There has never been a more important time to know your rights when it comes to debt collection agencies. A warning to all Australians to verify callers are indeed who they say they are, as scams around debt collection begin to surface. We look at where people are being caught out and what your rights are when speaking to any type of debt collector.

By Graham Doessel, Founder and CEO of MyCRA Credit Rating Repair  and www.fixmybadcredit.com.au.

Got a few debts in your past? Often if you have an outstanding account the Creditor may have on-sold the debt to a debt collector– and it is this separate entity which may need to recover lost money and even place a default on your credit rating. If you are aware of this, it may come as no shock that you could receive phone calls from a debt collector chasing money from you.

But just because you may be in default on an account, or even be in the process of Court proceedings against you, doesn’t mean you should be at the mercy of phone calls which make you feel threatened or uncomfortable.

Particularly, since the caller may not have a legitimate reason to be calling. It was reported in the Herald Sun yesterday that bogus debt collectors are making phone calls to households around Australia threatening legal action and other consequences unless they pay up. The warning came from Consumer Affairs Victoria – and involves scammers claiming to be from a company that prevents unwanted sales calls, tricking people into clearing fake debts. So even if you know you owe money – make sure the person who’s calling can verify their relationship to your specific Creditor before you give away any personal details, or God forbid, you hand over any money.

Here is an excerpt from that Herald Sun story:

“They say you have to attend a court hearing in Sydney, or can settle the ‘debt’ by paying thousands of dollars,” said CAV’s acting director, Phil D’Adamo.

“The caller then tells you to telephone the company’s lawyer. But the number they give you connects to the scammers at an overseas call centre.”

The name of a legitimate overseas company and particular courts are often used…

Other approaches included that of a fake solicitor, supposedly acting for a bank, claiming police would come to the person’s home with an arrest warrant unless they attended court or paid $9200.

Another householder was told that he had to attend court in Sydney because he was being sued for fraud, but he could settle the case out of court for $6500.

Inquiries into the origin of the scam are continuing.

Mr D’Adamo said court registries could confirm whether hearings were legitimate.

There are a number of ways you can report a scam. You can report it through a national scam register such as the ACCC’S SCAMWatch www.scamwatch.gov.au.

Or you can contact a consumer protection agency in your State.

If you are wishing to avoid unwanted sales calls can join the free federal Do Not Call Register.For details visit donotcall.gov.au

What are the rules governing debt collection agencies?

If you are unsure whether the debt collector you are dealing with is behaving according to the law, you can download a brochure from Australian Securities and Investment Commission (ASIC). The PDF ‘Debt Collection: Your Rights’ outlines the general rules debt collectors need to follow when attempting to recover a debt.

In this document ASIC has been specific as to what is not acceptable behaviour by a debt collector – so if you are not sure if a debt collector has been behaving fairly, you can check this list or contact ASIC or the Australian Competition and Consumer Commission (ACCC).

Remember, at no time is extreme conduct such as force, trespass, or intimidation acceptable behaviour, and ASIC also considers harassment, verbal abuse, and an overbearing manner to be unreasonable contact.

Debt collectors must not:

• make false statements about the amount you owe, or the status of your debt, for example:

– say you owe a debt when you do not

– say the amount you owe is greater than it is

– say that you have no choice but to pay a debt if you have a valid defence against payment, unless there has been a court judgment (if you are disputing a debt, a debt collector should stop collection activity until any reasonable request for information—such as giving you copies of accounts and contracts – has been met, and the debt has been confirmed)

– say that your spouse or partner must pay your debt when they have no legal liability to do so

– say that there has been a court judgment if this is not true

• make false statements about what will happen if the debt is not paid, or what the debt collector intends to do, for example:

– say that unpaid debts are a criminal offence involving the police or possibly jail (being in debt is not a crime!)

– say that your children can be taken away from you (this is completely false)

– say that you will be made bankrupt immediately, even though there has been no court judgment or bankruptcy proceedings started

– say that your goods (for example, your car) will be seized and sold immediately, even though there is no mortgage over the goods and no court judgment (if there is a mortgage over the goods, generally you must be given notice and 30 days to pay first)

– say that your wages will be garnished (taken), even though a court order to allow this has not been obtained

– say that your credit rating will be damaged, if that is not true (privacy laws limit the type of information that a credit reporting agency can hold on file, how long it can be listed on file, and who can access the information)

• use other misleading appearances or actions, for example:

– send letters demanding payment that are designed to look like court documents

– pretend to be (or pretend to act for) a solicitor, court or government body.

Knowing your rights may prevent you from being caught out by either bogus debt collectors or legitimate ones behaving inappropriately.

If you think that a debt collector has breached the ASIC/ACCC Debt Collection Guidelines, call ASIC’s Infoline on 1300 300 630 or email Infoline@asic.gov.au, or visit www.asic.gov.au/complain  to make a complaint online.

Image: David Castillo Dominici/ www.FreeDigitalPhotos.net