What can a debt collector legally do?

With the new Consumer Protection legislation, which came into effect on 1 January 2011, the Debt Collection Guideline for collectors and creditors is under review for republication, due to changes in the protections available under legislation. It is currently available online, but may change in the future. It is not reasonable to frighten, intimidate, harass, demoralise, exhaust, or embarrass the debtor. Consumer legislation on the prohibition of misleading and deceptive conduct, unconscionable conduct, and a general criminal prohibition of the use of physical force, undue harassment and coercion all apply to debt collectors.

Debt collectors can contact a debtor to:

  • give information about the debtor’s account;
  • convey a demand for payment;
  • accurately explain the consequences of non-payment, including any legal remedies available to the collector/creditor, and any service restrictions that may apply in the case of utilities (for example, electricity);
  • make arrangements for repayment of a debt;
  • put a settlement proposal or alternative payment arrangement to the debtor;
  • review existing arrangements after an agreed period;
  • ascertain why earlier attempts to contact the debtor have not been responded to within a reasonable period, if this is the case;
  • ascertain why an agreed repayment arrangement has not been complied with, if this is the case;
  • investigate whether the debtor has changed their residential location without informing you, when there are grounds for believing this has occurred;
  • sight, inspect or recover a security interest; or
  • at the debtor’s request.

Remedies are available through the Security and Investigations Agents Act 2002 (Tas) where a licensed Tasmanian debt collector has behaved in a manner that demonstrates that they are unsuitable to hold a license under that Act. Complaints should be directed to the Department of Consumer Affairs and Fair Trading (CAFT). You can also inform the Magistrates Court of a bailiff’s behavior if they have acted inappropriately, as the Magistrates Court are the body that license bailiffs. 

Harassment by Debt Collectors

Harassment of debtors or other persons while collecting debts is one ground for revoking or refusing to renew a debt collector’s licence. For the purposes of the Security and Investigations Agents Act), ‘harassment’ means any act or conduct that tends to intimidate, embarrass, ridicule or shame any person (s3, Security and Investigations Agents Act). It includes:

  • any conduct (including the positioning of a vehicle) from which it might reasonably be inferred by a person visiting or passing any premises that an occupant of the premises is being visited or under surveillance by an agent (for example, leaving the debt collectors car at or outside the debtor’s home);
  • unduly frequent visiting of premises or communication with the occupants of premises (for example, unreasonably frequent phone calls);
  • any statement or suggestion made to, or intended to be communicated to, a debtor that, if he or she fails to pay any debt, action may be taken that would embarrass or shame him or her, or prejudice him or her in his or her employment (for example, sending the debtor a letter threatening to leave an embarrassing document).

A debtor who has been harassed by a debt collector in any of these ways may be able to one or both of the things set out below.

Complain to the Police or CAFT

Serious harassment (such as violence or threats of assault) is a criminal offence for which the person harassed or the police can prosecute the debt collector. The police in the area where the debt collection agency does business should be notified of this conduct so they can begin proceedings to have the licence revoked, as described under ‘Letter of Demand’ above. For more minor types of harassment debt collection agencies may be subject to a fine (s22, Security and Investigations Agents Act).

An exception from the requirement to have a license exists for some creditors including banks, real estate agents and accountants (s41, Security and Investigations Agents Act) ensuring that they have less to fear when they harass debtors. However, if the creditor is a company or is using the phone or postal service to harass the debtor, it is possible for the debtor to complain to the Commonwealth agencies – the Australian Competition and Consumer Commission (ACCC) and/or the Australian Securities and Investments Commission (ASIC). Another alternative is the Tasmanian Department for Consumer Affairs and Fair Trading (CAFT). Under the Australian Consumer Law (ACL) it is an offence for a company to harass a consumer (ss50 and 168, ACL).

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