Consumer watchdog took firm to court over its pursuit of unpaid debt from a disabled man and a single mother

This article is more than 1 year old

This article is more than 1 year old

One of Australia’s largest debt collection firms, ACM Group, has been ordered to pay $750,000 in penalties for aggressively pursuing unpaid debts from two vulnerable consumers, including a man who was permanently disabled after suffering strokes and had difficulty communicating.

The other consumer was a single mother with three children who worked part-time, was receiving Centrelink benefits and was concerned about protecting her lines of credit. Between 2011 and 2015, ACM harassed and misled the consumers over their unpaid mobile services debt, which ACM purchased from Telstra.

The case was brought to the federal court on behalf of the consumers by the Australian Competition and Consumer Commission.

Methods used by ACM included threatening legal proceedings if the debt was not paid within 48 hours, even though the firm had no intention of taking legal action.

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ACM also lied about having prepared documents for potential legal action. The firm told the single mother that if a default on payment was listed on her credit file, she would not be able to obtain credit for up to seven years, even though ACM had no reasonable grounds for the threat. The court heard ACM knew of each of the individual’s difficult personal circumstances.

The court accepted the mother’s evidence that she “felt stunned, physically sick, pinned to the wall, flustered, anxious and railroaded” into agreeing to pay a substantial amount to ACM to avoid legal proceedings.

In his judgment, published on Friday, Justice John Griffiths found ACM “engaged in undue harassment and coercion, and misleading or deceptive and unconscionable conduct in its dealings with two consumers in the course of its business of debt collection”.

“ACM sent repeated letters demanding payment and threatening legal proceedings to one consumer, who was suffering from a serious medical condition, was unable to pay and had difficulty communicating,” the judgment said. “ACM also made repeated telephone calls to the care facility where the debtor resided, in an attempt to recover the debt. The court found that ACM’s conduct towards this consumer constituted undue harassment.”

ACCC sought the maximum penalty of $1.1m for ACM’s conduct towards the first consumer and about $550,000 for its conduct towards the second consumer.

The high penalty was sought because the ACCC submitted that ACM’s conduct was among the worst kind, given the harassment occurred over a lengthy period and could constitute bombardment, with the disabled consumer receiving 20 letters of demand and about 40 telephone calls to his residential care facility.

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Griffiths found there could be “no doubt” ACM’s conduct towards the consumers was deliberate.

“I accept that the numerous letters of demand were generated and sent automatically, rather than dispatched by a conscious and deliberate act,” he said. “That does not mean that automation excuses the conduct.”

ACM told the court the case brought by the ACCC had affected its profitability. Lawyers representing the firm said it had undertaken a significant restructuring of its business operations to improve its culture, business systems, training processes, compliance and the way in which it dealt with customers, and that these changes “were time-consuming, costly and required significant work”.

The ACCC commissioner Sarah Court said it was one of the worst cases of unconscionable conduct the agency had seen in the debt collection sector.

“This penalty sends a signal to all business in the debt collection sector that their standards of behaviour must comply with the Australian consumer law when they are seeking to recover debts,” she said.