The Australian Competition and Consumer Commission has hauled ACM before the Federal Court, accusing the company of engaging in misleading or deceptive conduct, harassment and coercion, and unconscionable conduct, in breach of consumer and corporate laws.
Not long ago the Sydney Morning Herald reported a story about the ACCC taking action against a debt collection Agency who hounded a stroke victim, unable to care for himself, for five years over an unpaid Telstra bill.
Read the full story here…
After suffering three strokes in a day, Greg* lost his courier job and moved into a nursing home, deprived of the ability to care for himself and speak.
But that didn’t stop debt collection giant ACM – aware of his condition and disability support pension – from demanding he immediately pay off his $5770 debt to Telstra on 60 occasions over five years.
During the rare instances the company managed to get him on the phone, he had to utter words such as “stroke”, “no”, “nursing home” and “speech” to get them to understand his situation.
The watchdog’s case is built on the experiences of two vulnerable consumers, one being Greg’s, whose debts to Telstra were purchased by ACM so the company could recover the amounts for a profit.
“It’s vulnerable consumers who are more likely to fall behind payments and companies need to have processes to deal with vulnerable people appropriately and realise there’s some debt you just can’t get back,” said ACCC chairman Rod Sims.
“The alleged conduct by ACM … was in our view contrary to accepted community values and standards of fairness in dealing with consumers.”
Court documents show Telstra sold Greg’s debt to ACM for 6 per cent of its value in 2010.
The ACCC alleges ACM was aware of Greg’s condition; and that he was living in a NSW nursing home and he was on the disability support pension, when they called him 40 times and sent him 20 letters demanding repayment in 2011-15.
ACM issued him “seven day” and “48 hour” demand letters, saying if he didn’t pay his debt, they would launch legal proceedings, despite having no plans to do so.
The ACCC also alleges ACM made similar, empty legal threats to a Victorian mother-of-three, with a part-time secretary job, who was receiving Centrelink benefits and couldn’t afford to pay off her $3150 Telstra debt.
It’s alleged an ACM employee falsely told her they had commenced legal proceedings against her and that, if she didn’t act, a default would be listed on her credit file and she wouldn’t be able to apply for a credit card for up to seven years.
“And I know with three kids, credit is very important, right?” the ACM representative allegedly told the single parent.
A statement from ACM, the largest privately owned debt acquisition firm in Australia, said the experiences of two debtors did not represent that of their 165,000 customers.
“The two matters do not reflect the incremental change management processes ACM has embarked on. By mid-2015, ACM had implemented numerous processes to ensure compliance and improve customer interaction,” the statement said.
“Also in 2015, to assist in positive outcomes for our customers, ACM worked with a consumer advocate to rewrite all staff training material and customer correspondence.”
In 2012, the Federal Court found ACM had harassed and coerced consumers and engaged in ‘widespread’ and ‘systemic’ misleading and deceptive conduct when seeking to recover money, in breach of the ASIC Act.
Mr Sims said it was concerning that despite ASIC’s successful court action, they were still receiving complaints of a similar nature.
ACM purchases debt ledgers from companies such as Telstra and Commonwealth Bank.
An ACCC report last year found Australians were being hounded by debt collectors more than 65 million times a year, in the form of letters, emails, texts and phone calls.
The ACCC is seeking pecuniary penalties, declarations, injunctions, orders for an ACL compliance program, publication orders and costs.
*name has been changed