Once upon a time in the land of his irresponsible student youth, the author admits that upon receiving his first ever shiny credit card, he did incur debts that he couldn’t pay back with speed. And so began the relentless chase by the ‘friendly’ credit recovery business. Day and night for weeks on end the phone calls and angry letters (this was pre email folks) flooded in threatening ‘immediate’ legal action if he did not find the money and pronto. After several weeks of intimidation the misery merchants upped the ante and started to appear on the young fella’s doorstep even warning his flatmate of the fate that would await him.
Damn that holiday in Cairns and those brand new sneakers… that shiny plastic just made it feel so easy at the time.
Looking back on this terrifying experience, with all its warnings and terse language it left very little room for flexibility and negotiation. Is it still an acceptable approach in the eyes of the law?
For those who have been put in a similar situation, you will be relieved to know that there is now much more civil approach required by debt collectors which is enforced by the ACCC.
The ACCC notes that: “The need for collection activity and harassment will be greatly reduced when debtors act promptly and responsibly, and collectors are flexible, fair and realistic.”
And it’s true that (aside from wayward youth), many people default on their debts because of circumstances beyond their control, such as unemployment, illness or family breakdown. Most people are honest and want to meet their commitments if given a reasonable opportunity to do so. The ACCC, and indeed ASIC, now actively encourage flexibility on the part of creditors and collectors.
Some of this flexibility includes recognising debtors who are vulnerable and experiencing financial hardship, and recognising that debtors may have a number of debts owing to different creditors. A flexible approach involves making meaningful and sustainable payment arrangements that reasonably take into account a debtor’s ongoing living expenses to enable them to live in basic comfort and prevent impoverishment or humiliation. If your in this situation make sure any negotiation with a debt collection service, bank or utility company doesn’t leave you in a precarious situation where you’re struggling to survive.
Your Right To Privacy
Under our privacy laws, debt collectors have obligations to protect the privacy of anyone who owes them money. These days the situation I faced of having people turn up on my doorstep warning others about my impending gloom is just not on. The same applies to phone calls to third parties letting them know about your debt.
A debt collection service’s first task when contacting is to to ensure that the person they are dealing with is the actual debtor. This must be done every time they make contact before you divulge any information about the debt, the process for its recovery or before providing any other confidential information. So if your flatmate, work colleague, or mum are being told about your debt you can make a complaint to the ACCC
Contact with a debtor must also be made at a reasonable hour, taking into account your circumstances and reasonable wishes. The current guidelines for reasonable contact times are:
Contact by telephone: Monday to Friday 7.30am -9pm
Weekends 9 am to 8 pm
National public holidays – no contact
The same time frames apply to face to face contact.
And if you feel they are engaging in unnecessary or unduly frequent contacts then it is undue harassment and can also be flagged with the ACCC. Current guidelines are that debt collectors not contact a debtor more than three times per week, or 10 times per month at most. This also includes when they ring and don’t leave a message.
Under consumer protection law, any frequent contact designed to wear down or exhaust a debtor, or likely to have this effect, is ‘undue harassment’ and must be avoided. For example, this is particularly likely if a debt collector makes a number of phone calls or other contacts in rapid succession.
There are also legal obligations under the Privacy Act 1988 (Cth) which are designed to protect your personal information. For example, obtaining a debtor’s contact details from your employer is collecting their personal information and is not allowed. Telling your neighbour the reason for trying to find you (a debt) will also disclose personal information about you and is also not allowed.
When It Isn’t Your Debt
If you have have already confirmed your identity and liability they can continue to pursue you. However, if you disputed that the debt is yours or that it never occurred or has already been paid any collection activity (including credit report listing) must be suspended.
If any collection activity is continued without properly investigating claims that a debt is not owed, the collector is potentially breaching the law.
Reasonable steps must also be taken by a debt collector to ensure that you are the alleged debtor. If your identity as the debtor cannot be established with sufficient certainty (because they deny their identity and you do not have any other supporting evidence to the contrary) all contact with that person should cease. Failure by a collector to do so may risk breaching the Privacy Act. You should also ask for a letter from them confirming the collecting has ceased
It is also misleading for debt collectors to state or imply that you must prove you are not liable for the debt. In legal proceedings, proof of the debt ALWAYS lies with the person alleging the debt (the collection agency).
How To Resolve A Dispute
Many industries (including telecommunications companies, utility suppliers and financial services businesses) belong to independent external dispute resolution schemes.
The ACCC and ASIC have always supported the role played by these schemes in resolving consumer complaints and disputes when these are unable to be resolved through the creditor or debt collector’s internal dispute resolution processes.
So if it’s become a nightmare dealing with tell them you want to have the matter resolved by an independent dispute resolution service
Still getting nowhere with a collector or feel their behaviour is out of hand? Then make a complaint or at least contact the ACCC to discuss further options HERE.
And never put up with threatening calls (or letters) which run off a script like this which have been shown by the court to constitute misleading and deceptive behaviour and undue harassment under the Australian Consumer Law :
‘Mr/Mrs/Ms. (Surname), the reason for my call to you today is a courtesy call due to the fact that I have received your physical file this morning from our solicitors. I have unfortunately been requested by our solicitors to put forward a final recommendation in reference to the outstanding amount of $(Balance) and will need to finalise my recommendation by no later than (x)
This debt collection agency manual then encouraged collections officers to make the strong suggestion that lawyers had already been involved in the account with phrases such as:
• I have received strict instructions from my solicitor, to proceed with litigation…
• I don’t even know where your matter is up to as our solicitors have you…
• I have just come out of a meeting with the solicitor with respect to three matters unfortunately one was yours…
• By tomorrow 3 pm this account will accumulate $350.00 worth of legal fees…
• Your account has been brought from the solicitor’s office and they are expecting a response from me as to proceed with litigation at 2.30 pm this afternoon…
• Just a reminder that our solicitors have given you one last chance to settle this account…
The court found that there was no lawyer involved at all and the sole intention of this “script” was to scare the willies out of any alleged debtor. What a bloody cheek and the collection agency was suitably punished by the court!
Don’t forget to check out more of your basic consumer rights HERE.