Released every month our debt collection blog contains news, stories and tips to keep you informed.
In our May 2016 issue of Debt Collection News we reported that an internal oversight by Westpac resulted in a 21 year old student overdrawing her account by $4.6 million.
The Sydney Morning Herald reported on 01/12 that criminal charges against the 21 year old, Christine Jia Xin Lee, have been dropped. Magistrate Lisa Stapleton indicated earlier on in the proceedings that Ms Lee may not have broken any laws at all.
The Department of Public Prosecution dropped the charges after a similar case involving a man withdrawing $2.1 million from ATMs was dismissed by the Court.
In response to the charges being dropped a spokesperson for Westpac said, "Westpac has taken all possible steps to recover its funds, including taking civil action against Ms Lee. The criminal charges against Ms Lee were a matter for the DPP and Police, and we respect their decision.” Ms Lee's lawyer, Hugo Aston, said in a statement, "She is happy it is behind her, and to move on with her life. There was no deception. It’s a very interesting case, and an interesting outcome. It is obviously clear the bank should adopt better policies.”
NSW Police have indicated that they will continue to hold onto a number of items, including luxury handbags, pending the outcome of the civil proceedings commenced by Westpac in which to recover the monies.
5 people in the US have had charges filed against them following their involvement in a local debt collection scheme according to the Ventura County District Attorney's Office.
The 5 people, named as Timothy Burke, Deisi Rivera, Angela Covarrubias, Veronica Ventura and Elizabeth Olvera, were charged with multiple felony counts including money laundering, rand theft, theft from an elder and conspiracy to commit false advertising. Additionally they have been charged with aggravated white-collar crime enhancement of stealing more than US$100,000
The District Attorney allege that Burke and Rivera ran several fraudulent debt collection agencies from 2013 to 2017 where they offered debt collection services to victims where they would collect fees upfront and utilise those fees to pay for their own personal expenses instead of providing a service or repaying Creditors. It is alleged that Ventura joined the scheme in 2015 as the General Manager with Covarrubias and Olvera involved in the management of the scheme since 2016.
Investigations by the District Attorney are continuing in conjunction with the FBI with Burke and Rivera currently in custody in lieu of a US$1.1 million bail, Covarrubias and Olvera are on bail and Ventura is on supervised community release pending their Court date.
Source: VC Star - November 2017
Atlantic DVD, who operated their store out of Semaphore South Australia, have allegedly sold a list of their outstanding debts to a debt collection agency.
The company, which ceased trading after 30 years in business, is allegedly pursuing customer for late payment fees allegedly incurred between 2011 and 2017. Several customers have indicated their disgust to the media including Rebecca Lynch who received a $40 demand for 5 films returned one day late in 2016 with the total fine being $17 and a letter cost of $22. Ms Lynch said in a statement, "That’s the second letter now and I don’t even recognise the titles as being something I would borrow — and as for the fee they chucked on, well, that’s bloody rude".
John Fitzpatrick, another former customer, has taken a more pro-active approach and has contested his $67 fine ($26 in late fees and $41 in fees) by demanding proof of the original agreement and rental payment. He said in a statement, "It’s truly just a game — if it ever went to debtors court, the collectors would need to prove the debt".
To date representatives of both Atlantic DVD and their debt collection agency have not responded for comment.
Source: Adelaide Now - November 2017
A man, allegedly* owning 4 properties in Shoalhaven NSW, has had a debt collector attend his Sydney property for rates that were 5 weeks overdue.
Stuart Cregan claims that he has paid council rates promptly every year for the last 20 years and claims that Shoalhaven Council did not write to him nor call him to remind him to pay the outstanding rates prior to the debt referred to a debt collection agency.
Mr Cregan contacted the media to make others aware of the tactics used by Shoalhaven Council and said in a statement, "I unfortunately missed one set of quarterly rates on one of the four residential properties I am involved with, purely due to a bookkeeping error, a couple of weeks later, thugs on my doorstep. I asked the man what he wanted, he told me to ring a number and pointed to the piece of paper he was holding. I refused and he continued with his spiel. I asked him to identify himself, again no response other than a first name. The conversation became intense. I asked him to leave as he wouldn’t identify himself, he continued with his thug-like spiel and wouldn’t leave until under intense pressure. I assisted him off my property, he advised he would be back. I'm a large person, I didn't back down. What would happen if it was a little old lady, or handicapped person, or my wife, it's just not on."
A spokesperson for Shoalhaven Council said in response, "Council has been outsourcing debt recovery to an external agency for some time. This is common practice for a number of local councils due efficiencies that are provided by these agencies. Council said the agency issues reminder notices before they take further action. Reminder notices are issued by our Debt Recovery Agency using Council letterhead. Then, if the overdue amount has not been paid or a satisfactory payment arrangement made, as per the Debt Recovery Policy, the account is referred to Council’s Debt Recovery Agency for further action."/p>
* Searches that we conducted of NSW LPI did not return any records for Mr Cregan as owning or having an interest in properties located in the Shoalhaven City Council area. Further searches also failed to locate Mr Cregan of being a Director of any company that may have had an interest in any such properties. It may be noted that any such properties may be in the name of other parties
Perth Now are reporting that parents in Western Australia have dodged paying $2.4 million in school fees in 2016-17.
Approximately $1.5 million of the $2.4 million quoted was for compulsory year 11 and year 12 fees for subject charges and extra-curricular activities for all years. A spokesperson for the Education Department said, "These are courses which parents have enrolled their children into, knowing the cost upfront. Payment plans can be arranged to suit individual circumstances so families experiencing difficulty can pay off the course cost over time. If debt collectors are used, under the department’s policy schools must tell them not to refer to legal action or credit agencies in their letters to families."
The Education Department has claimed that the circumstances of each family are taken into consideration with many debts written-off in accordance with legislative requirements.
Approximately 39% of the $2.4 million was for families holding 457 Visas who failed to pay in full or part of the $4,000 enrolment fee for public schools. This fee was introduced in 2015 by the WA State Government to help cope with the influx of children belonging to migrant workers who enrolled in public schools.
The department went on to say that to date 250 families had not made a payment for the 2016 school year while a further 139 had only made partial payments and again reiterated that arrangements could be made for payment of school fees. The spokesperson said that children of 457 Visa holders with unpaid fees were allowed to continue to attend public schools despite non-payment by their parents.
Source: Perth Now - October 2017
Following the inquiry into the "robo-debt" program the Australian Government is refusing to suspend the system while at the same time sending letters to those already impacted, adivsing them that they can ask for their debt to be reviewed.
In June 2017 both the Labor and Greens argued that the system should be put on hold until the system could be drastically overhauled with the Commonwealth Ombudsman initially indicating that approximately 20% of debts issued did not need to be paid back. Those who wanted to challenge the debt have claimed that they had difficulty in contacting Centrelink with the agency reporting that they missed 42 million calls in the last financial year (around 140,000 calls per day).
In a response to the inquiry, which was released on 10/10/17 the Government said it acknowledged that there had been "communication issues" with the robo-debt system that "gave rise to potential confusion on the part of some recipients". A spokesperson for the Government went on to say, "There is no evidence to support the recommendation to put on hold the online system. The government's clear position ... is that it is appropriate to ask people for information when there are differences between their income details held by the Department of Human Services and other third parties such as the Australian Taxation Office."
Greens Senator, Rachel Stewart, who served on the committee, said in a statement, "The people who gave evidence at the inquiry were vulnerable people, whose data had been automatically matched without oversight; people who had been harassed by debt collectors days before Christmas; people living below the poverty line wrongly told they only had a number of weeks to pay back thousands of dollars. We know that this debt collection process impacted on the mental health of many people. This government response shows a government deeply out of touch with people dependent on our social safety net."
The Government have since indicated that those that received an initial letter will now get a further letter advising of the debt and reminding them of their review rights before being contacted by a debt collector, employed by the Department of Human Services, who will also remind them of their review rights.
Source: BuzzFeedNews - October 2017
Equifax, one of the 3 largest credit reporting agencies in the US has revealed that between mid May 2017 and July 2017 that they were subject to a security breach.
The personal data of 143 million US customers was exposed with names, addresses, dates of birth and social security numbers leaked. The initial breach was first reported in March 2017 however during the May 2017 and July 2017 period hackers ransacked vast troves of information. Much remains unknown about the attack with security experts and Equifax now focusing on what the company did or didn't do in the lead up to the attack including their response to the original flaw found by Cisco.
Since the hack more than 11.5 million Americans have signed up for credit monitoring while others have frozen their credit reports with not only Equifax but also their rivals TransUnion and Experian.
Equifax have since disclosed that following the breach approximately 209,000 customers had credit card numbers stolen. Those credit card numbers are likely those who had previously purchased the credit monitoring service provided by Equifax in the hope of securing an additional layer of protection from fraud. Equifax have said in their latest report that it is regularly the target of cyber threats and has made substantial investments in security measures.
The breach is now subject to a federal investigation.
Source: PBS - 3 October 2017
In Compton, a city in the south of California, a repossession has gone dramatically wrong.
Footage posted on Facebook shows a man riding a tow truck bashing at the windows after his car was repossessed. In the video the man can be seen bashing at the window of the tow truck while the vehicle is literally dragged along the road. Footage of the original repossession has not been posted online however reports are that the incident occurred over a stretch of approximately 18 kilometres.
The Sheriff's department said in a statement to the media, "The tow truck driver noticed the owner of the vehicle riding on the back of the tow truck, holding a crow bar, and shattering the tow truck’s rear window".
While the tow truck was damaged no one has been arrested and charged.
In our December 2016 issue we covered in our blog the story of Centrelink issuing $650 million in debt notices. You can read this article here.
While there has been some noise in the local media since we first released this article, information obtained under Freedom of Information from the Administrative Appeals Tribunal ("AAT") indicates that one third of these Centrelink welfare debt recovery cases were appealed and are being overturned by the independent tribunal.
Of the 2,699 appeals lodged between March 2016 and March 2017, 960 debt decisions have been overturned with a further 132 varied. A spokesperson for the tribunal, who asked to remain anonymous said, "There's a lag time with the robo debts specifically … you’re looking at a minimum of six to eight months [until they appear in the tribunal]. We’re all suspecting that there is going to be some kind surge but it hasn’t come through yet."
A debt, according to Centrelink, may be overturned for several reasons including that the debt was calculated incorrectly or pursuing the debt would cause the recipient severe financial hardship. A varied decision can also indicate that the debt was calculated incorrectly or the debt was waived or set aside for the same reasons.
The Australian Council of Social Service's Chief Executive, Cassandra Goldie said, "We do not know how many of these were robo debt cases but our firm view is that, without human involvement in the detection and calculation of debts, mistakes will be made and there is a high risk that people will pay debts they do not owe. The government must only issue a debt notice if it has solid proof that a debt exists and that it is accurate. This is not the case under the robo debt program and is why it must be stopped immediately."
The Department of Human Services however indicated that during the Senate Inquiry that only a small number of the cases heard before the AAT related directly to the automated debt notices within only 106 people having lodged a request for review.
The Border Mail and subcontractors alliance, Subbies United, are reporting that losses are being incurred by subcontractors following non-payment by builders.
Some subcontractors are reporting losses dating back to 2013 with many owed over $10,000 by builders who simply refuse to answer calls demanding payment.
Rob Berry, a consultant to Subbies United, said in a statement, "For a long time the Victorian Building Authority has been the toothless tiger as a regulator. Builders can altogether fall off the planet and you’ve got to take legal action against the company. There’s no middle ground, you’ve got to take legal action or nothing." Mr Berry went on to say, "A lot of subbies wait cap in hand hoping the builder is going to pay. When they do go through the formal process they’ve lost a lot of time waiting and they might be beaten by the clock and when the sums are too big taking legal action can entrench the issue."
While the Victorian State Government established the Building & Construction Industry Security of Payment Act 2002 ("SOP Act") a glance at the flowchart provided by the Security of Payments Act website shows a complicated and lengthy process where it would appear that if precise time-frames are not followed that payment will not be forthcoming, or if amounts are too large, that individuals would need to commence legal proceedings in which to recover their debt.
Chief Executive of Master Builders Association Victoria, Radley de Silva, said, "Master Builders believes that the three months period contained in the security of payments laws is a generally sufficient window for a subcontractor to make a claim, considering that there will still exist traditional avenues to pursue any outstanding payments, such as through the courts."
Mr Berry went on to comment that he believes that a project bank account should be established to circumvent the builders having control of funds as is the standard in most OECD countries.