ASIC RG 96 — ASIC Regulatory Guide – RG 96 Debt collection guideline: For collectors and creditors

Page 1 REGULATORY GUIDE 96 Debt collection guideline: for collectors and creditors April 2021 About this guide This guideline has been jointly produced by the Australian Competition and Consumer Commission (ACCC) and the Australian Securities and Investments Commission (ASIC). The guideline will help you to understand how the Commonwealth consumer protection laws apply. The guideline applies to both creditors who are directly involved in debt collection and to specialist external agencies who provide debt collection services. The guideline also provides helpful guidance for debtors. Page 2 Debt collection guideline: for collectors and creditors April 2021accc.gov.au Page 3 © Commonwealth of Australia 2021 This work is copyright. In addition to any use permitted under the Copyright Act 1968, all material contained within this work is provided under a Creative Commons Attribution 3.0 Australia licence, with the exception of: ƒ the Commonwealth Coat of Arms ƒ the ACCC, AER and ASIC logos ƒ any illustration, diagram, photograph or graphic over which the Australian Competition and Consumer Commission and the Australian Securities and Investments Commission do not hold copyright, but which may be part of or contained within this publication. The details of the relevant licence conditions are available on the Creative Commons website, as is the full legal code for the CC BY 3.0 AU licence. Requests and inquiries concerning reproduction and rights should be addressed to the Director, Content and Digital Services, ACCC, GPO Box 3131, Canberra ACT 2601 or to the Senior Manager, Publishing Unit, Australian Securities and Investments Commission at publishing.unit@asic.gov.au Important notice This guideline is designed to give you basic information; it does not cover the whole of the Competition and Consumer Act 2010 (Cth), the Australian Securities and Investments Commission Act 2001 (Cth) or other relevant legislation and is not a substitute for professional advice. Moreover, because it avoids legal language wherever possible and there may be generalisations about the application of the above Acts, some of the provisions referred to have exceptions or important qualifications. In most cases, the particular circumstances of the conduct need to be taken into account when determining how these Acts apply to that conduct. ACCC 04/2021_20-34 www.accc.gov.au Page 4 iiiDebt collection g u ideline2 f o r c o llectors a n d c reditors Contents Part 1: Using this guideline 1 Who is this guideline for? 1 What this guideline covers 2 What this guideline does 3 Focus on individual debtors 3 Debtors’ responsibilities 3 Relationship with court debt recovery processes 4 A flexible, fair and realistic approach to collection 5 Part 2: Practical guidance 6 1. Contacting a debtor 6 2. Contact for a reasonable purpose only 8 3. What is ‘contact’? 11 4. Hours of contact 13 5. Frequency of contact 13 6. Location of contact 15 7. Face-to-face contact 16 8. Privacy obligations to the debtor and third parties 18 9. When a debtor is represented 20 10. Record keeping 22 11. Providing information and documents 23 12. Consistent and appropriate correspondence 25 13. If liability is disputed 26 14. Repayment negotiations 27 15. Contact when a payment arrangement is in place 29 16. Contact following bankruptcy or a Bankruptcy Act agreement 29 17. Conduct towards the debtor or their representatives 30 18. Conduct towards family members and other third parties 31 19. Representations about the consequences of non-payment 33 20. Representations about the legal status of a debt—including statute-barred debt 35 21. Legal action and procedures 36 22. Resolving debtor complaints and disputes 38 23. Compliance programs 39 24. The role of independent external dispute resolution schemes 40 Part 3: Commonwealth consumer protection laws 42 Prohibition of the use of physical force, undue harassment and coercion 42 Trespass 45 Prohibition of misleading and deceptive conduct 46 Prohibition of unconscionable conduct 48 Enforcement and remedies for breaching Commonwealth consumer protection laws 51 Appendix A: ACCC and ASIC—debt collection roles and contact details 54 Australian Competition and Consumer Commission (ACCC) 54 Australian Securities and Investments Commission (ASIC) 55 Dispute resolution schemes 55 Page 5 ivDebt collection g u ideline2 f o r c o llectors a n d c reditors Appendix B: Other statutory and common law obligations and remedies 56 State and territory fair trading laws 56 State and territory licensing of collectors 56 National Consumer Credit Protection Act 56 National Energy Retail Law 57 State and territory unauthorised documents laws 57 State and territory limitation of actions laws 57 Bankruptcy laws 57 Privacy laws 57 Tort law 58 Criminal law 58 Other obligations 58 Appendix C: Glossary 59 Appendix D: Authority Form from Financial Counselling Australia 61 Page 6 1Debt collection g u ideline2 f o r c o llectors a n d c reditors Part 1: Using this guideline The Australian Competition and Consumer Commission (ACCC) and the Australian Securities and Investments Commission (ASIC) have produced this guideline. The ACCC and ASIC enforce Commonwealth consumer protection laws, including laws relevant to debt collection. For more information about the responsibilities of each agency, see appendix A of this guideline. The terms ‘debt’ and ‘debtor’ are used in this guideline to include alleged debts and alleged debtors respectively (see the glossary in appendix C of this guideline for more information on terms and phrases). Who is this guideline for? This guideline will help you to understand how the Commonwealth consumer protection laws apply to you if you are a: ƒ debt collector (including a debt collection agency, debt buy-out service, in-house collection department of a business or government agency, solicitor and other) ƒ creditor who uses external collection agencies to collect debts or sells or assigns debts to third parties. This guideline applies to both creditors who are directly involved in debt collection and to specialist external agencies who provide debt collection services. When a creditor uses an agent for collection, the creditor (as principal) will generally be liable for their agent’s conduct when that conduct comes within the agent’s express, implied or ostensible authority. A creditor may be responsible for their agent’s collection activities even if the agent acts in a way that is contrary to an agreement or understanding between the creditor and agent about how the collection is to be undertaken. Page 7 2Debt collection g u ideline2 f o r c o llectors a n d c reditors A creditor may also remain liable for conduct regarding a debt despite having sold or assigned the debt. Liability will generally remain for misconduct occurring before the sale or assignment of the debt. The ACCC and ASIC encourage creditors to use this guideline to ensure their in-house collection activities are compliant with the Commonwealth consumer protection laws and to incorporate this guideline into their contractual and compliance auditing arrangements with their agents and assignees. This guideline will also serve as a point of reference for financial counsellors and debtors’ advisers when negotiating with creditors or collectors about their practices. What this guideline covers Commonwealth consumer protection laws This guideline explains the application of the following Commonwealth consumer protection laws, which are relevant to debt collection: ƒ The Australian Consumer Law (ACL), which is a schedule to the Competition and Consumer Act 2010 (Cth) (CCA). The ACL is jointly enforced by the ACCC and state and territory consumer protection agencies ƒ Part 2, Division 2 of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act), which is enforced by ASIC ƒ National Consumer Credit Protection Act 2009 (Cth) (NCCP) which includes the National Credit Code (NCC) as Schedule 1 to the NCCP, which is enforced by ASIC. Part 2 of this guideline provides practical guidance on what creditors and collectors should and should not do to minimise their risk of breaching the Commonwealth consumer protection laws that may apply when undertaking debt collection activities. When seeking to recover a debt, part 3 of this guideline looks at the prohibitions and remedies against creditors or collectors who engage in: ƒ the use of physical force, undue harassment or coercion ƒ misleading or deceptive conduct ƒ unconscionable conduct. Part 3 of this guideline also contains information about the penalties that apply for contraventions of the Commonwealth consumer protection laws. Other laws This guideline also refers to other laws and regulations that are not enforced by the ACCC and ASIC, but which are relevant to debt collection. These laws include: ƒ Commonwealth privacy laws, which are enforced by the Office of the Australian Information Commissioner (OAIC) ƒ state and territory fair trading laws, which include conduct prohibitions mirroring those of the Commonwealth consumer protection laws and that are enforced by the state and territory consumer protection agencies ƒ the Bankruptcy Act 1966 (Cth) (Bankruptcy Act), which is enforced by the Australian Financial Security Authority (AFSA). Various other laws, regulations and industry codes are also referred to in passing throughout this guideline. For a non-exhaustive list of other applicable laws, see appendix B of this guideline. Also see the comments under Relationship with court debt recovery processes in this guideline. Note: this guideline does not provide guidance on the law on mortgages and other securities or guarantees. Page 8 3Debt collection g u ideline2 f o r c o llectors a n d c reditors What this guideline does This guideline: ƒ explains the ACCC’s and ASIC’s views on the laws that they regulate ƒ provides examples on how the law has been applied in particular cases and details of court outcomes ƒ gives guidance on what you should and should not do if you wish to minimise the risk of breaching the Commonwealth consumer protection laws ƒ notes other laws and regulations not regulated by the ACCC and ASIC that are relevant to debt collection. This guideline does not have legal force. The ACCC and ASIC cannot make law in this field because that is the role of parliament. The ACCC and ASIC also cannot provide a definitive interpretation of the law because that is the role of the courts.1 ASIC and the ACCC will approach each potential compliance and enforcement matter on a case-by- case basis, taking into account all relevant circumstances, and by applying their respective enforcement and compliance policies. Compliance with this guideline cannot provide a guarantee against enforcement action by ASIC or the ACCC. Businesses may also be subject to action by private parties. Businesses should consider seeking independent legal advice on these matters. The ACCC and ASIC encourage businesses engaging in debt collection activity to follow this guideline and incorporate it into their staff training, both in terms of the text and the spirit of the document. Focus on individual debtors This guideline is developed with particular reference to collecting debts from individual debtors. However, many of the laws and principles discussed in this guideline will also be relevant to the collection of corporate, business, and in particular, small business debts. Debtors’ responsibilities While this guideline focuses on the responsibilities of creditors and collectors, the ACCC and ASIC recognise that debtors have responsibilities too. Debtors are legally responsible for paying the debts they legitimately owe. Where they owe the debt in question, debtors should: ƒ not attempt to avoid the obligation to satisfy debts they have incurred ƒ promptly contact creditors and debt collectors when they are experiencing financial difficulties and attempt to negotiate a variation in payments or other arrangement ƒ be candid about their financial position, including their other debts. The ACCC and ASIC also recommend that debtors experiencing financial difficulties should seek the assistance of a financial counsellor, solicitor or other qualified adviser who may be able to help them with a debt negotiation. 1 Although this guideline does not have legal force, it should be noted that: ƒ A creditor or collector may agree contractually to adhere to this guideline. This will be the case, for example, if the terms and conditions for a particular product or service stipulate that the provider of the service will abide by the guideline itself, or by an industry code of conduct requiring compliance with the guideline. In these circumstances, provisions of the guideline may be legally enforceable by the debtor on the basis of the express incorporation of them into the creditor’s contractual arrangements. ƒ An external dispute resolution scheme may consider this guideline when making binding determinations on scheme members. See further under part 2, section 24 of this guideline, The role of independent external dispute resolution schemes. Page 9 4Debt collection g u ideline2 f o r c o llectors a n d c reditors The ACCC and ASIC have also produced a guide for debtors entitled Dealing with debt collectors: your rights and responsibilities. The Australian Energy Regulator (AER) has produced a consumer information factsheet, Are you having trouble paying your energy bill? This publication provides information on energy retailers’ responsibility to help customers who are having difficulty paying their bills and to inform them of their options. For a copy of this publication and additional information for energy consumers in hardship, go to www.aer. gov.au/consumers/my-energy-bill/help-for-customers-in-hardship. We encourage creditors and collectors to refer debtors to these publications and other tools available at www.accc.gov.au/publications, moneysmart.gov.au and www.aer.gov.au/consumers/aer-resources and to the services referred to above when appropriate. Relationship with court debt recovery processes Broadly, debts may be recovered either through the courts, or by using creditor or collection agency personnel to negotiate repayments. Debt recovery through the courts is largely regulated by state and territory law and the procedural rules of the courts. The recovery process may include the repossession of assets, securities or other legal enforcement of security interests. This guideline is mainly concerned with non-court debt recovery processes and informal collection activities before a court action is commenced or after a court judgment. This guideline does not limit any right you may have to: ƒ take legal action to collect a debt ƒ conduct legal repossession activities and other legal enforcement of legitimate security interests ƒ seek and obtain pre-judgment remedies, for example, orders to prevent the removal or transfer of property from the jurisdiction ƒ enforce judgment through a court process—including examination hearings, instalment orders, orders for the seizure and sale of property, garnishment or attachment orders ƒ undertake all necessary procedures (for example, for serving documents) associated with these actions. However, you must not threaten action (legal or otherwise) that you are not legally permitted to take, do not have instructions or authority to take, or you have no intention to take. How legal action is threatened or taken can, in certain circumstances, amount to misleading or deceptive conduct, unconscionable conduct or harassment. As relevant laws may change from time to time, you should ensure you regularly review your processes and accurately reflect the law in your communications with debtors. You also must not misrepresent your legal entitlement to seize goods. See part 2, sections 19–21 of this guideline for more information about representations about the consequences of non-payment and the legal status of a debt and about legal action and procedures. Page 10 5Debt collection g u ideline2 f o r c o llectors a n d c reditors A flexible, fair and realistic approach to collection The need for collection activity will be greatly reduced when debtors act promptly and responsibly, and collectors are flexible, fair and realistic. Debtors may default on their debts because of circumstances beyond their control, such as unemployment, illness or family breakdown. While there are cases of fraud and deliberate evasion, most people are honest and want to meet their commitments if given a reasonable opportunity to do so. The ACCC and ASIC encourage flexibility on the part of creditors and collectors. This includes recognising debtors who are vulnerable and experiencing financial hardship, and recognising that debtors may have a number of debts owing to different creditors.2 A flexible approach involves making meaningful and sustainable payment arrangements that reasonably take into account a debtor’s ongoing living expenses to enable them to live in basic comfort and prevent impoverishment or humiliation. 2 Note that when a debt relates to a contract regulated by the NCC, s. 72 of the NCC provides borrowers with statutory rights to have a variation considered. Repayment negotiations more generally are discussed in this guideline in part 2, section 14, Repayment negotiations. Page 11 6Debt collection g u ideline2 f o r c o llectors a n d c reditors Part 2: Practical guidance If you are involved in collection activity, either as a creditor, agent or assignee, this part of the guideline is addressed directly to you. The term ‘debtor’ includes an alleged debtor, and the term ‘debt’ includes an alleged debt. The term ‘debt collector’ includes creditors, independent collection agencies, collections departments within businesses, debt purchasers, assignees, agents, lawyers, government bodies engaged in trade or commerce, and other persons3 collecting on behalf of others. 1. Contacting a debtor (a) Under the privacy laws, you have obligations to protect the privacy of debtors.4 When making direct contact, your first task must always be to ensure the person you are dealing with is the debtor. This must be done every time you make contact before you divulge any information about the debt, the process for its recovery or before providing any other confidential information. (b) If you consider it necessary to divulge your identity as a debt collector before being sure that you are dealing with the debtor (for example, if requested by the person you are dealing with), then you may do so if that would not have the effect of divulging that the debtor has a debt. Particular care should be taken when speaking to a person at a debtor’s workplace or when using a medium that may be shared with others (e.g. social media, landline telephones etc). 3 The CCA applies to corporations and individuals when they are acting as agents of a principal that is a corporation. 4 For information on privacy issues, see part 2, section 8 of this guideline, Privacy obligations to the debtor and third parties. Page 12 7Debt collection g u ideline2 f o r c o llectors a n d c reditors u Example: Calling from or on behalf of a bank If you are calling from or on behalf of a bank then it is unlikely that revealing the name of the bank would result in you divulging that the debtor has a debt. Banks commonly provide a range of services and the person you are dealing with will not be able to deduce that you are currently engaging in debt collection activities and that the debtor has a debt. u Example: Calling from or on behalf of an organisation with a descriptive name If you are calling from or on behalf of an organisation whose name is more revealing or descriptive in relation to debt collection practices (for example, ‘Collections R Us’) then revealing the name of the organisation is likely to divulge the existence of a debt. (c) The limits on disclosing information to third parties apply to the debtor’s spouse, partner and/or family as much as they apply to other third parties.5 (d) Having established the debtor’s identity, you should then identify who you are, who you work for and explain the purpose of the contact. Failing to clearly identify who is calling and the purpose of the call will most likely confuse the debtor and may lead to the debtor avoiding subsequent calls. (e) If you elect to use social media, voice mail or emerging technologies (such as voice messaging, or other online systems) to attempt to or make contact with the debtor, you should carefully consider the nature of the channel and its potential audience. It may be acceptable to attempt contact provided: ƒ you have a reasonable belief that contact will be with the debtor only ƒ you have a reasonable belief that the channel is not shared with other parties (for example, a shared work email address or joint social media account). (f) You should avoid contacting the debtor via a certain channel if: ƒ the debtor has specifically requested to be contacted through an alternate channel of communication, or ƒ the debtor specifically requested that this particular channel not be used. (g) When you make initial contact, you should also provide the debtor with basic information about the debt, including the name of the creditor and any assignee of the debt, details of the account and the amount claimed. A debtor may request further information or documentation relating to the debt (see part 2, section 11 of this guideline, Providing information and documents). (h) You should also provide your contact details such as your contact phone number, postal address and email address. If the debtor communicates with the collector through the collector’s non- preferred channel of communication (for example, written correspondence), then the collector should not ignore this correspondence and should attempt to contact the debtor via the same channel. (i) Do not misrepresent your identity in any way—for example, do not falsely state or imply that you are or work for a solicitor or that you are a court, government official or independent complaints handling body. 5 For authorised representatives, see part 2, section 9 of this guideline, When a debtor is represented. Page 13 8Debt collection g u ideline2 f o r c o llectors a n d c reditors Case Study A company implied to debtors that it was a firm which specialised in commencing legal proceedings for the recovery of debt, that it frequently commenced such proceedings, and that the particular matter had been referred to the company’s lawyers for the purpose of commencing legal proceedings, when none of these implications were correct. The court found that the company persistently engaged in misleading or deceptive conduct by making such implications. ASIC v Accounts Control Management Services Pty Ltd [2012] FCA 1164 Case Study A company was found to have engaged in misleading and deceptive conduct, unconscionable conduct and coercion when attempting to obtain payment for mobile phone services. The company created a fake complaints handling organisation to deceive debtors into believing their disputes about liability were being assessed by an independent body when neither that body nor those activities existed. The company then contacted debtors under the false pretence of a fictitious debt collection agency to induce debtors to pay the alleged debts. The court found this conduct to be unconscionable and that the company used undue coercion in its dealings with debtors. Several of the company’s employees were also found to have been knowingly concerned and personally liable for the contravening conduct. ACCC v Excite Mobile Pty Ltd [2013] FCA 350 (j) On first contact if the debtor denies liability for the debt or raises an issue indicating a dispute about the debt, you should also take the steps referred to in part 2, section 13 of this guideline, If liability is disputed. (k) If a debtor advises that they cannot afford to repay the debt then you are entitled to make reasonable enquiries into their financial position to determine whether the debtor is able to make meaningful and sustainable repayments. If it is determined that they cannot make such repayments then you may suggest that the debtor considers seeking the advice of a financial counsellor. If the debtor demonstrates willingness and intention to do so then you should not contact them until after a reasonable time has passed, allowing them to obtain advice so that they may better understand their options. 2. Contact for a reasonable purpose only (a) Communications with the debtor must always be for a reasonable purpose, and should only occur to the extent necessary.6 (b) It may be necessary and reasonable for you to contact a debtor to: ƒ provide information to the debtor about their account ƒ make a demand for payment ƒ offer to work with the debtor to reach a flexible repayment arrangement ƒ 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, disconnection of electricity or gas supply or restriction of water supply) ƒ make arrangements for repayment of a debt 6 You should not pursue a person for a debt unless you have reasonable grounds for believing the person you contact is liable for the debt: see part 2, section 13 of this guideline, If liability is disputed. Page 14 9Debt collection g u ideline2 f o r c o llectors a n d c reditors ƒ put a settlement proposal or alternative payment arrangement to the debtor ƒ review existing arrangements after an agreed period ƒ ascertain why earlier attempts to contact the debtor have not been responded to within a reasonable period, if this is the case ƒ ascertain why an agreed repayment arrangement has not been complied with, if this is the case ƒ investigate whether the debtor has changed their residential location without informing you, when there are grounds for believing this has occurred ƒ sight, inspect or recover a security interest ƒ or for other similar purposes.7 You may also contact a debtor at the debtor’s request. (c) What constitutes a reasonable purpose may change according to the personal characteristics of an individual debtor. You should consider the information you have about each individual debtor in order to determine whether intended contact with that debtor will be for a reasonable purpose. u Example: Debtor’s financial situation If you are aware that a debtor is unable to make meaningful and sustainable repayments towards a debt, then continuing to contact the debtor to demand payment will not be reasonable or appropriate. Where that is the case, you should only consider contacting the debtor if you know, or have good reason to think it is likely, that the debtor’s financial situation has improved. There are many reasons a debtor may be unable to make meaningful repayments towards a debt, including where they are: ƒ on a limited fixed income (whether on a temporary basis or for the foreseeable future, for example, with an aged pension) ƒ unemployed ƒ suffering significant, chronic or long-term illness or injury ƒ incarcerated ƒ experiencing family violence. Case Study A company made empty threats to litigate against two customers despite being aware that they had no means, or only limited means, to repay. The conduct included ongoing harassment of a care facility resident who had difficulty communicating after suffering multiple strokes, as well as coercion of a Centrelink recipient who was told their credit would be affected for up to seven years if they failed to pay immediately when the company did not have reasonable grounds for making that statement. The court found the company engaged in misleading or deceptive conduct, used undue harassment or coercion, and engaged in unconscionable conduct in its dealings with the two vulnerable consumers. ACCC v ACM Group Pty Ltd [2018] FCA 1115 7 However, there are circumstances when further contact with a debtor may not, or may no longer, be appropriate: see part 2, sections 4, 13, 15 and 16 of this guideline, which provide information about Hours of contact, If liability is disputed, Contact when a payment arrangement is in place and Contact following bankruptcy or a Bankruptcy Act agreement respectively. Page 15 10Debt collection g u ideline2 f o r c o llectors a n d c reditors (d) There may be circumstances where contact is made for a reasonable purpose, or contact is made initially for a reasonable purpose, and yet other relevant considerations mean the contact becomes unreasonable or unacceptable.8 Relevant considerations may include the debtor’s mental illness or intellectual disability, the debtor’s incarceration, or if the debtor is experiencing family violence. u Example: Disputed liability If you contact a debtor in order to convey a demand for payment, it may be contact for a reasonable purpose. However, if the debtor disputes liability and requests proof of the alleged debt, and you continue to pursue that person without properly investigating the claims, then this will not be contact for a reasonable purpose. u Example: Family violence If a debtor discloses that they are experiencing family violence, including economic abuse, it may not be reasonable to continue to contact the debtor. Such continued conduct could also constitute undue harassment in certain circumstances (see the case study below), and we recommend that collectors and creditors have specific processes for debtors experiencing family violence. u Example: Negotiating a repayment arrangement If contact is made with a debtor in order to negotiate a repayment arrangement where one does not exist, it may be necessary and reasonable contact; however, it may not be reasonable to contact the debtor where a payment arrangement exists and the debtor is meeting those repayments, unless you are proposing a genuine alternative arrangement to benefit the debtor. It is not reasonable or acceptable to contact a debtor to: ƒ frighten or intimidate the debtor ƒ demoralise, tire out or exhaust the debtor ƒ embarrass the debtor in front of other people ƒ or for other similar purposes (see part 2, sections 17 and 18 of this guideline, Conduct towards the debtor or their representatives and Conduct towards family members and other third parties).9 u Example: Referral of complaints If, during communications with a debtor or other person, you attempt to dissuade them from making a complaint or refuse to refer them to a supervisor or complaints department (that is, on the basis of a dispute about the debt or your conduct in collecting the debt), then this will be unreasonable contact and may be unconscionable conduct. 8 See also part 2, sections 13, 15 and 16 of this guideline, addressing If liability is disputed, Contact when a payment arrangement is in place and Contact following bankruptcy or a Bankruptcy Act agreement, respectively. 9 Note also that in Victoria, unreasonable communication with a debtor is specifically prohibited by s. 45(2)(p) of the Australian Consumer Law and Fair Trading Act 2012 (Vic). See also part 2, sections 17 and 18 of this guideline in relation to Conduct towards the debtor or their representatives and Conduct towards family members and other third parties. Page 16 11Debt collection g u ideline2 f o r c o llectors a n d c reditors Case Study A company harassed three consumers to pay disputed debts despite being advised that they were not liable for the debts. The court found that the company repeatedly insisted that the debtors disprove their liability, including for two of the consumers over relatively significant periods. The conduct was such as to “intimidate or demoralise, tire out or exhaust a debtor, rather than merely to convey the demand for recovery”. The court held that the company’s repeated and intrusive conduct constituted undue harassment of each of the debtors. ACCC v Panthera Finance Pty Ltd [2020] FCA 340 3. What is ‘contact’? (a) ‘Contact’ with the debtor or other person is interpreted widely. It includes, but is not limited to, the following: ƒ Communications by phone—including circumstances where the recipient (debtor or other person) elects to terminate the call, or where a voice message is left on a recording device, or where a message of any kind is delivered to the recipient. ƒ Communications in writing—including all written correspondence (for example, letter, email, text message, fax, social media application or program, instant chat, phone application, or any other similar device). ƒ Communications in person—including face-to-face contact, whether at the home of the debtor (or other person), workplace, or other location. u Example: Contact ‘Contact’ will be made if you phone a debtor and the debtor answers the call but shortly after terminates the call. If you phone again and leave a message on the debtor’s voice mail, then you will have made two separate contacts with the debtor. u Example: Multiple contacts If you phone a debtor and leave a message on the debtor’s voice mail, and you also send the debtor an email, and a text message, then you will have made three separate contacts with the debtor. (b) ‘Continuous contact’ with the debtor or other person refers to a chain of contact (for example, an email chain) wherein a series of communications all form part of a single ‘thread’ of communication. Depending on the circumstances, such a thread may be treated as a single contact, provided: ƒ the consumer is voluntarily engaging in the exchange and has not expressed any dissatisfaction in relation to the continuing contact ƒ the consumer has not been prompted by the collector for a response but instead has engaged in an interchange of communication whereby the parties take turns to initiate contact between the parties ƒ the communication is within a ‘reasonable proximity of time’ ƒ the communication is in relation to the same matter, and ƒ the communication is likely to be anticipated by the debtor or other person. Page 17 12Debt collection g u ideline2 f o r c o llectors a n d c reditors u Example: Continuous contact If you email a debtor regarding an account (contact), and the debtor replies offering a payment arrangement, then the subsequent reply to the offer would not be considered a new contact if it occurs promptly and if the debtor would have anticipated a reply (same contact). (c) We consider a ‘reasonable proximity of time’ to be where no more than two business days pass between such communications and therefore may be part of the one contact. (d) A single continuous contact may also involve a series of instantaneous communications (that is, a closed chat forum between the debtor and collector, pop-up message or same-time service). (e) Contact should be distinguished from ‘attempted contact’, which as it implies, falls short of contacting the debtor or other person, as described above. u Example: Attempted contact If you phone a debtor (or other person) but the call is unanswered and you do not leave a message on voice mail, this is regarded as attempted contact with the debtor (or other person), and will not constitute a contact with either party. (f) Attempted contact should be distinguished from a ‘misdirected contact’. A misdirected contact may include a phone call to a disconnected number or an email that bounces and is not delivered to any recipient. (g) The distinction between contact and attempted contact should not be construed by you as an opportunity to continually attempt to contact a debtor. Depending on the circumstances, continually attempting to contact a debtor (or other person) may amount to undue harassment (see part 2, section 5 of this guideline, Frequency of contact and Part 3 of this guideline, Commonwealth consumer protection laws). u Example: Unnecessary and unduly frequent attempted contacts If you phone a debtor and the debtor answers the call but subsequently terminates the call (contact), and then you proceed to repeatedly phone the debtor throughout the same day despite the debtor not answering the calls (attempted contact), this may amount to unnecessary and unduly frequent attempted contacts and could constitute undue harassment. Page 18 13Debt collection g u ideline2 f o r c o llectors a n d c reditors 4. Hours of contact (a) Contact with a debtor or a third party must be made at reasonable hours, considering their circumstances and reasonable wishes. The following can be assumed to be appropriate contact times, subject to the qualifications set out: Reasonable contact times These times apply to both debtors and third parties10 and are the local times in the debtor’s state or territory.11 Contact by telephone Monday to Friday Weekends 7:30 am to 9 pm 9 am to 9 pm National public holidays No contact recommended11 Face-to-face contact Monday to Friday Weekends 9 am to 9 pm 9 am to 9 pm National public holidays No contact recommended All workplace contact Debtor’s normal working hours if known, or 9 am to 5 pm on weekdays (b) We assume that contact will usually be by telephone. The above contact times for face-to-face contact, including contact at the debtor’s workplace, need to be read in conjunction with part 2, section 7 of this guideline, Face-to-face contact. (c) There may be reasons why contact during the above times is unreasonable, or contact outside these times is reasonable. For example, a debtor may ask that contact be made at other or more restricted times due to various reasons, for example, because the debtor: ƒ is a shift worker ƒ is responsible for children, or caring for a family member, and contact at certain times is not convenient ƒ does not wish to be contacted when other family members are present. (d) In these and other such cases, the reasonable wishes of the debtor should be respected, and contact limited to the times requested by the debtor. (e) However, a collector may alter the time of contact if, after reasonable efforts over a reasonable period of time to contact the debtor during normal hours or at the times requested by the debtor, the collector has not been able to do so. 5. Frequency of contact (a) Debtors and third parties are entitled to be free from excessive communications from collectors.12 Communications must always be for a reasonable purpose, and should only occur to the extent necessary: see part 2, section 2 of this guideline, Contact for a reasonable purpose only. The guidance on frequency of communications should be read subject to this general principle. (b) References to the number of contacts with debtors should be read as the number of contacts per account, rather than per individual debtor. It may be acceptable to have a higher overall level of contact with an individual debtor if this contact relates to more than one account. Where possible, however, collectors should seek to discuss multiple accounts with a debtor during the one contact 10 See definition of ‘third party’ in appendix C of this guideline. Contact with a debtor’s representative, such as financial counsellors and solicitors, would normally occur during ordinary business hours. 11 It will generally be inappropriate to contact debtors on New Year’s Day, Australia Day, Good Friday, Easter Sunday, Easter Monday, Anzac Day, Christmas Day and Boxing Day. Contact may also be prohibited on other days in particular jurisdictions. For example, in South Australia, s. 43(1)(d)(i) of the Fair Trading Act 1987 (SA) prohibits telephone calls or personal calls on any public holiday (state or national) to demand payment. 12 In Victoria, s. 45(2)(m) of the Australian Consumer Law and Fair Trading Act 2012 (Vic) provides specific protection to debtors. Subsection (m) specifically prohibits a collector from contacting a debtor if the debtor has requested in writing that no further communication should be made. Page 19 14Debt collection g u ideline2 f o r c o llectors a n d c reditors to avoid unnecessary communications. Subject to your arrangements with original creditors, this includes where you collect debt on a contingent basis for multiple clients. (c) Unnecessary or unduly frequent contacts may amount to undue harassment of a debtor. We recommend that you do not contact a debtor more than three times per week, or 10 times per month at most (when contact is actually made, as distinct from attempted contact) and only when it is necessary to do so. This recommendation does not apply to face-to-face contact which is specifically addressed below. (d) Unreasonably frequent attempted contact may also amount to undue harassment. This may occur, for example, where an automated dialler is used to make calls and a debtor’s number is returned to the queue within a short space of time after each attempted contact. Collectors should ensure that attempted contacts are not excessive. u Example: Unnecessary repeated contacts If you contact a debtor or other person multiple times a day, without allowing an appropriate interval for the debtor to respond, then this is likely to involve unreasonable contact and may amount to undue harassment. Such contact may arise, for example, from the use of an automatic dialler system which leaves messages on recording devices and continues to call the recipient repeatedly until a response is received or identification is confirmed. (e) Unnecessary or unreasonable contact through any means must be avoided. (f) It is important to cease your efforts to contact the debtor once you have reached the above recommended limits or if it is evident that further contact would not be for a reasonable purpose, unless the debtor invites the contact or there is some other legitimate reason for making further contact (for example, you are in the process of negotiating an agreement with a willing debtor). It is also important to cease your efforts to contact the debtor using a particular medium when the debtor has requested that this medium not be used and has provided you with an alternative method of contact. (g) Once you have made contact, leave a reasonable interval before next contacting the debtor. Give the debtor time to respond to your previous communications, and/or to organise payments if this has been agreed. u Example: Repeated contact without interval If you have spoken to the debtor and it is understood that the debtor requires a few days to speak to third parties or consider options, then contacting the debtor on the following day may be considered unreasonable, even if it is otherwise consistent with the recommended limits. Page 20 15Debt collection g u ideline2 f o r c o llectors a n d c reditors Face-to-face contacts (h) Further guidance is provided in part 2, section 7 of this guideline on when face-to-face contact with the debtor is appropriate. You should only make face-to-face contact when such contact is necessary and reasonable. In such cases, we recommend that you do not make more than one face-to-face contact with a debtor per month (if contact with the debtor actually takes place). Case Study The court ordered the defendant company to restrict its agents to a total of five personal visits (for the period of collection) unless a visit was specifically requested by the customer or a repayment agreement had been made and subsequently breached (in which case a further five visits could be made). ACCC v Esanda Finance Corporation Ltd [2003] FCA 1225 Third parties (i) We recommend that you do not contact a third party to obtain location information more often than once every six months. An exception is when permission to make further contact about the location of a debtor has been sought and given in advance by the third party. See part 2, section 8 of this guideline, Privacy obligations to the debtor and third parties and section 18 of this guideline, Conduct towards family members and other third parties. u Example: Frequency of third party contact If you contact a third party in an attempt to speak with a debtor, and that other person tells you that the debtor does not live at that address and they do not know the location of the debtor, or do not have further details to provide, or simply do not wish to provide further details about the debtor, then you should not contact that third party again, unless you have reason to believe that after six months or more they may be in possession of relevant information about the debtor. Undue harassment (j) Unduly frequent contact designed to wear down or exhaust a debtor, or likely to have this effect, constitutes ‘undue harassment’ or coercion and must be avoided. This is particularly likely if the collector makes a number of phone calls or other contacts in rapid succession. See part 3 of this guideline, Commonwealth consumer protection laws. 6. Location of contact (a) In most cases, the debtor’s home will be the appropriate place to contact a debtor, with contact by letter or telephone generally being the most appropriate mode of contact.13 However, if a debtor provides a telephone contact number (including mobile phone) as the means of contact, contact using that number will be appropriate whatever the debtor’s location. (b) Sometimes, a debtor may not wish to be contacted at their home. If the debtor provides an alternative and reasonable location for contact and can be contacted at that location, the debtor should not be contacted at their home. (c) You should carefully consider whether contacting the debtor at work on a switch number or reception (contrasted with the debtor’s direct work phone number) is appropriate and whether there are more suitable options available. Where contact is made at work, the debtor should be offered an opportunity to provide an alternate number to receive a call back at a more convenient time or nominate a preferred time for contact. 13 However note that some statutory notices must be sent to a particular address. Page 21 16Debt collection g u ideline2 f o r c o llectors a n d c reditors (d) Contact must not involve a breach of your privacy obligations to the debtor. See part 2, section 8 of this guideline, Privacy obligations to the debtor and third parties. 7. Face-to-face contact (a) We recommend that personal or ‘field’ visits generally be considered as an option of last resort. Generally, face-to-face contact should only be made if reasonable attempts to contact a debtor by other less intrusive means such as phone calls, emails or letters have failed, and face-to-face contact is considered appropriate and necessary. (b) Where face-to-face contact is necessary we recommend that it is made at the debtor’s home when possible during reasonable hours of contact, see part 2, section 4 of this guideline, Hours of contact. Making face-to-face contact with the debtor at work should be the last option. (c) Making a personal visit may be justified when a debtor refuses or fails to respond to other means of communication. Face-to-face contact may also be justified to verify the identity or location of a debtor when this is reasonably in doubt. (d) Written communications should only refer to the possibility of face-to-face contact where such contact is genuinely being contemplated as the most likely and appropriate next step. Where contact with a debtor has been established, face-to-face contact should not be threatened as part of a demand for payment. (e) Note—this guidance is not intended to limit otherwise legally permissible visits: ƒ to sight, inspect or recover security interests ƒ for the serving of legal process ƒ for the enforcement of court orders by officers appropriately authorised by the relevant court. Visiting the debtor’s home (f) Visits to a person’s home will often raise issues about the privacy of the debtor and/or third parties. This subsection should be read in conjunction with part 2, sections 8 and 18 of this guideline. (g) The following is recommended when visiting a debtor’s home: ƒ Generally, do not visit the debtor’s home uninvited when it is possible to ask permission to visit the debtor. If the debtor refuses the visit, you must not visit them.14 ƒ State clearly to the debtor the purpose of any visit before making the visit. ƒ Negotiate a mutually convenient time for the visit. Unless the debtor agrees to or specifies another time, we recommend that visiting times be consistent with the reasonable contact times set out in part 2, section 4 of this guideline, Hours of contact. ƒ Prior to any visit, allow the debtor time to either seek advice, support, or representation from a third party. ƒ Do not visit the debtor’s home if you know of special circumstances (for example, the debtor is seriously ill or mentally incapacitated) which would make face-to-face contact inappropriate. Leave the debtor’s premises immediately if you become aware of such circumstances during the visit. 14 If you enter the debtor’s premises when instructed not to do so, you risk breaching civil or criminal trespass laws. This is further discussed in Part 3 of this guideline. Page 22 17Debt collection g u ideline2 f o r c o llectors a n d c reditors Case study A company threatened to inform the debtor’s husband about her indebtedness in circumstances where the debtor had already told the company that her husband did not know and that she did not want him to know. The court found that the suggestion that there would be a marked car at the debtor’s house with two Sheriff’s officers, when combined with the observation that the collection officer knew that the debtor did not want her husband to know of the situation, was, in effect, a tactic by which the officer sought to intimidate the debtor and suborn her will. The conduct was held to be unduly harassing and coercive. ASIC v Accounts Control Management Services Pty Ltd [2012] FCA 1164 (h) You must leave the debtor’s premises immediately if, at any time, you are asked to do so. As well as breaching the prohibition on undue harassment and coercion15 refusing to leave someone’s property on request is likely to constitute a breach of civil or criminal trespass laws. This applies to service or trades people claiming they are not permitted to leave a consumer’s residence without receiving payment. (i) Whether before or after visiting a debtor, or at any other time, do not stay in the vicinity of the debtor’s home for an extended period of time or engage in any other conduct that may suggest to the debtor or a third person that the debtor or a member of the debtor’s household is under surveillance. Visiting the debtor’s workplace (j) Visiting a debtor’s workplace should only be undertaken as a last resort, unless the debtor: ƒ is the proprietor or a director of a business to which the debt relates ƒ has specifically requested or agreed to the visit. (k) If a debtor has asked that you do not visit them at their workplace, and has provided an alternative and effective means of communication, do not visit them at their workplace. (l) Visiting a debtor at their workplace will always involve a risk of breaching the collector’s privacy obligations to the debtor.16 Collectors will generally be asked to explain who they are and why they are visiting, and it will generally be difficult to provide an explanation without giving confidential information to third parties. (m) Visiting a debtor at their workplace uninvited may also be seen as an attempt to put pressure on the debtor by embarrassing or threatening to embarrass them in front of work colleagues. If this is found to have occurred, such conduct is likely to constitute undue harassment or coercion of the debtor. (n) If you do visit a debtor’s workplace: ƒ under no circumstances reveal to a third party, whether directly or indirectly, that the visit is in connection with a debt17 ƒ under no circumstances discuss the debt in front of co-workers18 ƒ leave immediately if, at any time, you are asked to do so by the debtor or another person.19 15 In Victoria, the failure to leave a person’s private residence when requested to do so is prohibited under s. 45(2)(d) of the Australian Consumer Law and Fair Trading Act 2012 (Vic). 16 See part 2, section 8 of this guideline, Privacy obligations to the debtor and third parties. 17 ibid. 18 ibid. 19 If you do not leave the debtor’s workplace when asked to do so, you risk breaching tort and/or criminal trespass laws. Also, in Victoria, the failure to leave a person’s workplace when requested to do so is prohibited under s. 45(2)(d) of the Australian Consumer Law and Fair Trading Act 2012 (Vic). Page 23 18Debt collection g u ideline2 f o r c o llectors a n d c reditors (o) A visit to a debtor’s workplace should be undertaken when you know the debtor will normally be at work. If you do not know the debtor’s working hours, we recommend that you limit any visit to between 9 am and 5 pm on weekdays. (p) Whether before or after visiting a debtor, or at any other time, do not stay in the vicinity of the debtor’s workplace for an extended period, or engage in any other conduct that may suggest to the debtor or a third person that the debtor is under surveillance. 8. Privacy obligations to the debtor and third parties The Office of the Australian Information Commissioner (OAIC) has responsibility for privacy regulation at the Commonwealth level.20 (a) A debtor’s personal information should always be treated with respect. The improper use of a debtor’s personal information may cause that person serious harm. (b) There are legal obligations under the Privacy Act 1988 (Cth) (the Privacy Act) designed to protect the privacy of a debtor’s personal information. (c) A debtor’s personal information may be regulated by the Privacy Act in a number of ways. Under the Privacy Act, personal information is defined as ‘information or an opinion about an identified individual, or an individual who is reasonably identifiable: a) whether the information or opinion is true or not, and b) whether the information or opinion is recorded in a material form or not.21 u Example: Personal information Obtaining a debtor’s contact details from their employer is collecting their personal information. Telling any third party the reason for trying to find the debtor will also disclose personal information about the debtor. Collecting and disclosing the debtor’s personal information (d) Information handling by private sector organisations is regulated, in part, by the Australian Privacy Principles (the APPs).22 (e) There are several key obligations around handling personal information: ƒ Personal information (other than sensitive information which is discussed below) must not be collected about an individual unless the information is reasonably necessary for one or more of your organisation’s functions or activities. Therefore, only collect information that is reasonably necessary to recover the debt. For example, do not write down extra information about the debtor from an identifying document just because it might be useful. ƒ Sensitive information must not be collected about an individual unless the individual has consented and the information is reasonably necessary for one or more of your organisation’s functions or activities. Some limited exceptions to this rule apply. Sensitive information includes information or an opinion about an individual’s race or religious beliefs, criminal record, health information, or membership of a professional or trade association. ƒ Personal information must be collected only by lawful and fair means and must be collected directly from the debtor, unless this is unreasonable or impracticable.23 ƒ When the debtor’s information is collected, whether from a creditor or from the debtor, take reasonable steps to let the debtor know: 20 The OAIC can be contacted on 1300 363 992 or www.oaic.gov.au. See also under Privacy laws in appendix B of this guideline. 21 Section 6 of the Privacy Act. 22 For more information on the APPs and how they are applied, see the APP guidelines at www.oaic.gov.au/privacy/ australian-privacy-principles-guidelines/. 23 See APP 3. Advice on the operation of APP 3 can be found in the APP guidelines at www.oaic.gov.au/privacy/australian- privacy-principles-guidelines/. Page 24 19Debt collection g u ideline2 f o r c o llectors a n d c reditors – the identity of the organisation collecting the information and how to contact it – the fact that the organisation has collected information and the circumstances of that collection – the purposes for which the information is collected – the main consequences (if any) for the individual if all or part of the information is not provided – any law that requires the particular information to be collected – the organisations (or types of organisations) to which the organisation usually discloses information of that kind – whether the organisation is likely to disclose the information to overseas recipients – the fact that the debtor may access the information collected – how the individual can complain about a breach of the APPs.24 ƒ Do not use or disclose the information for a purpose other than that for which it was collected unless the debtor has consented to that use or disclosure or another exception applies.25 ƒ Do not use or disclose personal information for direct marketing, unless certain matters are satisfied.26 ƒ Before disclosing personal information about a debtor to an overseas recipient, the collector must take such steps as are reasonable in the circumstances to ensure that the overseas recipient does not breach the APPs in relation to that information.27 (f) Caution should be exercised when leaving messages for the debtor that may be seen or accessed by third parties, for example: ƒ Business cards or other documentation should not be left for the debtor in any open manner that would allow a third party to infer the nature of your interest in contacting the debtor ƒ Voicemail messages should be phrased so as to avoid a third party inferring the nature of your interest in contacting the debtor ƒ At no stage should contact be made with a debtor’s social media account that would compromise the debtor’s privacy, for example, placing a message for the debtor in a way that would allow anyone other than the debtor to view it. u Example: Contact using social media As with other forms of contact, if you use social media such as Facebook to contact the debtor, then you must ensure such contact is not excessive and is always for a reasonable purpose; otherwise the contact may amount to undue harassment. You must also observe your privacy obligations when using such forums to make contact with the debtor. What you should do with the debtor’s personal information (g) Remember the following: ƒ Take reasonable steps to ensure that the personal information being collected is accurate, complete and up-to-date. Before using or disclosing the personal information, having regard 24 Advice about what steps might be reasonable in certain circumstances can be found in the APP guidelines at www.oaic. gov.au/privacy/australian-privacy-principles-guidelines/. 25 See APP 6. Advice on the operation of APP 6 can be found in the APP guidelines at www.oaic.gov.au/privacy/australian- privacy-principles-guidelines/. 26 See APP 7. Advice on the operation of APP 7 can be found in the APP guidelines at www.oaic.gov.au/privacy/australian- privacy-principles-guidelines/. 27 See APP 8. Advice on the operation of APP 8 can be found in the APP guidelines at www.oaic.gov.au/privacy/australian- privacy-principles-guidelines/. Page 25 20Debt collection g u ideline2 f o r c o llectors a n d c reditors to the purpose of that use or disclosure, take reasonable steps to ensure the information is accurate, up-to-date, complete and relevant28 ƒ If personal information is kept for any time, ensure it is secure against misuse, interference or loss and from unauth