Case note: misleading or deceptive conduct by debt collectors

In Australian Competition and Consumer Commission v ACM Group Limited (No 2) [2018] FCA 1115 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 Telstra to ACM for debt recovery.

ACM is a debt collector which purchases debts from other entities. ACM’s representatives are engaged in recovering these acquired debts. This is usually done by telephone calls being made to the debtor by ACM’s representatives, who generally operate from a call centre, in this case, one located in the Philippines. ACM also sends various different types of letters to debtors, demanding payment of the acquired debts.

A preliminary issue was whether the correct plaintiff was ASIC under the ASIC Act or the ACCC under the ACL.

The Court concluded that as the underlying contracts were with Telstra and were for the provision of telecommunication services the conduct in question is not conduct in relation to or in connection with a financial service so as to attract the counterpart provisions in the ASIC Act. Unlike the provision of credit card accounts and personal loan facilities, the Telstra Services are not “financial services” within any of the meanings of that concept in s 12BAB(1) of the ASIC Act, including paragraph (g). The Court found that that the relevant provisions in the proceedings are those in the ACL and not the ASIC Act.

Background facts

One consumer suffered from a stroke and was a resident of a care facility.
ACM was given information about the consumer’s health, condition, location, financial position and welfare payments.
An entry was made in the consumer’s file to the effect that the telephone number listed on file for him should not be called.

On about 40 occasions during 2011 to 2014, ACM representatives telephoned the care facility where the consumer resided.
In the period between 29 April 2011 and 12 June 2015, ACM sent 20 letters to CT:
(a) some of the letters were entitled “Final Notice” and stated that if the balance owing was not paid, legal proceedings “could be commenced” and that ACM “may forward your file to [its] solicitors”;

(b) some of the letters were entitled “Notice of Intention to Commence Legal Proceedings” and stated amongst other things that, if the balance owing was not paid, legal proceedings “could be commenced” and ACM “may forward your file to [its] solicitors”;

(c) some of the letters were entitled “Urgent Notice” and stated amongst other things that, if the balance owing was not paid, legal proceedings “may commence” and that ACM “may forward your account to [its] solicitors”; and

(d) some of the letters were entitled “48 Hour Demand” and stated amongst other things that, “We recommend that you make immediate payment to avoid legal proceedings which may commence 48 hours from the date of this notice” and “legal proceedings through our solicitors may be commenced without further notice”.

The trial judge concluded:

Finally, on the basis of all the evidence before the Court, I am comfortably satisfied that ACM’s multiple telephone calls to the care facility, coupled with the number and content of its correspondence to CT, was calculated to intimidate or demoralise CT or, alternatively, to tire him out or exhaust him….
For all these reasons, it is concluded that the relevant conduct by and on behalf of ACM involves undue harassment and was in contravention of s 50(1)(b) of the ACL, which conduct related to CT’s payment for the Telstra services.
Having regard to the general principles summarised above and taking into account inter alia the non-exhaustive matters set out in s 22 of the ACL, I find … that ACL’s pleaded conduct was unconscionable within the meaning of s 21 of the ACL.

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