Making contact with a debtor
In Western Australia, the Fair Trading Act 2010 contains provisions that prohibit certain behaviour towards consumers.
The joint ASIC-ACCC publication Debt Collection Guideline: for collectors and creditors outlines how the Fair Trading Act 2010 and other Commonwealth and Sate legislation applies to the conduct of debt collectors. This publication outlines what debt collectors should and should not do to avoid breaching these laws and mandatory codes. This page provides a concise summary of this publication.
Importance of the Guideline to creditors
Even if a creditor objects to the collection activities of their agent, or if the agent acts in a manner that is inconsistent with an agreement or understanding between the creditor and agent, the creditor may still be responsible for their agent's actions.
A creditor can also be held accountable for debt recovery conduct by an 'assignee' i.e. the person or corporation who has bought or been assigned the debt.
Making contact with the debtor
- Before pursuing someone for payment of a debt, it is essential that you are certain that the person is liable for the debt.
- You should only contact the debtor for a practical purpose and only to the extent necessary to recover the debt. Unnecessary or persistent contact could be classified as 'undue harassment'.
- Once contact has been made, further contacts should occur no more than three times per week. This includes letters and telephone calls to the debtor.
- If face-to-face contact is necessary, it is recommended that this occur no more than once per fortnight.
- It is also recommended that you request assistance from a third party to ascertain a debtor's whereabouts no more than once every six months.
- If at any time you are asked to leave the debtor's residence or workplace, you must do so immediately.
Under the Privacy Act 1988, it is the responsibility of the collector to ensure the privacy of debtors.
When contacting the debtor for the first time, your first priority should be to confirm that the person you have contacted is the debtor. You must do this each time you contact a new debtor, before you disclose any information about the debtor or the debt.
Once you have verified that the person you have contacted is the debtor, you need to bear in mind that the limits on disclosing information to third parties also apply to the debtor's spouse, partner and/or family.
Providing information and documents
If the debtor asks to view their personal credit information held by you, they have a right to do so and to correct it if it is inaccurate.
You must provide this information as quickly as possible. The National Credit Code sets out specific timeframes for providing information on request when the debt relates to a consumer loan, credit card facility or similar credit product.
The Code states that information must be provided within 14 days if what is requested relates to the preceding 12-month period. Otherwise, a 30-day timeframe applies.
If a request for information relates to a disputed amount, you should stop all collection activity until you have provided the information requested to the debtor.
In some situations, failure to provide information may amount to misleading, deceptive or unconscionable conduct.
If liability is disputed
If the person you contacted about payment of a debt tells you that they are not the debtor or that the debt has already been paid and you have no evidence to the contrary, you must defer further collection action until you can confirm the debtor's identity and liability.
If you ignore their claims and carry on with the collection activity, you risk breaching one or more of the consumer protection laws if the alleged debtor is not liable for the debt.
If neither the creditor nor collector can provide proof of the debtor's liability, collection activity should be suspended indefinitely.
In legal proceedings, proof of the debt rests with the party that alleges the debt is owed to them. It is misleading to state or imply that it is up to the debtor to prove that payment of the debt is not their responsibility.
Conduct by the debtor
Inappropriate behaviour on the part of the debtor does not mean a collector can engage in similar conduct. If the debtor becomes violent, a debt collector should cease contact immediately and refer the matter to the police.