Debt collector warned for likely harassment, coercion, misleading claims

An account director of a debt collection company and the company have both been warned by the Commerce Commission over information given to debtors and for conduct which the Commission considers was likely to be harassment and/or coercion.

The warnings were sent to Twenty Five Station Limited (TFS) which is now in liquidation and John Stuart Campbell who was its Account Director. TFS traded as Law Debt Collection.

The Commerce Commission received a number of complaints about TFS and its operations in South Auckland.

In the Commission’s view, Mr Campbell and TFS were likely to have breached the Fair Trading Act 1986 by providing incorrect information to debtors in connection with debts and listings with credit reference agencies and by engaging in conduct in relation to one person that was likely to be harassment and/or coercion.

Mr Campbell and TFS told debtors:

  • their names would be listed with credit reference agencies such as “National Credit Data Base” and “Credit Reference Association” which do not exist.
  • they had been listed with a credit reference agency when they had not.
  • they were liable for court costs when a court had not awarded any costs.

“The Commission considers that, as a result of Mr Campbell and TFS’s conduct, debtors were likely to have been misled that an adverse credit listing had been lodged against them when it had not and that they had no time to dispute the debt. We consider they were also likely to have been misled about where they could go to check their credit status and whether they were required to pay costs,” said Commission Chair Anna Rawlings.

Mr Campbell and TFS also added debt collection costs to debts when contracts did not allow for that.

Further, in the Commission’s view Mr Campbell and TFS engaged in conduct with one person that was also likely to amount to harassment and/or coercion because of the volume, tone and content of the correspondence, including statements which, in the Commission’s view, were likely to mislead or deceive. That person was told that:

  • he had ignored letters when he had not
  • TFS had listed the debt with a credit reference agency and identified it as not in dispute when the person had disputed the debt
  • if debts were not paid immediately a collector would come to his home or work with a court summons
  • he and his wife would be listed as a “bad payer” with non-existent credit agencies.

As well, some correspondence stated “LAST DATE FOR ACTION” when the date stated was not the last date for action, and it also contained a logo that may have given the impression TFS was connected to the Courts.

“In our view the volume, tone, and content of correspondence with this person was used to intimidate and/or wear him down, so that he paid a debt he disputed. Debt collectors must ensure that their conduct complies with the law and it’s our view that Mr Campbell and TFS did not comply with the law in several ways,” said Ms Rawlings.


Guidance for debt collectors and debtors

The Commission has recently published guidance for debt collectors as well as guidance for debtors.

Warning letters

A warning explains the Commerce Commission’s opinion that the conduct at issue is likely to have breached the law. Only the Courts can decide whether a breach of the law has in fact occurred.

A warning letter is to inform the recipient of the Commission’s view that there has been a likely breach of the law, to suggest a change in the recipient’s behaviour, and to encourage future compliance with the law.

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