08 July 2014

Debt Collection

The Australian Competition and Consumer Commission (ACCC) and the Australian Securities and Investments Commission (ASIC) have launched an updated version of their Debt collection guideline: for collectors and creditors publication, revised following "extensive consultation with key industry and consumer representatives to provide enhanced guidance to anyone involved in debt collection". 

The ACCC and ASIC have had joint responsibility since 2002 for administering consumer protection legislation in relation to "the debt collection industry", i.e. under the Australian Securities & Investments Commission Act 2001 (Cth) mirroring provisions of the Australian Consumer Law (ACL).

In 2012 the Federal Court of Australia, in Australian Securities and Investments Commission v Accounts Control Management Services Pty Ltd [2012] FCA 1164, found one of Australia’s largest debt collection companies had harassed and coerced debtors and engaged in 'widespread' and 'systemic' misleading and deceptive conduct when recovering money. During the following year the ACCC prosecuted a company for setting up a fake complaints-handling organisation to give debtors the false impression that disputes about liability were being assessed by an independent arbitrator. The Federal Court ordered Excite Mobile to pay a penalty of $455,000, with the company’s directors ordered to pay penalties totaling $100,000.

 The guideline has been updated to reflect the introduction of the ACL in 2011, the National Consumer Credit Protection Act 2009 (Cth) and new privacy laws and principles. It "incorporates recent court outcomes and practical examples to assist creditors, collectors and debtors in areas that have caused concern".

The ACCC indicates that the Guideline offers practical guidance about:
  • when it is appropriate to contact a debtor, including what constitutes contact and reasonable contact hours, methods or frequency of contact 
  • how the need for collection activity will be greatly reduced when debtors act promptly and responsibly, and collectors are flexible, fair and realistic 
  • new communication technologies developed since the initial publication, including the use of social media platforms and auto dialers, and the potential pitfalls to avoid in using such technologies. 
The ACCC and ASIC encourage businesses to incorporate the recommendations of this guideline into their arrangements with agents and assignees.