Possible scam targeting debt collectors - 27/04/10
WA Scamnet at the Department of Commerce is warning businesses of all sizes to be wary of international clients approaching you in the guise of purchasing services.
The department has received reports from real estate and settlement agents, debt collection agencies and a wide range of small business operators of a number of over payment scams.
Internationally based scammers offer to pay for goods or services using fraudulent credit cards or fake cheques. The key to the scam is often an overpayment for freight or a related service (such as a payment from a debtor) which the scammer requests the business operator transfer to an associate business on their behalf.
Once the credit card transaction is reported or the cheque does not clear, the business is left out of pocket.
In a recent instance, a licensed debt collector was contacted by a Jerry Yang who claimed to represent Lankom Electronics Company Ltd, based in Taiwan. He claimed the company had sizable debts owing to it, particularly in the USA, Canada and Australia. Recovery of a large debt was requested from an Australian alleged debtor, Kelly Adams, however Kelly Adams could not provide details of the company, or its trading name, from which the debt was owed.
More information regarding these scams can be obtained from WAScamNet or by calling 1300 30 40 54.
You may wish to attend ASIC’s information sessions to see how the national credit reforms will affect debt collectors.
The Australian Securities and Investments Commission (ASIC) have released details of their National Credit Roadshow for industry, which will aim to assist industry members in complying with the new National Consumer Credit laws, scheduled to commence on 1 July 2010.
The draft National Consumer Credit Protection Regulations 2010 (Cwlth) were released in late 2009 for consultation and set out a 12 month exemption for debt collectors. The draft regulations provide that, , where persons are collecting debts on behalf of another person, they are exempt from the need to be licensed for the first 12 months of the national credit laws. Debt collectors who purchase debts will be treated as creditors and will need to be licensed under the national credit laws.
Review of this exemption and consideration of the national regulation of debt collectors is being considered as part of Phase 2 of the national credit reform.
IMPORTANT: As debt collectors are exempt from the national consumer credit regulation for the first 12 months, the Debt Collectors Licensing Act 1964, including licensing requirements, will remain in place and continue to be administered by the Consumer Protection Division of the Department of Commerce. However, as a licensed debt collector, you may be interested in attending the national credit roadshow being hosted by ASIC for information on the national credit reforms.
ASIC will be holding three sessions in Perth and several WA regional sessions between 15 March 2010 and 1 April 2010. Please refer to the National Credit Roadshow Timetable on the ASIC website for dates and session information.
Trust account requirements – 12/12/08
Consumer Protection is taking this opportunity to remind licensees of the requirements of the Debt Collectors Licensing Act 1964 (the Act) in relation to the naming of trust accounts.
The definitions contained in s. 3 of the Act set out two requirements for the naming of trust accounts:
The title of the trust account must read “Trust account of [name of entity]”. For example: “Trust account of John Smith”. Trust accounts that have been named differently will not satisfy the requirements of the Act.
The name of the entity that appears in the title of the trust account must be exactly the same as the name of the entity that appears on the debt collectors licence. For example, if the licence is held by a corporation, that corporation’s name must appear in the title of the trust account.
The onus is on the licensee to ensure that their trust account conforms with the requirements of the Act.
Consumer Protection will continue to monitor the compliance of debt collectors’ trust account names as part of the licensing and renewal process and through its proactive compliance visit program.
Consumer Protection has recently issued the following media statement, reproduced here for the information of licensees:
Former licensed debt collector Paula Davenport of Bunbury has been fined $2000 with costs of approximately $8000 in the Bunbury Magistrates Court.
“This successful prosecution of Ms Davenport was a landmark case for Consumer Protection as it is the first time a debt collector has been found guilty of undue harassment and coercion, since the department took over regulation of debt collectors in 2005,” Consumer Protection Commissioner Anne Driscoll said.
“The penalty and significant court costs should send a clear message to the industry that intrusive and unprofessional conduct will not be tolerated,” she said.
The magistrate rejected Ms Davenport’s account of her dealings with her clients, and found instead that the number of calls and inappropriate comments in connection with attempts to recover debts with respect to goods and services was in breach of the Fair Trading Act.
Consumer Protection’s investigation had indicated that Ms Davenport had used similar practices against a number of people in the South West region.
“Bullying and intimidation is unwarranted and illegal. A debt collector’s duty is to draw the debt to the attention of the debtor and take reasonable steps to recover the debt.
“Harassing and threatening families is not on, and Consumer Protection officers will use all possible means available to ensure that the rights of consumers are protected and offenders are held responsible,” Commissioner Driscoll said.