ACM Group Ltd Accused of Harassing Telstra Customers Over Unpaid Debts

Friday 3 June 2016 @ 9.10 a.m. | Legal Research | Trade & Commerce

As revealed recently in an ACCC Media Release, the Australian Competition and Consumer Commission (ACCC) has commenced proceedings in the Federal Court against debt collection firm ACM Group Ltd (ACM). 

The ACCC alleges ACM engaged in misleading or deceptive conduct, harassment and coercion, and unconscionable conduct in dealings with two consumers in contravention of the Australian Consumer Law (ACL) [Sch 2 to the Competition and Consumer Act 2010 (Cth)] and/or the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act).

About ACM

ACM purchases debts from companies, including telecommunications companies, utility companies and banks, and then attempts to recover all or part of the debt. The company is the largest privately owned debt acquisition firm in Australia. In 2012, in a case brought by ASIC, the Federal Court found that ACM had harassed and coerced consumers and engaged in “widespread” and “systemic” misleading and deceptive conduct when seeking to recover money. The ACCC’s current action relates to two instances of conduct which it considers particularly concerning.

In addition to alleged contraventions of the ACL, the ACCC alleges, in the alternative, that ACM’s conduct contravened the ASIC Act. This relies on a delegation of power from ASIC to the ACCC.

ACM’s conduct

The first alleged victim was "a resident in a care facility" who was harassed between 2011 and 2015, while the second Telstra customer was "a single parent with a limited income" who was pursued in September 2014.

The first victim, according to the ACCC, was the recipient of "undue harassment" with repeated phone calls and letters despite ACM's awareness that he had:

"… difficulty communicating, was highly vulnerable and had no capacity to repay the debt".

The second victim was allegedly told that failing to make an immediate payment would affect her ability to obtain credit for five to seven years, even though ACM had no "reasonable grounds" to make such a claim.

The debt collection firm also allegedly informed both consumers that the company was about to start legal action, when this was untrue. The second consumer was told that the company was preparing a summons, even though this was not the case.

The allegations against ACM

The ACCC alleges that ACM engaged in misleading or deceptive conduct by representing to:

  • both consumers that ACM was about to commence legal proceedings against them when this was not the case; and
  • the second consumer that ACM was preparing to issue them with a summons when ACM was not planning to do so, and that failing to make an immediate payment to ACM would affect their ability to obtain credit for five to seven years when ACM did not have reasonable grounds to make that statement.

It is also alleged that ACM:

  • engaged in undue harassment by repeatedly contacting the first consumer by phone and letter when ACM was aware that he had difficulty communicating, was highly vulnerable and had no capacity to repay the debt; and
  • engaged in coercion by representing to the second consumer that ACM was going to take legal action or issue a summons and that failing to make an immediate payment to ACM would affect their ability to obtain credit for five to seven years.

The ACCC also alleged that ACM’s conduct in dealing with each of these consumers was, in all circumstances, unconscionable.

The ACCC Chairman Rod Sims said:

“Conduct affecting vulnerable consumers is an enforcement priority for the ACCC. The ACCC has brought these proceedings because the alleged conduct by ACM, in seeking to recover debts ACM had purchased from Telstra, was in our view contrary to accepted community values and standards of fairness in dealing with consumers, especially those who are vulnerable. This action is part of our joint efforts with the Australian Securities and Investments Commission to improve debt collection practices. The ACCC has worked with debt collectors and businesses who assign debts, to ensure that collection activity complies with best practice and the law. We are now taking enforcement action to reinforce these efforts.”

The ACCC is seeking pecuniary penalties, declarations, injunctions, orders for an ACL compliance program, publication orders and costs.

TimeBase is an independent, privately owned Australian legal publisher specialising in the online delivery of accurate, comprehensive and innovative legislation research tools including LawOne and unique Point-in-Time Products.

Sources:

ACCC accuses debt collector of 'harassing' Telstra customers – crn.com.au

ACCC takes action against debt collection firm ACM Group Ltd – ACCC Release MR 94/16 

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