Thursday, June 28, 2018 - Posted by Michael McCulloch
Fox Symes and Associates have recently been fined $37,800 in penalties for making potentially misleading statements in their advertising.
Following an investigation by the Australian Securities and Investments Commission (ASIC) they found that the debt management firm undertook a number of potentially misleading representations on their website, banner advertisements and Google ads. These representations included "Free Debt Assistance", "reduce Debt in Minutes" and "15sec Approval".
The concern of ASIC in this instance was that the statements being made misrepresented the speed and cost of Fox Symes and issued the company with 3 infringement notices. In a statement to the media ASIC Deputy Chair, Peter Kell, said, "Debt management firms are often engaging with particularly vulnerable consumers who are seeking assistance with their debts. They should be careful not to misrepresent their services using high impact terms like ‘free’, ‘minutes’ and ‘seconds’ suggesting that debt assistance will be quick and at no cost".
Fox Symes have since voluntarily amended it advertising once ASIC highlighted the issues. ASIC have indicated that payment of an infringement notice is not an admission of contravention, but rather, they can issue an infringement notice where they have reasonable grounds to believe a person or corporation may have contravened consumer protection laws.
Source: AustralianBroker - May 2018
Thursday, March 29, 2018 - Posted by Michael McCulloch
The Federal Court has recently published their reasons and finding for ordering Australian and New Zealand Banking Group Ltd ("ANZ") to pay $5 million for breaches of responsible lending provisions.
ANZ has agreed to pay the fine as part of settlement of the case which also saw them admitting to 24 breaches of responsible lending provisions of the National Consumer Credit Protection Act 2009 (Cth) for car loans approved by Esanda from 3 finance brokers. We covered the successful prosecution of 1 broker in our May 2017 edition. ASIC alleged that between July 2013 and May 2015 that ANZ failed to meet their obligations when it relied on payslips only included in 12 car loan applications to verify the consumer's income. ANZ claimed to have detected and reported the suspected fraudulent conduct by the brokers and that it disaccredited the individuals involved and no longer accepts applications from them.
In relation to the civil penalty proceedings the Federal Court found ANZ:
- knew that payslips were a type of document that was easily falsified;
- received the document from a broker who sent the loan application to Esanda; and
- had reason to doubt the reliability of information received from that broker;
- income is one of the most important parts of information about the consumer’s financial situation in the assessment of unsuitability, as it will govern the consumer’s ability to repay the loan;
- while ANZ did not completely fail to take steps to verify the consumers’ financial situation, it inappropriately relied entirely on payslips received from these brokers; and
- ANZ management did not ensure that relevant policies were complied with and, in the case of the contraventions involving one broker, no action was taken despite management personnel having become aware of the issues about the broker.
ASIC Deputy Chiarman, Peter Kell, said, "A consumer's income is an essential component in determining their ability to repay a loan. Lenders must take reasonable steps to verify a consumer's financial situation, and this includes checking the reliability of documentation that is provided to them. Lenders must be alert to the potential for documents to be falsified and ensure that their controls are sufficiently robust."
The Court has ordered ANZ remidiate approximately 320 car loan customers for loans taken out through the 3 broker businesses from 2013 to 2015 with ANZ:
- offering eligible customers the option of entering into a new loan on mare favourable terms than the existing loan;
- providing refunds to some customers who have paid out their loan or had cars repossessed; and
- removing any default listings result from the loan.
Tuesday, February 27, 2018 - Posted by Michael McCulloch
A water utility supplier in Queensland brings to the light the issue of attempting to recover debt collection charges from customers.
Queensland Urban Utilities have recently come under regulatory scrutiny after they were found to be charging a debt collection fee on their overdue debts. It is reported in the Courier Mail that they are currently clarifying their legal position but in the meantime will reimburse or fogive $180,000 in debt collection fees.
The Queensland Debt Collectors (Field Agents and Collection Agents) Act 2014
forbids the collection of debt collection costs -
s27 Recovery of Costs of Debt Collector
(1) A person must not recover or attempt to recover from a debtor the costs or expenses of a debt collector for performing a debt collection activity or a repossession activity.
(2) Subsection (1) does not apply to prevent a person who appoints a debt collector to repossess goods or chattels from a debtor from recovering the debt collector’s costs and expenses if the person has a right under an agreement with the debtor or otherwise to recover the costs or expenses.
(3) Costs or expenses recovered in contravention of this section may be recovered by the debtor as a debt.
(4) This section applies subject to the National Credit Code in schedule 1 of the National Consumer Credit Protection Act 2009 (Cwlth) .
(5) In this section—
"costs" do not include—
(a) stamp duty; or
(b) legal costs fixed by, or payable under, rules of court or a court order.
"debtor" includes a person from whom goods or chattels may be lawfully repossessed.
Similar legislation applies in New South Wales and Victoria under the NSW Commercial Agents and Private Inquiry Agents Act 2004 and Australian Consumer Law and Fair Trading Act 2012:
NSW Commercial Agents and Private Inquiry Agents Act 2004
s19 Licensee Not to Charge Debtor for Expenses of Debt Collecting
(1) A licensee must not request, demand or collect from a person (the "debtor" ) any payment for the costs or expenses incurred by the licensee in connection with the collection from that person of money due under a debt.
(2) Any money received from the debtor by a licensee in contravention of subsection (1) may be recovered by the debtor from the licensee, as a debt, in any court of competent jurisdiction.
(3) This section does not limit any right that the person to whom the debt is payable (the "creditor" ) may have at law with respect to the recovery from the debtor of the creditor's costs in recovering the debt.
Australian Consumer Law and Fair Trading Act 2012
s52 Offence to Charge Debtor for Cost of Debt Collection
(1) A debt collector must not recover, or attempt to recover, from a debtor any remuneration or payment in connection with the collection of a debt including the costs and expenses of a debt collector for—
(a) finding or attempting to find goods or chattels of the debtor;
(b) repossessing or attempting to repossess goods or chattels from the debtor;
(c) collecting or attempting to collect a debt owed by the debtor.
(2) Subsection (1) does not apply in respect of a debt collector who is recovering or attempting to recover on behalf of a creditor enforcement expenses reasonably incurred by that creditor—
(a) if a credit contract allows the recovery of those expenses; or
See section 107 of the National Credit Code.
(b) in the case of a debt that was not wholly or predominately accrued in connection with personal, domestic or household purposes, if a term of an agreement between the creditor and the debtor permits the recovery of those expenses.
(3) It is a defence for an offence against subsection (1) that the debt collector had an honest and reasonable belief that the enforcement expenses that he or she was recovering or attempting to recover did not exceed those reasonably incurred by the creditor.
(4) Any costs or expenses recovered in contravention of subsection (1)—
(a) may be recovered by the debtor as a debt; and
(b) if the debt collector is the creditor—
(i) may be set off against the debt; or
(ii) may be recovered by the debtor from the debt collector or the creditor.
(5) In this section—
"costs" do not include—
(a) stamp duty; or
(b) legal costs fixed by, or payable under, rules of court or a court order;
credit contract has the meaning given by section 4 of the National Credit Code;
"creditor" includes a partner, employer, employee, principal or agent of the creditor or a person who is in any way acting in collusion with the creditor;
"debt collector" means a person who engages in debt collection—
(a) as a principal or agent;
(b) as an employee of a principal or agent in exchange for salary, wages or commission;
"debtor" includes a person from whom goods or chattels may be lawfully repossessed.
For further reading we refer you to ACCC v Sampson  FCA 1165.
The ACCC has previously written to agencies and Solicitors who act in the debt collection industry reminding them:
- If something is only a possible consequence of not paying a debt, you must ensure that you do not create an impression that it is a definite consequence
- Before asserting the right to payment of administrative and or legal costs you must ensure that you are aware of whether or not there is a legal entitlement to claim any such costs
- You cannot create an impression that a debt collection letter, demand or notice are documents which have been authorised by a Court or able to be filed with a Court.
For further clarification regarding the contents of this article or to have your Terms and Conditions reviewed so reasonable debt collection fees and charges may be collected please contact Collection Law Partners
to discuss your requirements.
Disclaimer: This article is general information only and does not constitute legal advice and is not intended to be relied on in any way.
Tuesday, January 30, 2018 - Posted by Michael McCulloch
A total of 278,683 Radio Rental leases that led to poor outcomes for consumers has resulted in ASIC pressuring parent company, Thorn Australia, to issue $19.9 million in refunds.
The action comes after ASIC filed proceedings in the Federal Court where ASIC proposed a $2 million penalty in addition to the $11.8 million the company has already refunded to affected consumers for not upholding responsible lending practices. A further $6.1 million will also need to be paid to cover refunds and defaults for 60,000 leases and potentially a further $200,000 more in costs to ASIC.
This is seperate to thet $50 million class action that was filed by law firm Maurice Blackburn in March 2017.
2 of the examples provided to the Federal Court of irresponsible lending include:
- A 65 year old pensioner, Norma Wannell, purchasing 2 Dyson vacuums, with a combined retail price of $991, entering into an Agreement with Radio Rentals that would have cost her $3,900 over the term of the Lease; and
- A mother of 5 in Wagga Wagga, NSW, purchasing a used mattress and bed for $430 but entering into an Agreement with Radio Rentals to pay back almost $3,300.
Acting Chairman of ASIC, Peter Kell, said in a statement, "If customers are paying more than what is required, lease providers need to promptly fix this or face regulatory action. The changes we have made to the consumer leasing division put it on a sound footing to meet the needs of its customers and satisfy its responsible lending obligations".
The Consumer Action Law Centre
("CALC") encourages consumers to seek additional compensation from Radio Rentals and reminded consumers that they may contact the Credit and Investments Ombudsman ("CIO"), of which Thorn Australia, is a member of, to make a complaint.
A spokesperson for Maurice Blackburn said that the recent Federal Court action has no impact on its upcoming class action.
Thursday, September 28, 2017 - Posted by Michael McCulloch
In our March 2017 edition we released a blog article Bank Lenders Must Meet Unfair Contract Laws.
The Australian Securities & Investments Commission ("ASIC") have now reported by media release on Thursday, 24 August 2017 that National Australia Bank, Commonwealth Bank of Australia, Australian and New Zealand Banking Group (ANZ) and Westpac Banking Corporation have now agreed to specific changes to eliminate unfair terms from their Contracts.
The changes mean that:
- The loan documents will not contain 'entire agreement clauses' that absolve the bank from responsibility for conduct, statements or representations they make to borrowers outside the written contract.
- The operation of the banks' indemnification clauses will be significantly limited. For example, the banks will now not be able to require their small business customers to cover losses, costs and expenses incurred due to the fraud, negligence or wilful misconduct of the bank, its employees or a receiver appointed by the bank.
- Clauses which gave banks the power to call in a default for an unspecified negative change in the circumstances of the small business customer (known as 'material adverse change event' clauses) have been removed – so that the banks will now not have the power to terminate the loan for an unspecified negative change in the circumstances of the customer.
- Banks have restricted their ability to vary contracts to specific circumstances, and where such a variation would cause a customer to want to exit the contract, the banks will provide a period of between 30 and 90 days for the consumer to do so.
The banks have agreed that any customer who entered into a Contract from November 2016 will be protected by the changes introduced by ASIC with ASIC also indicating that they will conduct regular audits to ensure compliance.
In a statement to the media ASIC Deputy Chair, Peter Kell, said, "ASIC welcomes the significant improvements made by the banks to their small business lending agreements. The improvements have raised small business lending standards and provide important protections for small business customers. ASIC will be following up with other lenders to ensure that their small business contracts do not contain unfair terms, and we will continue to work with the ASBFEO on these issues".
At this point in time ASIC have indicated that they will also conduct a further review in the coming months so that other lenders to small business can consider their position and whether changes to their Contracts may be required in the near future.
Sunday, July 30, 2017 - Posted by Michael McCulloch
The Australian Securities & Investments Commission ("ASIC") has commenced legal proceedings against a Queensland based credit repair business for allegedly making false or misleading representations and allegedly engaging in unconscionable conduct.
The business, Malouf Group Enterprises Pty Ltd, who trade under several names including Credit Clean Australia, Credit Wash, Credit Clean Australia and Clear Your Credit, have had Court action commenced following an investigation by ASIC that alleges between 01/01/2014 and 31/12/2015 that representations were made that they could remove negative listings from an individuals credit file when nothing could be done about the listings. ASIC also allege that in several cases there was nothing wrong with the consumers individual credit file.
ASIC is seeking the following Orders that:
- Declarations that Malouf Group made representations that were false or misleading, and engaged in conduct that was misleading or deceptive and unconscionable;
- Declarations that Mr Malouf was knowingly concerned in the contraventions by Malouf Group;
- Orders to stop Malouf Group and Mr Malouf from continuing to make false or misleading representations;
- Refunds for consumers; and
- Orders requiring Malouf Group to establish compliance and training programs and to publish corrective notices.
ASIC are also seeking maximum penalties to be imposed by the Court for breaches of Australian Consumer Law which are $1.1 million for corporations and $220,000 for an individual.
The case has been set down for a Directions Hearing in the Brisbane Federal Court on 12 July 2017.
Source: ASIC Media Release - 17-226MR ASIC Commences Proceedings Against Credit Repair Business
Thursday, June 29, 2017 - Posted by Michael McCulloch
A phone book publisher, Local Blue Pages, has been fined $40,000 by the Magistrates' Court for coercive debt collection.
The phone book, which is primarily delivered in the Melbourne metropolitan area, contains advertisements from small businesses however following an investigation by Consumer Affairs Victoria it was found that Local Blue Pages had harassed 4 advertisers between 2014 and 2016 using illegal debt collection tactics.
These tactics included:
- Establishing a fake debt collection agency;
- Misrepresenting and overstating the consequences of non-payment;
- Serving documents pertaining to be issued by the Victorian Civil and Administrative Tribunal ("VCAT") which were never lodged with the tribunal;
- Creating an impression that legal action had commenced; and
- Continually making demands for payment where the business owner was not liable
Owner of Local Blue Pages, Les Papaioannou, was also personally fined $5,000 and said in a statement, "They have made me a scapegoat. All I was doing was chasing the debt that people owed me. In my opinion we made some mistakes, but I wasn't trying to rip anyone off I was just trying to chase my accounts".
Director on Consumer Affairs Victoria, Simon Cohen, said, "The threats made by Local Blue Pages undoubtedly caused a great deal of stress to victims."
Mr Papaioannou said in a later statement that Local Blue Pages has since changed its debt recovery proceedings as a result of the Court case.
Thursday, March 23, 2017 - Posted by Michael McCulloch
The Australian Securities and Investments Commission
("ASIC") and the Australian Small Business & Family Enterprise Ombudsman
("ASBFEO") have recently met to discuss unfair Contract laws.
The review of small business loan contracts offered by Australia's big 4 banks were found to not meet their new obligations under unfair Contract Terms ("UCT") legislation depsite being provided with a 1 year transition period ahead of the November 2016 implementation deadline.
Both ASIC and the ASBFEO have advised that lenders need to take immediate steps to ensure compliance with the new legislation and must immediately:
- Prohibit non-monetary default clauses where the borrower is meeting their Contractual obligations;
- Provide at least 90 days notice where a loan facility will not be extended; and
- Provide more comprehensive access to external dispute resolution schemes.
ASIC Deputy Chair, Peter Kell, said in a statement, "ASIC is committed to ensuring the UCT provisions help to raise small business lending standards. Where we identify a potentially unfair term we will work with the lender to remove or amend the term, and we have already started to raise these issues with lenders. If the lender refuses to do so we will consider all regulatory options, including taking the matter to court as ultimately a court can decide whether or not a term is unfair
Kate Carnell of the ASBFEO said in a statement, “I’m firmly of the belief that the loan contract terms as they currently stand, fail to comply with the UCT law. Once again, repeated calls for the banks to amend their practices are falling on deaf ears, despite inquiry after inquiry highlighting major flaws in the way they treat their small business customers
Read a copy of the ASIC Information Sheet 211
Unfair contract term protections for small businesses (INFO 211).
Alternatively read a copy of the amendments to the Australian Securities and Investments Comission Act 2001 via the Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Act 2015 (no. 147, 2015) – Schedule 1 – Amendments here
Sunday, October 30, 2016 - Posted by Michael McCulloch
A Sydney based SEO ("Search Engine Optimisation") company allegedly contacting 3rd parties in relation to an outstanding debt is currently being investigated by NSW Fair Trading over potential breaches of Australian Consumer Law.
The company, Search Results Specialists, appears to undertake their own debt collection activities and after having invoices go unpaid by La Mona Beauty it is alleged that they contacted 3rd parties, including the owners daughter's boyfriends employer, the owners son's boss as well as the Local Council and suppliers to the debtor.
Search Result Specialists claimed that La Mona Beauty owed $1,400 for SEO work performed however the owner, Nidhal Robb, denied utilising their services and asked for evidence which was not forthcoming.
It is being reported that the matter has now been settled by the parties, NSW Fair Trading have indicated that since 2014, 64 complaints have been received about Search Results Specialists including 12 in this year alone.
While this is certainly not an isolated incident for Search Results Specialists it should serve as a reminder to anyone undertaking the collection of debts that you must comply with not only Australian Consumer Law but also the ACCC / ASIC Debt Collection Guidelines.
Source: Daily Telegraph - Public Defender: Search Results Specialists Will Hound People You Know If You Owe Them Money
Tuesday, June 28, 2016 - Posted by Michael McCulloch
In a most recent article on our blog we revealed that the ACCC had commenced Court action against ACM Group
We can now reveal that in the case of the resident in a care facility that the debt for $5,768.53 was purchased from Telstra by ACM.
It has been alleged:
- The customer was contacted by phone on more than 40 occasions to demand payment;
- 20 demand letters were sent to the customer between April 2011 and June 2015;
- It was communicated to ACM that the customer could not care for himself;
- The customer was in receipt of a Government pension; and
- He was unable to service debt.
While ACM did take steps to make reference this in their customer log the debt was subsequently returned to a debt recovery campaign.
ACM has recently released a statement regarding the allegations on 02/06:
"ACM Group Ltd has today been notified that the Australian Competition and Consumer Commission (ACCC) has commenced civil proceedings against it in the Federal Court of Australia alleging breaches of the Australian Consumer Law in the recovery of two small Telecommunication debts.
The allegations made by the ACCC regarding the two accounts, are not representative of our hundreds of employees nor of our over 165,000 customers.
Further, the two matters do not reflect the incremental change management processes ACM has embarked on. By mid-2015, ACM had implemented numerous processes to ensure compliance and improve customer interaction. Also in 2015, to assist in positive outcomes for our customers, ACM worked with a consumer advocate to rewrite all staff training material and customer correspondence.
ACM is mindful that these matters are now before the Federal Court, and as such, it is inappropriate to make further comment".
While the statement by ACM regarding "incremental change management processes" is certainly a positive sign for future cases one would question as to why this activity existed in the first place especially with the ASIC / ACCC Debt Collection Guidelines originally being published in 2005 and subsequently updated to reflect significant changes to the law.
Unfortunately for those in the industry, that are compliant, the negative stigma attached to the industry continues with stories like this and will no doubt, in the future, require the industry to be more heavily regulated.