, Rex D. Ware and Vikki R. Shirley of Huey, Guilday & Tucker, P.A., Tallahassee, for Appellees/Petitioners.
We have for review Credicorp, Inc. v. Department of Banking & Finance, 659 So.2d 376 (Fla. 1st DCA 1995), which passed upon the following questions certified to be of great public importance:
MAY FLORIDA IMPOSE A LICENSING REQUIREMENT AND ANNUAL FEE UPON A RETAIL INSTALLMENT SELLER THAT ACTIVELY SOLICITS AND SELLS TO FLORIDA RESIDENTS, BUT REACHES THIS STATE ONLY BY UNITED STATES MAIL AND COMMON CARRIER?
Id. at 382, 388. We have jurisdiction. Art. V, § 3(b)(1),(4), Fla. Const. 1 We answer the first certified question in the affirmative and uphold section 520.32, Florida Statutes (1995). We decline to answer the second certified question as it is mooted by our answer to the first certified question.
The facts of this case are set out in the hearing officer's order under findings of fact:
1. Credicorp, Incorporated (Credicorp) is a Texas corporation whose principal place of business is located in Dallas, Texas. Credicorp is not licensed pursuant to chapter 520, Florida Statutes, and never has been. Originally incorporated in 1990 under the name FAFCO, Credicorp began 2. John Rheinfrank was president of Credicorp from November of 1990 until October of 1992. Since then, Stevan Brown, who has been corporate secretary at all pertinent times, has served as president. Credicorp has no employees or agents in Florida, and owns no property in Florida. Credicorp has not registered to do business in Florida and does not collect Florida sales or use taxes.
mailing solicitations to Florida in November of 1990.
3. Credicorp mails solicitations, also called invitations, to Florida residents and others. Before the corporate name change, invitations sent to prospects read as follows:
[Name and address of targeted individual]
YOU HAVE BEEN PRE-APPROVED FOR A GOLD CARD WITH A $10,000 LINE OF CREDIT.
*MAIL YOUR $29.95 ANNUAL FEE BY CHECK OR MONEY ORDER BY (specified date) ALONG WITH THIS SIGNED NOTICE TO ACTIVATE YOUR CREDIT IMMEDIATELY.
FAILURE TO DO SO WILL RESULT IN OUR REEVALUATION OF YOUR ELIGIBILITY. PLEASE RETURN THIS TELEGRAM WITH PAYMENT BY (date specified). MAKE CHECK OR MONEY ORDER PAYABLE TO FAFCO GOLD CARD.
NEW ACCOUNTS MANAGER
RESPOND TODAY!
Petitioner's Exhibit No. 19. Robert J. Armstrong, the putative accounts manager, does not exist. Recently invitations have included a 60-day moneyback guarantee and a disclaimer in small type disclosing Credicorp's lack of affiliation with a financial institution.
4. The solicitation arrives in an enveloped stamped "DATED MATERIAL: YOUR IMMEDIATE REPLY REQUESTED," and the return address is shown as "CREDIT APPROVAL DEPT."
5. Ordinarily the solicitation contains all the information an individual receives before paying money to Credicorp to secure its services. Respondents offer potential customers residing in Florida a "Gold Card" with "a $10,000 line of credit" at a 12% annual interest rate, in exchange for a $29.95 fee.
6. The services Credicorp in fact provides to members are offers to sell merchandise, loans for purchasing the merchandise that Credicorp sells, assorted coupons, and hotel and rental car discounts. Not one of these services is clearly identified on the initial solicitation sent to potential members.
7. After the customer submits a pre-approved application and pays the membership fee, Credicorp mails a "fulfillment package." The customer must pay a $29.95 fee before Credicorp performs any service on the customer's behalf. The fulfillment package contains a letter that states, in part:
WELCOME TO CREDICORP, YOUR LINE OF CREDIT IS $10,000
HERE IS YOUR CREDICORP MEMBERSHIP CARD!
ACCOUNT #
START USING YOUR CREDICORP MEMBERSHIP AND BONUS COUPONS IMMEDIATELY TO PURCHASE NAME BRAND PRODUCTS FROM OUR HOME VALUES AND GIFT CATALOG. ENCLOSED IS OUR GIFT TO YOU, YOUR PREFERRED MEMBER SAVINGS COUPON BOOKLET WORTH UP TO $1,000.00 IN COUPONS REDEEMABLE IN YOUR AREA. ALSO SEE INFORMATION ENCLOSED ABOUT 50% DISCOUNTS AT THOUSANDS OF LOCATIONS THROUGHOUT THE U.S.
This letter is the first notice Credicorp gives the "new member" that he or she has joined a catalogue shopping club.
8. The fulfillment package also contains a second letter addressed "Dear New Credicorp Member," a copy of the Credicorp Rules and Regulations, a collection of Home Values and Gifts Bonus Coupons, a booklet of Super Saver coupons, and the Home Values and Gifts catalogue. For the past six months or so, the package has contained an application for a "Privilege Card."
9. A member can purchase merchandise listed in the Home Values and Gifts catalogue by completing order forms contained in the catalogue and mailing them, along with payment, to Credicorp. Credicorp extends members a line of credit of up to $10,000 to purchase this merchandise. The member's "Gold Card" number must be included when ordering products from the catalogue.
10. A member cannot use the "Gold Card" to purchase goods or services from retail sellers other than Credicorp. Members cannot use their "Gold Cards" or their membership to obtain cash from anybody. The Better Business Bureau of Texas received over 34,000 inquiries in 1992 regarding Credicorp's activities.
11. Credicorp receives a mark-up on the merchandise it sells to members. Members who purchase merchandise on credit must initially submit a specified downpayment with the order. Two prices are available to a Credicorp member, a cash price and a "credit price," which reflects a 12% financing fee. Merchandise purchased on credit arrives with an installment coupon book for each item ordered.
12. The Credicorp Rules and Regulations, the order forms contained in the catalogue, and all other materials Credicorp provides members make no mention of any contingency once the member completes, signs and sends in a form order for merchandise with the amount of money required. Many Florida residents complete and sign these order forms in Florida. Credicorp has received at least 378 form orders for merchandise from Florida residents.
13. Approximately 1,600,000 individuals have submitted to Credicorp membership applications, each accompanied by $29.95. New members' names and addresses are entered into a computer data base and "batch edit sheets," each listing 100 names of new members, are printed.
14. Sample batch edit sheets obtained from Credicorp by the Department listed the names of 640 Florida residents who had sent a membership application form and $29.95 to Credicorp to obtain membership. On a single day, June 24, 1992, money and membership application forms from 243 residents of Florida reached Credicorp.
On the basis of these findings of fact, the hearing officer recommended the imposition of sanctions against Credicorp, John Rheinfrank 2 who served as Credicorp's president until his departure from the company in the fall of 1992, and Steven Brown who served as its vice-president, treasurer and secretary prior to becoming the company's president after Rheinfrank's departure, in their capacity as officers of Credicorp. In partial support of the recommendation, the hearing officer concluded that "One purpose Chapter 520 evinces is to protect Florida consumers from misleading solicitations." In essence, the hearing officer found, as detailed in the findings of fact, that Credicorp had engaged in extensive deceptive practices in its solicitations of Florida consumers. Subsequently, the Department approved the findings of the hearing officer and ordered Credicorp to cease and desist certain activities under both chapters 520 and 687, Florida Statutes (1991). The Department also imposed substantial administrative fines against Credicorp, Rheinfrank, and Brown.
On appeal to the First District, the district court affirmed in part, reversed in part, and certified two questions to this Court. The court held that (1) Credicorp was a retail installment seller under the Act, (2) the licensing
requirements of the Retail Installment Sales Act could not be applied to Credicorp without violating the Commerce Clause, (3) Credicorp was a loan broker as defined in section 687.14, Florida Statutes (1991), and (4) the Loan Broker Act applied to Credicorp and did not violate the Commerce Clause. Credicorp, Inc. v. Department of Banking & Finance, 659 So.2d 376 (Fla. 1st DCA 1995). The district court indicated that, absent controlling precedent, it would uphold the application of the licensing requirements of chapter 520 to Credicorp as a valid state regulatory measure and the imposition of sanctions under that chapter.
The United States Constitution empowers Congress "To regulate Commerce with foreign Nations, and among the several States." Art. I, § 8, cl. 3, U.S. Const. The purpose of this provision was to ensure the free and unimpeded transportation and exchange of goods between the states. Armstrong v. City of Tampa, 118 So.2d...
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