If you have started this year buried in debt after enthusiastically embracing those post-Christmas sales, take heart. You will be comforted to know that there have been recent legal developments in consumer law that favour consumers and offer them greater protection.
Recent amendments to the concept of “unfair contracts” under the Fair Trading Act 1999 (Vic) arguably broaden the definition of “unfair contracts” by offering greater protection from those terms that create “…a significant imbalance in the parties” rights and obligations…to the detriment of the consumer” (new s32W). In addition, Consumer Affairs Victoria (CAV) has released new “Guidelines for debt collection”, aimed at ensuring those engaged in the booming debt collection business understand their legal obligations to consumers. The debt collection guidelines are examined more closely below.
Consumer law relating to debt collection and what conduct by debt collectors is and is not acceptable is outlined in the Trade Practices Act 1974 (Cth) (“TPA”) and the Fair Trading Act 1999 (Vic) (“FTA”). Other legislation, such as the Consumer Credit Act 1995 (Vic) (dealing with the collection practices of credit providers) and the Australian Securities and Investments Commission Act 2001 (Cth) (dealing with contracts for the provision of financial services) regulate debt collection in more specific areas. Both the TPA and the FTA prohibit misleading and deceptive conduct, false and misleading representations and undue harassment and coercion in recovering money owed. The TPA applies to businesses engaged in interstate and overseas trade, with the responsibility of regulating these practices resting with the Australian Competition and Consumer Commission (ACCC). Indeed, the ACCC produced similar debt collection guidelines in 1999. The FTA and the new CAV guidelines have broad application for Victorians, covering all types of business activity, not just that of corporations.
The new guidelines outline 13 guiding principles to be followed by debt collectors aimed at reducing the risk of them contravening the law in this area. These principles cover aspects of collection such as the frequency and type of communication made by the debt collector to the debtor (including his or her family members or persons acting on his or her behalf), the appropriateness of personal visits to the debtor’s workplace, and conduct that amounts to harassment and coercion. Examples of misleading and deceptive conduct outlined as inappropriate in the guidelines include impersonating a bailiff or police officer, using misleading letterhead on correspondence or false court documents and serving a summons that has not been properly issued by the court.
The principles also warn against a debt collector contacting a debtor where liability for the debt has been denied (whether or not legal proceedings have commenced), or where the debtor has entered into a repayment arrangement, or where a debtor has indicated that he or she is financially unable to repay the debt and expressly requested that no further contact be made (including where the debtor has instigated bankruptcy proceedings or made arrangements under the Bankruptcy Act).
While consumers are required to honour agreements for purchases by promptly paying for the goods and services received, circumstances can result in debts remaining unpaid. It is important that debt collection procedures remain fair and reasonable and that a consumer’s rights are protected. The debt collection guidelines can be obtained from the CAV website:
...or by telephoning CAV on 1300 55 81 81
