Federal Court Finds Against Debt Collection Agency

A debt collection agency who act for Telstra has lost their case in the Federal Court following proceedings being commenced by the Australian Competition and Consumer Commission (ACCC) and the Australian Securities and Investments Commission (ASIC).

The proceedings, which commenced in June 2016, highlighted the pressure some agencies apply to collect payment including engaging in misleading, deceptive and unconscionable conduct in it's dealings with 2 particular customers.

The first customer, CT*, who was living in a care facility on a disability support pension, after having suffered 3 strokes, received in excess of 60 demands for payment for a debt of $5,770. The Court found that the agency knew of CT's condition, which left him with the inability to care for himself or readily speak, however called the care facility approximately 40 times and sent approximately 20 demand letters seeking payment. Several times CT was threatended with legal action despite the agency not having any plans to follow through with the threat.

In the other matter a single Victorian mother of three, who worked part time and received a Centrelink payment, was demanded to pay $3,150. It was alleged that the woman was told that legal proceedings would be commenced against her and that a payment default would be recorded. The woman in question promised a payment of 50% of the debt in an attempt to avoid legal proceedings, despite this payment leaving her unable to pay rent and meet her other day-to-day expenses.

The Judgment, which you can read online, also criticises the capitalised use of words in demand letters and the use of “the words 'could' and 'may' would reasonably be read in the light of the prominent heading to the pro forma letter, the terms of which strongly suggest that ACM intended shortly to commence legal proceedings .....".

In a statement to the media the ACCC said that they will be seeking Orders preventing agencies engaging in misleading, deceptive and unconscionable conduct and will be seeking for large fines to be imposed.

Source: itnews - July 2018

* Name noted as per the original Judgment

Cash Converters Fined $650K For Breaching Guidelines

Cash Converters has again found itself in the spotlight for all the wrong reasons with ASIC finding that the company failed to meet regulatory guidelines and breaching the ASIC and ACCC Debt Collection Guidelines.

An ASIC investigation found that the pay day lender routinely breached the frequency of contact guidelines of 3 times per week or less than 10 times a month -

5. Frequency of Contact
(c) Unnecessary or unduly frequent contacts may amount to undue harassment of a debtor. We recommend that you do not contact a debtor more than three times per week, or 10 times per month at most (when contact is actually made, as distinct from attempted contact) and only when it is necessary to do so. This recommendation does not apply to face-to-face contact which is specifically addressed below. 

The investigation also uncovered that a related company, Safrock Finance Corporation (QLD), was also found to have provided incorrect information to a credit reporting agency. The error resulted in 38,500 customer being reported  inaccurate amount owing over a 1 month period. According to ASIC the financier has since worked with Equifax to ensure all incorrect credit listings have been removed.

ASIC has since imposed licence conditions on Cash Converters which includes outsourcing all of their debt recovery to a 3rd party collection agency and must seek consent from ASIC prior to bringing these activities back in-house.

In retribution this time around, Cash Converters has paid $650,000 in community benefits payments to the National Debt Helpline for breaching the Guidelines.

Peter Kell, ASIC Deputy chair, said in a statement to the media, "Consumers expect to be treated fairly and in a manner that complies with consumer protection laws. ASIC expects all financial service providers to have appropriate systems and controls in place to ensure that debt collection practices are consistent with the guidelines. It is also critical that licensees ensure that credit information provided to credit bureaus is accurate."

This is not the first time that Cash Converters has been investigated by ASIC. You may recall that in our May 2017 blog post that Cash Converters were fined and paid $1.35 million in penalties for breaching responsible lending conduct provisions and refunded consumers $10.8 million in fees through a consumer remediation program.

You can download a copy of the ASIC and ACCC Debt Collection Guidelines from their website.

Source: TheAdvisor - May 2018

Phone Book Publisher Fined Over Fake Debt Collection

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

Fair Trading Investigate SEO Company

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

Lawsuit Filed Against Panthera Finance

Debt purchase company, Panthera Finance, is fighting a lawsuit commenced by Consumer Action Law Centre on behalf of Edwina Crawford, an alleged single mother claiming harassment and alleged breaches of the Debt Collection Guidelines.

The lawsuit filed in the Victorian Civil and Administrative Tribunal claims:

• Panthera Finance acted illegally;
• That Ms Crawford was harassed; and
• Panthera Finance made certain misrepresentation of about the consequences of non-payment.

ACM Contact Stroke Victim Over Telsta Debt

ACCC Commences Court Action Against ACM Group

Court action has been commenced against ACM Group Ltd by the Australian Competition and Consumer Commission ("ACCC"). The ACCC allege that ACM engaged in conduct that breached Australian Consumer Law and / or the Australian Securities and Investments Commission Act.

The breaches include:

• Misleading or deceptive conduct
• Harassment and coercion
• Unconscionable conduct in dealings with two consumers

Consumer 1 - A Resident In A Care Facility

Consumer 2 - A Single Parent With Limited Income

Debt Collector chasing debtor for $350 now owes debtor $33k

A debt collector in chasing a debt of $350 had a court Judgment ordered against him in the debtors favour for $33,000 for harassment under the Fair Debt Collection Practice Act.

It is difficult to ascertain the facts of the case as the debt collector did not attend court. The allegations from the debtor included receiving 15 text messages a day, debt collection phone calls after the debt way paid, informing the debtors employer and co-workers about the existence of the debt.

The debt collector has already stated he won't be paying the fine and is not concerned about the associated credit listing the judgment will bring.

Bizarre case of debt collection harassment in the US

In the US, Missouri, in what can only be described as a bizarre case, a debtor made contact with a Creditor. The Creditor was subsequently held responsible for breaching harassment laws under the Fair Debt Collection Practices Act ("FDCPA").

Under the FDCPA, once a debtor advises a Creditor they have engaged a Lawyer, the Creditor or collection agency must only correspond with the Lawyer appointed by the debtor unless there is prior consent.

In this case, the debtor engaged a Lawyer to represent him regarding his debts. Shortly after the Lawyer was engaged, the debtor made a call to the debt collection agency collecting the debt and asked about the debt and advised the debt collection agency that he had retained a Lawyer concerning this debt. The debt collection agency did not terminate the call at this point, but instead asked why the debtor was engaging a Lawyer, to which the debtor responded he had engaged a Lawyer. A payment plan was attempted by the collection agency before the debtor again stated a Lawyer had been engaged. At this point, the debt collection agency asked for the contact details of the Lawyer.

On these facts the debtor brought an action against the debt collection agency in court for engaging in harassing, abusive and unconscionable conduct.

The agency argued that the actions of the debtor initiating the telephone call amounted to consent to discuss the debt with the debtor.

The Court agreed with the debtor. The fact that the debtor initiated the call was not conclusive that the debtor consented and the agency engaged in prohibited conduct.

One could view the actions of the debtor were a deliberate successful attempt to induce the debt collection agency into breach the FDCPA.

Source: United States District Court Eastern District of Missouri Eastern Division.

debt collection field agent tactics in Singapore

In Singapore a collection agency DZ Global has defended the practices of its field agents. A video was uploaded to a website, the Online Citizen, of 3 field agents attending a field call at a debtors home. The field agents threatened the debtor whilst banging on the front door of the debtors property.

The threat made was "If you don't open the door now, I will come back at 8am tomorrow and make sure you can't go out or go to work." The company defended the practices of its agents advising they had acted within the confines of the law and within company procedures.

The collection agency alleges that S$20k was taken from a mentally handicapped person and not used for the purposes it was given, instead the debtor bought luxury goods for personal use, and prior to the video commencing the debtor taunted the field agents.

If this same field call were to be undertaken in Australia, it is very probable that the ACCC and ASIC Guide to debt collection was breached with the actions of the field agents being harassment.