Debt collection guideline: for collectors and creditors

1. Making contact with a debtor

  1. Under the privacy laws, you have obligations to protect the privacy of debtors.4 When making direct contact, your first task must always be to ensure the person you are dealing with is the debtor. This must be done every time you make contact before you divulge any information about the debt, the process for its recovery or before providing any other confidential information.
  2. If you consider it necessary to divulge your identity as a debt collector before being sure that you are dealing with the debtor (for example, if requested by the person you are dealing with), then you may do so if that would not have the effect of divulging that the debtor has a debt. Particular care should be taken when speaking to a person at a debtor’s workplace.

Example: Calling from or on behalf of a bank

If you are calling from or on behalf of a bank then it is unlikely that revealing the name of the bank would result in you divulging that the debtor has a debt. Banks commonly provide a range of services and the person you are dealing with will not be able to deduce that you are currently engaging in debt collection activities and that the debtor has a debt.

Example: Calling from or on behalf of an organisation with a descriptive name

If you are calling from or on behalf of an organisation whose name is more revealing or descriptive in relation to debt collection practices (for example, ‘Collections R Us’) then revealing the name of the organisation is likely to divulge the existence of a debt.

  1. The limits on disclosing information to third parties apply to the debtor’s spouse, partner and/or family as much as they apply to other third parties.5
  2. Having established the debtor’s identity, you should then identify who you are, who you work for and explain the purpose of the contact. Failing to clearly identify who is calling and the purpose of the call will most likely confuse the debtor and may lead to the debtor avoiding subsequent calls.
  3. If you elect to use emerging technology to attempt to or make contact with the debtor, you should carefully consider the particular channel and its potential audience. It may be acceptable to attempt contact via emerging technology provided:
    • you have a reasonable belief that contact will be with the debtor
    • you have a reasonable belief that the channel is not shared with other parties (for example, a shared work email address or joint social media account).
  4. You should avoid contacting the debtor via a certain channel (whether it is an emerging technology or a more traditional channel of communication) if:
    • the debtor has specifically requested to be contacted through an alternate channel of communication, or
    • the debtor specifically requested that this particular channel not be used.
  5. When you make initial contact, you should also provide the debtor with basic information about the debt, including the name of the creditor and any assignee of the debt, details of the account and the amount claimed. A debtor may request further information or documentation relating to the debt (see part 2, section 11, Providing information and documents).
  6. If the debtor communicates with the collector through the collector’s non-preferred channel of communication (for example, written correspondence), then the collector should not ignore this correspondence and should attempt to contact the debtor via the same channel. We also recommend that all written correspondence you send to debtors includes your contact details such as contact phone number, postal address and email address.
  7. Do not misrepresent your identity in any way—for example, do not falsely state or imply that you are or work for a solicitor or that you are a court, government official or independent complaints handling body.

CASE STUDY

A company implied to debtors that it was a firm which specialised in commencing legal proceedings for the recovery of debt, that it frequently commenced such proceedings, and that the particular matter had been referred to the company’s lawyers for the purpose of commencing legal proceedings, when none of these implications were correct.

The court found that the company persistently engaged in misleading or deceptive conduct by making such implications.

ASIC v Accounts Control Management Services Pty Ltd [2012] FCA 1164

CASE STUDY

A company was found to have engaged in misleading and deceptive conduct, unconscionable conduct and coercion when attempting to obtain payment for mobile phone services. The company created a fake complaints handling organisation to deceive debtors into believing their disputes about liability were being assessed by an independent body when neither that body nor those activities existed. The company then contacted debtors under the false pretence of a fictitious debt collection agency to induce debtors to pay the alleged debts.

The court found this conduct to be unconscionable and that the company used undue coercion in its dealings with debtors. Several of the company’s employees were also found to have been knowingly concerned and personally liable for the contravening conduct.

ACCC v Excite Mobile Pty Ltd [2013] FCA 350

  1. On first contact if the debtor denies liability for the debt or raises an issue indicating a dispute about the debt, you should also take the steps referred to in part 2, section 13, If liability is disputed.
  2. If a debtor advises that they cannot afford to repay the debt then you are entitled to make reasonable enquiries into their financial position to determine whether the debtor is able to make meaningful and sustainable repayments. If it is determined that they cannot make such repayments then you may suggest that the debtor considers seeking the advice of a financial counsellor. If the debtor demonstrates willingness and intention to do so then you should not contact them until after a reasonable time has passed, allowing them to obtain advice so that they may better understand their options.

4For information on privacy issues, see part 2, section 8, Privacy obligations to the debtor and third parties.

5For authorised representatives, see part 2, section 9, When a debtor is represented.

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