Unfair Debt Collection

From 1st September 2011 there will be new laws implemented into the Fair Trading Act 1999 (Vic) prohibiting certain practices in relation to debt collection. The Minister for Consumer Affairs, Mr. Robinson stated that "no Australian jurisdiction has directly prohibited a wide range of unfair debt collection practices in the manner proposed in this bill. This is an important reform to ensure that businesses collecting debts, whether or not those debts are being collected on behalf of someone else, and consumers are aware of what is unacceptable".  The new laws form part of the Consumer Affairs Legislation Amendment (Reform) Act 2010 (Vic). Under these new laws a person must not engage in a prohibited debt collection practice while collecting or attempting to collect a debt. A prohibited debt collection practice has been defined under section 162AA as follows:

1. Demanding the payment of a debt from a person without having a belief on reasonable grounds that the person is-

• The debtor or the debtor's agent or representative; and  
• Liable for the debt;

2. Communicating with a person in a manner that is unreasonable in its frequency, nature or content;
3. Using physical force or undue harassment or coercion;
4. Using a document that is not an official document but that resembles or purports to be an official document;
5. Impersonating an employee or agent of the State, another state, a Territory or the Commonwealth;
6. Disclosing or threatening to disclose debt information, without the consent of the debtor, to any other person who does not have a clear and legitimate interest in the information;
7. Contacting a person by a method that the person has asked not to be used, unless there is no other method available
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8. Making a false or misleading representation in connection with-

• The nature of a debt; or
• The extent of a debt; or
• The consequences of not paying a debt; or
• The method of recovering a debt;

9. Contacting a person about a debt after the person advises in writing that no further communication should be made about that debt, unless the contact is by way of-

• An action issued through a court or the Tribunal; or
• The threat of an action that the person to whom the debt is owed is entitled to issue through a court or the Tribunal and which the person intends to take;

10. Attempting to take possession of or threatening to take possession of any property to which the person, or the person's principal, is not entitled to possession.

For more examples of prohibited debt collection practices see the Act.  Under the Act if a person has experienced humiliation or distress due to prohibited debt collection practice/s being undertaken with respect to a consumer debt they may apply to a court or the Tribunal for an order that the person engaging in that conduct pay damages of up to $10,000.