The Federal Court has found one of Australia’s largest debt collection firms, ACM Group Ltd, engaged in misleading or deceptive conduct, harassment and coercion, and unconscionable conduct in its dealings with two vulnerable consumers.
ACM’s conduct was found to be in contravention of the Australian Consumer Law.
The ACCC brought the action against ACM in respect of its conduct between 2011 and 2015 in pursuing two vulnerable customers who had defaulted on their phone bills. Their debts had been on-sold by their service provider to ACM for debt recovery.
“The ACCC and ASIC have done extensive work to improve debt collection practices,” ACCC Commissioner Sarah Court said.
“Lower-income groups suffer greater stress because of debt collection practices and have limited access to legal support, while creditors are using improper ways to escalate disputes.”
“This conduct by ACM was particularly egregious, as it included ongoing harassment of a care facility resident who had difficulty communicating after suffering multiple strokes, as well as a Centrelink recipient who was falsely told their credit would be affected for up to seven years if they failed to pay immediately,” Ms Court said.
“ACM was found to have made empty threats to litigate against both customers despite knowing they had no means, or only limited means, to repay.”
“One of the ACCC’s enduring enforcement priorities is taking action against conduct that impacts disadvantaged or vulnerable consumers,” Ms Court said.
In his judgment, Griffiths J rejected a number of explanations of why ACM had contacted one of the consumers 34 times and found that conduct amounted to undue harassment and coercion.
Griffiths J also found that the multiple telephone calls, coupled with the number and content of its correspondence was calculated to intimidate or demoralise the consumer.
Griffiths J stated that “ACM cannot justify its conduct on the basis that it required verification of information about [the] medical or financial circumstances when ACM itself did not take reasonable steps to contact people who may have been in a position to provide such verification”.
The alleged conduct occurred between 2011–2015 in relation to one consumer, a resident in a care facility, and in September 2014 in relation to the other consumer, a single parent with a limited income. In each case, the debt being pursued had been sold to ACM Group by Telstra.
In 2012, in a case brought by ASIC, the Federal Court found that ACM Group had harassed and coerced consumers and engaged in ‘widespread’ and ‘systemic’ misleading and deceptive conduct when seeking to recover money.
In December 2013, the ACCC released ‘Dealing with debt collectors: Your rights and responsibilities’, a guide that helps consumers in trouble with debt understand their options and how to deal with debt collectors and creditors.
In July 2014, the ACCC and ASIC released updated guidelines for debt collection firms regarding their contact with consumers and compliance with the law. The guidelines encourage debt collectors to be flexible, fair and realistic and to recognise debtors who are vulnerable. The industry association for debt buyers, the Australian Collectors & Debt Buyers Association, required its members to accept these guidelines in March 2016.
In 2015, the ACCC released a report into the Australian debt collection industry.
Both the ACCC and ASIC are responsible for consumer protection in the debt collection industry. The two agencies work closely and in this case ASIC delegated its powers to the ACCC to pursue this action.