A Federal Court has heard that one of Australia’s largest debt collection agencies was found to be harassing and misleading debtors in an attempt to recover outstanding debts. Accounts Control Management Services (ACM), which was under investigation by the Australian Securities and Investment Commission (ASIC) was found to have engaged in harassment and widespread and systematic misleading and deceptive conduct in chasing debts, including “rude, condescending and vicious” calls and threats of imprisonment. if you have an outstanding account  the Creditor may have on-sold the debt to a debt collector– and it is this company which places a default on your credit rating. In dealing with a debt collection agency, it’s important to know your rights, and just what is appropriate behaviour from debt collectors when they are attempting to recover debts from you.

By Graham Doessel, Founder and CEO of MyCRA Credit Rating Repairs and www.fixmybadcredit.com.au.

ASIC presented to the court 96 phone calls and the ACM debt collector training manual, which the court found and ruled in its October 26 2012 decision “made it very plain that debtors should be threatened with litigation”. ACM’s clients include Telstra, the National Australia Bank and the Commonwealth Bank.

Yesterday Smart Company featured the story ‘Why you need to be careful about outsourcing debt collection: Court finds agency harassed and misled debtors’ by Cara Waters. Here is an excerpt from this story:

The court found ACM had engaged in repeated threats to inform a debtor’s husband about her debt in circumstances where her husband did not know about it and ACM knew that she did not want him to know about her debt.

The debt collection agency also made threats to call a debtor’s friends and employer until the debt was repaid, made threats to have Sheriff’s officers attend a debtor’s home or place of employment in a marked car and made telephone calls to neighbours and friends of a debtor.

ACM made a threat to issue a warrant for a debtor’s arrest and a threat to take action that would result in a debtor being unable to travel overseas.

The court was scathing in its description of the tone of one of ACM’s supervisors as “rude, condescending and vicious, no description of this call (and some of her later efforts) can adequately capture the offensiveness involved”.

It found ACM persistently misled debtors by implying that it was a firm which specialised in commencing legal proceedings for the recovery of debts and that it frequently commenced legal proceedings.

“The constant references to litigation were not an accident. They were the intended outcome of a house manual which promoted threatening litigation as a means to achieving recoveries,” the court found.

“The operators were told to make references to legal proceedings and lawyers and it is only natural that this is what they did.”

The court awarded declarations of misconduct and injunctive relief which restrain ACM from future similar conduct.

ASIC Commissioner Peter Kell said ASIC will not tolerate behaviour designed to intimidate and mislead debtors.

“This includes cases where the debtor’s family, friends and associates are also threatened with unreasonable behaviour,” Kell said.

…SmartCompany contacted ACM but did not receive a response before publication.

What are the rules for debt collection agencies?

If you are unsure whether the debt collector you are dealing with is behaving according to the law, you can download ASIC’s brochure (PDF) ‘Debt Collection: Your Rights’ which outlines the general rules debt collectors need to follow when attempting to recover a debt. In this document ASIC has been specific as to what is not acceptable behaviour by a debt collector – so if you are not sure if a debt collector has been behaving fairly, you can check this list or contact ASIC or the Australian Competition and Consumer Commission (ACCC).

Remember, at no time is extreme conduct such as force, trespass, or intimidation acceptable behaviour, and ASIC also considers harassment, verbal abuse, and an overbearing manner to be unreasonable contact.

ASIC’s key points for dealing with debt collectors are:

1. A debt may be collected by a creditor themselves or by someone acting on their behalf, like a debt collector.

2. If you are contacted by a debt collector, be polite and cooperative. In turn, you should expect to be treated in a professional and courteous manner.

3. When, where and how a debt collector can contact you is regulated by guidelines designed to ensure you are not harassed.

4. As a guide, a debt collector should only contact you when it is necessary to do so and for a reasonable purpose.

5. If you feel a debt collector has breached the guidelines, and the debt is in relation to a financial service, contact ASIC to make a complaint.

It is important to know that debt collectors should not make false or misleading statements to you about your debts and the ramifications of it:

Debt collectors must not:

• make false statements about the amount you owe, or the status of your debt, for example:

– say you owe a debt when you do not
– say the amount you owe is greater than it is
– say that you have no choice but to pay a debt if you have a valid defence against payment, unless there has been a court judgment (if you are disputing a debt, a debt collector should stop collection activity until any reasonable request for information—such as giving you copies of accounts and contracts – has been met, and the debt has been confirmed)
– say that your spouse or partner must pay your debt when they have no legal liability to do so
– say that there has been a court judgment if this is not true

• make false statements about what will happen if the debt is not paid, or what the debt collector intends to do, for example:

– say that unpaid debts are a criminal offence involving the police or possibly jail (being in debt is not a crime!)
– say that your children can be taken away from you (this is completely false)
– say that you will be made bankrupt immediately, even though there has been no court judgment or bankruptcy proceedings started
– say that your goods (for example, your car) will be seized and sold immediately, even though there is no mortgage over the goods and no court judgment (if there is a mortgage over the goods, generally you must be given notice and 30 days to pay first)
– say that your wages will be garnished (taken), even though a court order to allow this has not been obtained
– say that your credit rating will be damaged, if that is not true (privacy laws limit the type of information that a credit reporting agency can hold on file, how long it can be listed on file, and who can access the information)

• use other misleading appearances or actions, for example:

– send letters demanding payment that are designed to look like court documents
– pretend to be (or pretend to act for) a solicitor, court or government body.

If you think that a debt collector has breached the ASIC/ACCC Debt Collection Guidelines, call ASIC’s Infoline on 1300 300 630 or email Infoline@asic.gov.au, or visit www.asic.gov.au/complain to make a complaint online.

If you need help with disputing a credit listing, either from a debt collection agency or Creditor then contact you should consider credit repair. A credit repairer can conduct an audit-like investigation on your case. MyCRA Credit Rating Repairs can give you the best chance of having the disputed credit listing removed by fighting your case on your behalf and requesting that if a credit listing has been proven to be listed unlawfully, it should be removed from your credit rating.

Contact a Credit Repair Advisor for more information call tollfree 1300 667 218 or visit the MyCRA Credit Rating Repairs website for more information www.mycra.com.au.

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