Debit Card Provision Uncertainties Answered

The outcome of this year’s legislative session evoked a lot of confusion from property managers and boards of directors serving the community association industry.  As a result, we have received a lot of requests from our readership asking for clarification on some of the laws that were enacted. In this post, we will be tackling the debit card provision in an effort to clear up some misconceptions about the new legislation.

The debit card provision was added to block any community association, its officers, directors and employees from using a debit card issued in the name of the association to pay for association-related expenses. In the face of an increasingly cashless society, this new regulation poses a problem for many, considering that plastic is becoming the most common and preferred method of payment. So how are associations expected to pay for services such as Internet and communal utilities, or expenses such as new patio furniture?

Though this new provision prevents associations from using debit cards, it does not prohibit the use of credit cards for association related expenses.  By not allowing the use of a debit card, direct access to the association’s cash is restricted.  While this measure was likely intended to provide a level of legislative protection from dishonest individuals having access to an ATM machine and a large bank account, use of credit cards for association purposes remains an allowable form of purchasing power, if not still a risky endeavor.  Associations that utilize credit cards are encouraged to restrict their use altogether, limiting the risk of becoming victims of fraud or theft. However, if an association is inclined to have a credit card, we recommend allowing only one card to be issued, keeping a low limit on the card, paying the card in full every month, and frequently checking charges made to the account. While we realize that some may look at this new legislation as an inconvenience, ultimately, the goal was to help protect condominium and homeowners associations and their owners from theft and fraud – and  with the disturbing amount of cases of deceit in Florida community associations, we can use all of the protection we can get.