Control Your Creditors
Sydney Morning Herald
Saturday December 12, 1998
PETER LAVELLE reports on how to handle to debt collector.
If you have an outstanding unpaid debt, there's a good chance that you have been - or will be - harassed about it. But borrower's rights against excessive harassment have been strengthened by the recent release of draft guidelines setting out what is acceptable - and what isn't.
According to Michael Funston, a solicitor and policy office at the Consumer Credit Legal Centre, there is always an element of coercion in collecting a debt. Some collection agencies use acceptable methods to collect a debt, but many do not - going well beyond what is acceptable or even legal.
According to Funston, a letter of demand or a phone call to discuss an unpaid account during reasonable hours is acceptable. A creditor threatening to send an unpaid bill to a solicitor or mercantile agent, or a solicitor threatening legal action on behalf of their client, is also acceptable.
"These might be stressful occurrences, but they're not harassment," says Funston.
But he says in about 20 to 25 per cent of inquiries to credit counselling services about unpaid debts, consumers complain they have been unreasonably harassed.
Complaints include receiving repeated phone calls, calls at unreasonable hours, after hours visits, threats to disclose information to third parties such as employers, and misleading threats about the future consequences of not paying.
In some cases creditors have engaged in behaviour that is clearly criminal, such as using threatening language, violence or threats of violence, refusing to leave premises after being ordered to, or using documents made up to look like court documents.
Harassment used to be confined to lower income and migrant groups, who creditors believed were less likely to be aware of their rights and less likely to go to court. But in recent years the net has widened to include middle-class groups, says Funston.
Unfortunately, debtors who are harassed have few options if they want to do something about it.
Unlike for example the banking industry, which has a detailed Code of Conduct and an industry dispute resolution scheme (the Australian Banking Ombudsman), debt collection agencies don't have such mechanisms and there is no industry ombudsman to appeal to.
It is possible to bring an action for harassment in the courts - but to date, this has not been easy.
Section 60 of the Trade Practices Act and Section 55 of the Fair Trading Act specifically prohibit a corporation or other person from using physical force, "undue" harassment or coercion in relation to the payment for goods and services to the customer.
However, both pieces of legislation are hazy about what exactly constitutes undue harassment. Furthermore, there has never been a ruling by the courts as to what harassment means in practice. This leaves creditors with a measure of protection and puts the alleged victim of harassment in an uncertain position in any legal proceedings.
Moreover, people who are victims of harassment will find the court option prohibitively expensive. "They don't have the money, which is usually the problem in the first place," says Funston.
The Australian Competition and Consumer Commission hopes to change the landscape with its recent release of a draft set of guidelines defining what is undue harassment.
According to the deputy chairman of the ACCC, Allan Asher, the ACCC believes the industry and the courts will benefit from the more concise definitions.
Broadly speaking, the draft guidelines define harassment as "pestering and plaguing with repeated requests or demands that cause distress and anxiety" - taking into account the particular needs of those who are old, ill, or don't speak English.
Both the ACCC and the NSW Department of Fair Trading are welcoming inquiries from consumers who believe they are the victims of harassment - and will prosecute offending debtors where appropriate. So consumers should consider them an early port of call.
But probably the most effective means of stopping harassment is to make it clear you know your rights. If they know you are prepared to make a complaint, they will usually cease the harassment - especially of you make it clear you have had legal advice, says Funston.
If harassment continues or becomes a problem:
* Keep a record of what happened and when - if subject to verbal abuse, make precise notes as soon as possible of exactly what was said.
Keep any correspondence.
* Get advice sooner rather than later.
If there's any violence or threat of it, or if a debt collector refuses to leave the premises after you have ordered them to leave, or keeps coming back, call the police.
The ACCC's draft guidelines include the following as examples of harassment:
* Phone calls or visits between 9pm and 8am (unless agreed to).
* Phone calls or visits to your workplace where the creditor has been asked not to call.
* Use of or threat of violence to persons or property.
* Misrepresentation of the consequences of non-payment.
* Threat of publication in a "default" list.
* Disclosing information to third parties (such as an employer, neighbour or government or welfare agencies).
* Continuing to contact you personally after being asked to do so only through your legal representative or other adviser.
* Use of abusive, threatening or obscene language.
* Use of documents made up to look like court documents.
* Lenders misrepresenting themselves as court officials or solicitors.
Consumer Credit Legal Centre 9212 4111 ACCC 9230 9133 NSW Department of
Fair Trading 13 3220
© 1998 Sydney Morning Herald
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