Debt collection practices reviewed

The ACCC is continuing its policy of seeking to obtain enforceable out of court settlements rather than pursue lengthy court actions. ACCC’s latest announcement deals with its settlement with Alliance Factoring over its debt collection procedures.

The ACCC was concerned that
Alliance had engaged in misleading and deceptive conduct and undue
harassment and coercion in relation to its debt collection practices in
attempting to recover Telstra debts it purchased in 2002 and 2003.

Alliance has agreed to:

  • establish a 1300 hotline for 12 months in which complainants can
    lodge a dispute in relation to money paid to Alliance where the
    complainant claims the money was not owed; and/or disputes liability;
    or where a default listing has resulted from debt which the complainant
    claims was not owed.
    Where Alliance is reasonably satisfied a debt was not owed it will:

    • refund the money paid;
    • remove the default listing; and
    • reimburse the alleged debtor’s legal costs.
  • Alliance will advertise this process in all metropolitan
    newspapers. In addition, Alliance will advise key financial advisers
    and State Fair Trading offices of this process.

Alliance has also agreed to:

  • sponsor a two day forum for the debt collection industry
  • review its existing compliance program/implement a trade practices law compliance program
  • review its complaints handling procedure
  • review its standard form letters
  • review of call guides
  • produce a written policy for handling of bankrupt debts, and
  • cause an independent review of its compliance program, once a year for three years.

It appeared the conduct of concern arose from a number of factors, including:

  • the age of some of the debts and the level of information provided
    to alleged debtors, making it difficult for them to determine whether
    the debt was theirs, and/or whether the debt had been paid or otherwise
    dealt with
  • Alliance’s systems were also unable to readily and accurately
    determine whether particular debts had been the subject of bankruptcy
    proceedings or whether legal proceedings to recover the alleged debt
    may have become statute barred, and
  • alleged debtors had difficulty in resolving disputes with Alliance because of a lack of clear complaints handling procedures.

Complaints received included allegations that alleged debtors were
harassed by the frequency with which Alliance contacted them by mail,
telephone and/or text message (SMS); contacted alleged debtors at work
when they had requested Alliance not do so; and used threatening and on
some occasions abusive language.

The ACCC also considered Alliance may have inappropriately listed
debts that were in dispute with a credit reporting agency. In some
cases it appears Alliance indicated that an alleged debt would be
listed as a default on the consumer’s credit file unless the alleged
debt was paid when, in some cases, the debt had already been listed as
a default.

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