Case note: decision on penalty for misleading, harassing, coercive and unconscionable pursuit of unpaid debts

In Australian Competition and Consumer Commission v ACM Group Limited (No 3) [2018] FCA 2059 the Federal Court gave its decision on, and the reasons for, the penalty for ACM Group misleading, harassing and coercing two vulnerable consumers for payment of unpaid debts. Background.

The Federal Court ordered ACM Group Ltd to pay a total of $750,000 in penalties, consisting of one penalty of $500,000 for one consumer and $250,000 for the other.

Between 2011 and 2015, ACM pursued the two consumers, one who had suffered from a stroke and was resident in a care facility and the other a single parent with limited income, for unpaid mobile services debt which ACM purchased from Telstra.

ACM represented to the consumers in multiple letters of demand that it intended shortly to commence legal proceedings against a debtor to recover its debt it if was not paid, when it did not intend to do so.

ACM also made repeated telephone calls to the care facility where a debtor resided, in an attempt to recover the debt.

The Federal Court also:

  • granted injunctions restraining ACM from from engaging in the misleading and deceptive conduct, from using undue harassment of debtors, from using coercion of debtors and from engaging in conduct that is unconscionable;
  • directed ACM to prominently publish a prescribed notice on its internet homepage for a period of six months;
  • directed ACM to establish a Compliance Program.

ACM’s financial position

Justice Griffiths observed:

“…I accept ACM’s submission that if a pecuniary penalty in the range sought by the ACCC was imposed, it may result in ACM’s insolvency, particularly taking into account the additional liability which it will have in bearing the ACCC’s reasonable costs of the proceeding. I do not consider, however, that these matters attract much weight. As the ACCC correctly pointed out, ACM’s capacity to pay is of limited relevance. In some cases the imposition of a penalty the appropriateness of which has been arrived at by reference to all relevant factors may have the likely consequence that the contravener will become insolvent. This possibility should not prevent the Court from doing its duty. Otherwise, the important object of general deterrence will be undermined…”.

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