Panthera, being pursued by consumer watchdog, is parent of ARL, contracted to recover debt from welfare recipients

This article is more than 1 year old

This article is more than 1 year old

The parent company of a debt collector handed $3.3m in taxpayer dollars to pursue welfare recipients over robodebts and other overpayments is being sued by the consumer watchdog for alleged harassment, coercion and unconscionable conduct.

ARL Group was among three companies to share in $16.5m in contracts to carry out debt recovery services for the Department of Human Services in the 2019-20 financial year, tender documents published in July show.

The parent company is the Queensland-based debt acquisition and collection agency Panthera, which since July has been facing court proceedings brought by the Australian Competition and Consumer Commission (ACCC). The link between the two companies was first reported by the IT News website on Tuesday.

Huge rise in Centrelink seizing tax returns to repay robodebts Read more

In court filings, the ACCC alleged that ARL’s parent company Panthera unduly harassed three consumers over electricity and phone company debts they did not owe.

It accused Panthera of undue harassment and coercion, unconscionable conduct, and a false and misleading representation, the documents state. The allegations include placing an incorrect default listing on the consumers’ credit rating files and imposing “onerous requirements on these consumers to ‘prove’ they didn’t owe the debts”, the ACCC said.

It comes as the Coalition’s data-matching debt recovery scheme faces a federal court challenge and a possible class action, while Labor and the Greens have called for it to be abolished.

In particular, the Department of Human Services has faced particular criticism for referring thousands of debts to external debt collectors. Between 2016 and 31 March 2019, more than 170,000 robodebts were handed to an external agency.

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Amid this push, welfare recipients have complained that the first they have heard about their alleged debt is after being contacted by an external debt collector, while a Senate inquiry heard evidence of government-contracted debt collectors threatening to garnish the wages of people caught up in the scheme.

While the department continues to use external agents to chase debts, Guardian Australia revealed on Monday that it is also increasingly seizing tax returns over alleged robodebts. It stepped back the use of external debt collectors on the robodebt scheme after the tactic caused significant criticism in 2017.

After receiving more than 100 complaints, the ACCC lodged its action against Panthera on 24 July. The Department of Human Services debt recovery contract handed to its subsidiary, ARL, was published on 29 July. However, it would have been signed earlier given it spans from 1 July 2019 to 30 June 2020.

While Panthera became the sole owner of ARL Group in February 2018, a spokesman told Guardian Australia they operated as separate entities.

A spokesman for Panthera said the company informed its clients, which include the Department of Human Services and the federal education department, of the ACCC action.

“When the ACCC notified Panthera of its action, we were highly proactive and notified all clients,” he said.

“Panthera Finance takes these matters very seriously and we’re currently working with the ACCC to resolve the issues raised in their report,” the spokesman added.

“We are dedicated to maintaining the highest standards of service to our customers at all times, and constantly improving our policies and procedures to enable us to remain ahead of the market on compliance and training. We note that these ACCC matters are three cases of some 50,000 attempted contacts we make per day across our 1.3 million customers.”

The Department of Human Services spokesman, Hank Jongen, said the department did not have a commercial relationship with Panthera Finance.

“The department does have commercial arrangements with a number of other companies for the provision of certain debt recovery services,” he said.

Jongen said the department would take action if it became aware of issues with the performance or conduct of the contracted providers.

As part of the new debt recovery contracts, the department also handed $8.8m to Milton Graham, which formerly traded as Dun and Bradstreet, and $4.4m to Probe Group.