Debt collection guideline: for collectors and creditors

18. Conduct towards family members and other third parties

  1. You must not try to pressure a debtor by misleading, harassing, threatening or putting pressure on a debtor’s spouse or partner, a member of a debtor’s family (especially a child) or other third parties such as authorised representatives.
  2. All communication with third parties, including members of a debtor’s family, must be consistent with your privacy obligations to the debtor and the third party as set out in part 2, section 8, Privacy obligations to the debtor and third parties.

CASE STUDY

A company threatened to call neighbours and friends of the debtor with the expectation that they would inform the debtor or the debtor’s husband that the company had contacted them.

The court found that contacting the debtor’s neighbour and asking him to pass a message to the debtor’s husband, as opposed to the debtor, was a distinctly unsavoury tactic. It was found to amount to undue harassment and coercion. The court found that this conduct carried with it the implicit suggestion that such exposures might be expected in the future.

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

  1. A debtor’s family and third parties should be treated with courtesy and respect. In most circumstances, it is likely that the third party is unaware of the debt and may find the contact distressing (particularly in the case of family members).
  2. You might breach Commonwealth consumer protection laws if, in communicating with a third party, you:
    • suggest or imply that the third party is liable for the debt when that person has no legal obligation to pay
    • suggest or imply that the third party should try and persuade the debtor to pay the debt, or that the third party should themselves pay the debt
    • put pressure on the debtor indirectly by involving the third party
    • embarrass or distress the debtor.
  3. When it is appropriate to communicate with a third party, do so by telephone or other non-intrusive means wherever possible.64
  4. Only visit a third party at their home or other location when no other means of making contact is available, for example, when you only have, or can only reasonably obtain, an address.
  5. Attempting to get information about a debtor from a third party under false pretences, for example, by pretending to be an associate or friend of the debtor, constitutes misleading or deceptive conduct and is against the law.

CASE STUDY

A company was eliciting confidential information about the debtor from the debtor’s employer under false pretences by making a statement which was knowingly false, namely, that the call was for the purpose of processing a ‘credit application’.

The court declared that the company had engaged in misleading or deceptive conduct and undue harassment and coercion.

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

  1. A third party is not obliged to give you information, nor agree to leave a message for a debtor, or otherwise help you. If a third party indicates they do not want to help you—however, unreasonable that refusal may seem to you—stop contacting the third party.

Communication with the debtor’s child

  1. Attempting to pressure a debtor by instigating unauthorised communication with the debtor’s child, or by making threats about the debtor’s child (for example, threatening to report the debtor to the family welfare authorities) will constitute undue harassment or coercion or unconscionable conduct within the meaning of the consumer protection laws.
  2. Do not communicate with a debtor’s child (under the age of 18) about a debt, unless:
    • communication with that child is specifically authorised and initiated by the debtor; or the debtor, on their own initiative, asks the child to act as a translator
    • you reasonably believe the child is willing and able to act as a translator or other intermediary
    • you reasonably believe that the child has not been coerced in any way by the debtor or another party to act in this capacity.65
  3. You must take particular care to ensure that your conduct and demeanour does not distress or embarrass the child. You should immediately cease communication involving the child if the child appears to become upset, or the child or a member of the child’s family requests that the communication cease.

64 On the hours and frequency of contact with third parties, see part 2, section 4, Hours of contact and section 5, Frequency of contact. If communication is made with a third party, the creditor or collector should avoid disclosing any information about the debtor including the existence of the debt: see part 2, section 8, Privacy obligations to the debtor and third parties.

65 Note that in Victoria, any communication with a person under the age of 18 regarding a debt (if the person is not the debtor) is prohibited under s. 45(2)(n) of the Australian Consumer Law and Fair Trading Act 2012 (Vic).

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