Tag: ACCC

Older Investors Most Likely To Be Scammed

ASIC says “The Targeting Scams report published today shows losses reported to the Scamwatch website from investment scams doubled in 2015. ASIC is alerting the public to the ways they can protect themselves from scams that are designed to steal their money,” ASIC’s Deputy Chairman Peter Kell said.

“The ScamWatch data published by the ACCC indicates that a wide variety of scams, including investment and ‘get rich quick’ scams, continue to hit Australians. Overseas based scammers in particular commonly target consumers in wealthier countries such as Australia. People over 55, many of whom are looking for investment returns in a low interest rate environment, are often most at risk,” he said.

“ASIC received 367 reports about scams in 2015, although in our experience scams are often under reported.  The number of Australians contacted by scammers, and the amounts of money lost, are likely to be much larger than what is reported to us.”

In 2015 the top five types of scams reported to ASIC were:

  • overseas cold calling about investment opportunities;
  • overseas calls offering easy credit or loans after payment of an upfront fee;
  • sports arbitrage or gambling schemes;
  • money transfer schemes (job opportunity or other fraud); and
  • fake debt and invoice scams.

“The scams reported to ASIC generally come from overseas. In many cases the pitch to consumers is so professional, slick and believable that it is hard to tell these are not genuine financial opportunities. Scammers have sophisticated sales practices that include call scripts, false paperwork, fake websites and made-up referees,” Mr Kell said.

Typically, investment and financial scams will offer:

  • High, quick returns and sometimes tax-free benefits;
  • Big rewards for what seems a small upfront payment;
  • Discounts for early bird investors;
  • ‘No risk’ or ‘low risk’ investments, where ‘you can sell anytime’, get a refund for non-performance or have ‘guaranteed’ transactions;
  • Inside information or the opportunity to invest before a public float; or
  • ‘Magic’ software that claims to predict sporting results or promises to makes you rich through active share trading.

During Consumer Fraud Week 2016, the Australian Securities and Investment Commission is warning consumers and investors to ‘Wise Up to Scams’ and do some simple checks before they part with their money.

Consumers Eat More Data For The Same Price – ACCC

The Australian Competition and Consumer Commission has published its annual reports on the telecommunications sector for 2014–15. This year’s reports show that consumers continue to benefit from competition in the sector. However consumers in regional areas are less well served.

“Consumers are reaping the benefits of competition in the form of increased data allowances, new services, and lower prices,” ACCC Chairman Rod Sims said.

“Consistent with the trend in recent years, consumer demand for data is continuing to increase and is affecting both fixed and mobile networks.  On fixed networks, data consumption grew by 40 per cent to 1.3 million terabytes (TB) of data. On mobile networks, data consumption increased by 35 per cent to 110 000 TB.”

“The increase in demand for data is largely due to the popularity of audio-visual streaming services, including the introduction of subscription video on demand (SVOD) services such as Netflix, Presto, and Stan,” Mr Sims said.

Industry members have responded to the increase in demand by investing in their fixed and mobile networks to make sure that they have sufficient capacity to meet the data traffic.

Service providers have also responded by increasing data allowances. During 2014-15, data allowances increased by over 70 per cent for DSL internet services and more than doubled for post-paid mobile services.

At the same time, overall prices fell by 0.5 per cent in real terms in 2014-15.

“While a smaller reduction than in the previous eight years, which has seen a 3.3 per cent fall each year on average, this indicates that competition on factors other than price has been a feature of the market,” Mr Sims said.

“Given this, the ACCC will continue to take a particular interest in ensuring consumers receive accurate information about network performance.”

A number of important mergers and new alliances occurred in the past year, including TPG’s acquisition of iiNet and NBN Co’s acquisition of Optus’ hybrid fibre coaxial (HFC) network.

“The fixed broadband market is now relatively concentrated and further consolidation would receive close attention from the ACCC,” Mr Sims said.

The recent industry consolidation may reflect a desire to grow not only in response to increasing data traffic, but also to the growing presence of the National Broadband Network (NBN). The rollout of the NBN is one of the most significant features of the telecommunications market with nearly 700, 000 active services in 2014–15. The scale and complexity of the multi-technology mix NBN and its implications for competition and consumers continues to be a major area of ACCC interest.

“The communications sector faces a number of challenges in the transition to the NBN and as network operators manage increasing data traffic. We will continue to watch these developments closely and work to ensure that consumers continue to benefit from competition”, Mr Sims said.

 

ACCC takes action against Woolworths for alleged unconscionable conduct

The Australian Competition and Consumer Commission has instituted proceedings in the Federal Court against Woolworths Limited, alleging it engaged in unconscionable conduct in dealings with a large number of its supermarket suppliers, in contravention of the Australian Consumer Law.

The ACCC alleges that in December 2014, Woolworths developed a strategy, approved by senior management, to urgently reduce Woolworths’ expected significant half year gross profit shortfall by 31 December 2014.

It is alleged that one of the ways Woolworths sought to reduce its expected profit shortfall was to design a scheme, referred to as “Mind the Gap”. It is alleged that under the scheme, Woolworths systematically sought to obtain payments from a group of 821 “Tier B” suppliers to its supermarket business.

The ACCC alleges that, in accordance with the Mind the Gap scheme, Woolworths’ category managers and buyers contacted a large number of the Tier B suppliers and asked for Mind the Gap payments from those suppliers for amounts which included payments that ranged from $4,291 to $1.4 million, to “support” Woolworths. Not agreeing to a payment would be seen as not “supporting” Woolworths.

The ACCC also alleges that these requests were made in circumstances where Woolworths was in a substantially stronger bargaining position than the suppliers, did not have a pre-existing contractual entitlement to seek the payments, and either knew it did not have or was indifferent to whether it had a legitimate basis for requesting a Mind the Gap payment from every targeted Tier B supplier.

The ACCC alleges that Woolworths sought approximately $60.2 million in Mind the Gap payments from the Tier B suppliers, expecting that while many suppliers would refuse to make a payment, some suppliers would agree. It is alleged that Woolworths ultimately captured approximately $18.1 million from these suppliers.

“The ACCC alleges that Woolworths’ conduct in requesting the Mind the Gap payments was unconscionable in all the circumstances,” ACCC Chairman Rod Sims said.

“A common concern raised by suppliers relates to arbitrary claims for payments outside of trading terms by major supermarket retailers. It is difficult for suppliers to plan and budget for the operation of their businesses if they are subject to such ad hoc requests.”

“The alleged conduct by Woolworths came to the ACCC’s attention around the time when there was considerable publicity about the impending resolution of the ACCC’s Federal Court proceedings against Coles Supermarkets for engaging in unconscionable conduct against its suppliers,” Mr Sims said.

“Of course, the allegations against Woolworths are separate and distinct from the Coles case.”

The ACCC is seeking injunctions, including an order requiring the full refund of the amounts paid by suppliers under the Mind the Gap scheme, a pecuniary penalty, a declaration, and costs.

These proceedings follow broader investigations by the ACCC into allegations that supermarket suppliers were being treated inappropriately by the major supermarket chains.

ACCC authorises system to facilitate credit reporting

The Australian Competition and Consumer Commission has granted authorisation for five years to the Australian Retail Credit Association Ltd (ARCA) in relation to principles for exchanging comprehensive consumer credit data between signatory credit reporting bodies and lenders.

ARCA represents lenders and credit reporting bodies in Australia and has developed the principles in a process involving its members and industry since July 2013. This follows reforms to the Privacy Act which expand the type of consumer credit information that can now be shared.

The ACCC received a large number of submissions from industry in response to the application and its draft determination, with general support for the principles.

“Access to more consumer credit information will allow lenders to make better credit decisions, with resulting benefits for consumers in the form of greater financial inclusion for consumers and assisting to reduce consumer over-indebtedness,” ACCC Deputy Chair Delia Rickard said.

“This will lead to increased competition between credit reporting bodies and between lenders, and assist lenders to comply with their responsible lending obligations at less cost.”

The ACCC has considered a concern raised that some provisions are unduly prescriptive and will impose costs on smaller credit providers who wish to have an agreement with more than one credit reporting body. Also consumer advocacy bodies want to include provisions about recording repayments under financial hardship arrangements.

“The ACCC accepts that there are some potential public detriments arising from the costs imposed by the provisions. However, these costs appear to be relatively small and offset by the cost savings and other benefits of these provisions,” Ms Rickard said.

“Each credit provider will make a commercial decision whether or not to provide data and consume data from multiple credit reporting bodies.”

“ARCA is working to resolve the issues around reporting of financial hardship arrangements, and will need to involve industry and relevant regulators. The ACCC will be keen to see this matter resolved in assessing any application for re-authorisation.”

Authorisation provides statutory protection from court action for conduct that might otherwise raise concerns under the competition provisions of the Competition and Consumer Act 2010. Broadly, the ACCC may grant an authorisation when it is satisfied that the public benefit from the conduct outweighs any public detriment.

More information about the application for authorisation is available at Australian Retail Credit Association Ltd Authorisation A91482

ACCC Chairman discusses competition law and economics

Australian Competition and Consumer Commission Chairman Rod Sims today delivered the opening address at the 13th Annual Competition Law and Economics Workshop in Adelaide.

This year the ACCC and the University of South Australia are co-hosting the two-day event for the first time. The workshop will bring together local and international experts to discuss the practical application of competition law and economics.

Introducing the workshop theme, Mr Sims discussed issues confronting the ACCC when applying Australia’s competition law, the importance of the Harper Review and the reality of increasing globalisation.

“There is a criticism that competition agencies, are either overly legalistic in the way they interpret the law, or overly theoretical in the way they apply the law,” Mr Sims said.

“An example arises with the emergence of many peer-to-peer business models, which the ACCC strongly welcomes. The ACCC is keen to ensure incumbent firms, with substantial market power, do not attempt to thwart new business models, and indeed, the potential for creative destruction.”

“Some have said we are adopting a theoretical approach, out of touch with the real world; we should simply stand back and observe.”

Citing the recent ihail draft decision, Mr Sims dismissed such claims. He said the ACCC is acutely aware of the profit maximising incentives and strategies of commercial firms, and that this approach is inherent in the ACCC’s competition assessments.

Mr Sims also spoke about the importance and challenges of making evidence based decisions, often in the face of speculative predictions of parties with vested interests.

In the second part of the speech, Mr Sims said the ACCC is very supportive of the vast majority of the Competition Review Panel’s findings, both as they relate to the Competition and Consumer Act and policy settings more broadly.

“The Harper Review’s recommendations on competition law showed a desire to both take a real world view, and a desire to bring our law into line with that applying overseas,” Mr Sims said.

“Harper’s recommendations on mergers and concerted practices illustrate this, as does the Panel’s recommendation on the misuse of market power.”

Mr Sims said other Harper recommendations do not get the focus they deserve.

“I believe Harper’s recommendations on collective bargaining, which could more readily allow collective boycott, can improve the bargaining power of small businesses and farmers in particular circumstances.”

“Another important recommendation, that does not get enough attention, is to ensure the CCA’s treatment of commercial activities by governments is consistent with those of private sector players.”

In the final part of his speech, Mr Sims discussed the reality of increasing globalisation and the response from competition agencies.

“Economic globalisation has resulted in an increasing number of reviews of mergers and investigations into cartels and unilateral conduct that transcend jurisdictional boundaries. This reality requires competition agencies, including the ACCC, to act cooperatively and collaborate,” Mr Sims said.

“Our engagement with other competition agencies has also helped us understand the significance of competition advocacy and impressed on us the value of market studies as a tool for analysing complex competition and consumer problems.”

“We are now more actively using the market studies tool with studies currently focussing on the Eastern Australian gas market as well as petrol markets in particular regional cities.”

Private Health Insurance Sector Needs Reform

The ACCC has released its 16th report to the Australian Senate on competition and consumer issues in the private health insurance industry for the period 1 July 2013 to 30 June 2014. The ACCC has previously found that the industry is characterised by information asymmetry and complexity. These findings have been replicated in this report. The ACCC has an obligation to provide an annual report on competition and consumer issues within the private health insurance industry under an Australian Senate order. However, seems that not much follows from such reviews!

The private health insurance industry is an important component of the Australian health care system. The number of people with private health insurance has been growing steadily, with year on year average increases of 2.5 per cent over the last 10 years. At the end of 2013–14, 47.2 per cent of the population was covered for hospital treatment and 55.2 per cent was covered by general treatment policies, commonly referred to as ‘extras’ cover. Health insurers generate revenue from the sale of health insurance policies as well as through the investment of premium reserves. Currently there are over 20 000 private health insurance policies on offer to consumers in Australia. Over the next five years, industry revenue and profit are forecast to grow at a compound annual rate of 6.4 per cent to reach $28.8 billion. Annual revenue in 2014-15 is estimated at $21.1bn and returning $1.5bn in profit. There are 34 businesses providing health care insurance.

Their main findings were:

First, there are market failures due to asymmetric and imperfect information. This leads to complexity in private health insurance policies, which reduce consumers’ ability to compare policies and make informed choices. Further, consumers have limited information about their likely future health needs, which may lead to consumers underestimating their future medical needs and instead focusing on the immediate costs and benefits of private health insurance.

Second, existing regulatory settings can change consumers’ incentives in purchasing private health insurance and drive insurers to offer products to primarily reduce consumers’ tax liabilities, rather than also focussing on consumers’ current and future medical needs (which are difficult to predict). As funds respond to market demand for affordable policies, there are increasing policy limitations and exclusions leading to higher numbers of consumers having policies with less cover than they expected. This leads to an increased risk of consumers facing unexpected out-of-pocket expenses and general dissatisfaction with the system. We accept that some consumers in purchasing private health insurance may only be seeking to reduce their tax burden and/or the risk of the LHC loading. However, they still expect basic
cover from their purchase.

Third, while health insurers may be strictly compliant with the requirements of the Private Health Insurance Act and the Code, the research has revealed examples where representations by insurers to consumers, including when entwined with policy variations, may be at risk of breaching the consumer laws.

There were some interesting consumer insights:

Consumers’ understanding of policy benefits and exclusions will vary depending on the complexity of the information provided and their familiarity with the health system and their health needs. Where insurers provide information that is overwhelming, incomplete or complex, it is less likely that consumers will be able to exercise informed choices to purchase cover that is appropriate to their needs and circumstances. In turn, these consumers are more likely to face unknown or hidden costs of private services that are not covered in full by their insurance. There are a range of factors in the private health sector that increase complexity for consumers, including:

  1. regulatory settings, providing participation incentives and government rebates that vary depending on age and income
  2. policy exclusions, excesses, co-payments and waivers
  3. preferred provider arrangements
  4. the rewards and benefits being offered by larger insurers if certain conditions are met.

Adding to the complexity is the sheer number of options available, and that each insurer has different terminology and ways of presenting information, which makes comparisons difficult. Policies can contain a mix of levies, surcharges and rebates. Sometimes the specific details are hidden or obscured in lengthy and complex policy documents that are not easily accessible to consumers. In addition, private health insurance contracts allow for the insurer to unilaterally vary a consumer’s policy terms, conditions and exclusions (subject to private health insurance legislation). This means that even where a consumer spends considerable effort in understanding the policies on offer in order to make an informed choice, that effort may become redundant if an insurer subsequently decreases the cover provided. Under the ACL, provisions that allow such unilateral variations may constitute unfair contract terms (subject to a number of exemptions), particularly if the term is not transparent and causes consumer detriment.
The mix of levies, combined with a tendency by funds to change their policies over time, make it difficult for even astute consumers to judge the true cost and value of their private health insurance.

Most consumers with private health insurance will access some of their benefits at some point. The quantitative research found that while 30 per cent of consumers rarely access their benefits, 43 per cent sometimes do and 18 per cent do so frequently. Eight per cent had not yet accessed their private health insurance. The quantitative research also indicates that consumers who regularly use their private health insurance are more likely to feel informed about their health insurance, and confident they have received all they expected in terms of their rebate or claim. However, the data further discloses
that one quarter of consumers who have accessed their benefits have experienced at least one occasion where their expectations were not met, largely because they were dissatisfied with the claim amount or believed they were covered for something that they were not.

The quantitative research found that just under two thirds of all respondents have had private health insurance for 10 or more years. However, only 14 per cent of respondents had changed insurers, despite 48 per cent having thought about changing insurer and some taking steps to do so without completing the transaction. For respondents who have changed insurer or contemplated it, the most reported reason was that the premium was too expensive (57 per cent), followed by dissatisfaction with claim amount and policy benefits and exclusions (both 6 per cent). Respondents who have thought about changing private health insurers but have not done so, reported that their main reason for not changing was that they have not found an insurer that meets their needs (21 per cent), whilst 12 per cent considered that the process of changing is too difficult.

 

ACCC Fixed Line Services Decision Leads to 9.4% Fall in Access Prices

The Australian Competition and Consumer Commission has released its final decision on the prices that other operators pay to use Telstra’s (ASX:TLS) copper network to provide telecommunications services to consumers.

The final decision will require a one-off uniform fall of 9.4 per cent in access prices from current levels for the seven fixed line access services. This revises the 9.6 per cent fall estimated in the June further draft decision. The new prices will apply from 1 November 2015 until 30 June 2019.

“The ACCC has dealt with a number of complex issues during this inquiry, including the unique circumstances of the transition from Telstra’s copper network to the NBN. Our final decision on prices is the result of a number of considerations, with downward pressures more than offsetting upward pressures,” ACCC Chairman Rod Sims said.

“Downward pressures largely come from lower expenditures, falling cost of capital, the treatment of the effects of migration to the NBN and updated information on the NBN rollout. These more than offset upward pressures from a shrinking fixed line market due to consumers moving away from fixed line services and to mobile services.”

“Importantly, users of Telstra’s network should not pay the higher costs that result from fewer customers as NBN migration occurs. If there is no adjustment for these higher costs then customers who have not yet been migrated to the NBN will ultimately pay significantly higher prices for copper based services,” Mr Sims said.

“The ACCC has taken this approach because it considers that users of the fixed line network have not caused the asset redundancy and under-utilisation and will not be able to use those assets and capacity in the future. It would not be in the long term interests of end users (LTIE) for costs to be allocated to users of the network who do not cause them, particularly when Telstra has an avenue to recover those costs.”

NBN Co released new information on its rollout plan in August 2015 and the ACCC’s decision accepts Telstra’s expenditure forecasts subject to updating for that latest information. The allowed expenditure is also subject to exclusion of the capital and operating expenditures that are specific to the NBN and which should not be recovered from users of the copper network.

The ACCC’s final decision also covers connection and disconnection charges and a decision to not exempt the CBD areas from coverage under the final access determinations.

The ACCC’s final decision and related materials available at http://www.accc.gov.au/regulated-infrastructure/communications/fixed-line-services/fixed-line-services-fad-inquiry-2013

ACCC not to oppose Macquarie’s bid for Esanda

The Australian Competition and Consumer Commission has announced that it will not oppose Macquarie Group Limited’s (ASX:MQG) (Macquarie) bid for the Esanda Dealer Finance business (Esanda) from the Australian and New Zealand Banking Group (ASX: ANZ). Both Macquarie and Esanda provide motor vehicle finance to motor vehicle dealerships and consumers throughout Australia.

The ACCC concluded that the possible acquisition was not likely to substantially lessen competition in the market for the supply of bailment finance and point-of-sale (POS) finance facilities to motor vehicle dealerships.

“The ACCC had some concerns that the proposed acquisition may lead to increased bailment interest rates (or lower commissions to dealers on POS finance), particularly for dealerships that do not have access to an aligned or in-house finance provider,” ACCC Chairman Rod Sims said.

“However, the ACCC concluded that on balance the combination of existing and potential competitive constraints would be sufficient to prevent a substantial lessening of competition as a result of the possible acquisition. The merged entity will face competition from Westpac/St George and manufacturer-aligned financiers as well as the possibility of new entry, and pressure from vehicle manufacturers (OEMs) to ensure that their dealers’ finance offers remain competitive with those of other dealers.”

Several vehicle manufacturers in Australia have an aligned finance arm, including Toyota Finance, Nissan Finance, BMW Finance, VW Finance and Mercedes Finance. Although aligned financiers generally only offer wholesale finance to dealerships which sell vehicles of their manufacturer, the ACCC understands that most dealerships in Australia sell multiple brands of vehicles. Accordingly the proportion of dealerships without access to an aligned financier is small. Further, one of the aligned financiers, Alphera, competes for non-BMW dealerships despite being owned by BMW.

“The ACCC also noted that if the merged entity were to increase bailment rates and/or decrease POS commissions, this would provide an incentive for other providers, including manufacturer aligned financiers such as Toyota Finance and Nissan Finance, to begin to compete for the business of unaffiliated dealerships,” Mr Sims said.

The ACCC also considered that the competitive nature of car retailing may impose a further indirect competitive constraint on Macquarie. OEMs without their own finance arms (such as GM Holden, Ford and Mazda) need to ensure that their dealers remain competitive with other OEMs’ dealers. If they perceived that increased finance costs were affecting sales of their vehicles they would have an incentive to respond. OEMs already seek to ensure competitive finance options are available to their dealers by running tenders and appointing financiers to be the ‘white label’ finance provider to their dealerships. OEMs may also be able to use these tender processes to introduce another financier into the market.

Bailment finance is acquired by dealerships to finance the vehicles held in their showrooms before they are sold to customers. Dealerships also acquire POS finance facilities to enable them to offer finance to customers purchasing vehicles, and earn commissions on the customer finance contracts they arrange.

ACCC releases comparator website guidance

The Australian Competition and Consumer Commission has released consumer and industry guidance on the operation and use of comparator websites.

“The consumer guidance offers tips to help consumers get the best outcomes when using comparator websites. The industry guidance sets out the standards that the ACCC expects comparator websites to meet,” ACCC Deputy Chair Delia Rickard said.

“Comparator websites can drive competition and assist consumers to make informed purchasing decisions when comparing what are often quite complex products. However, the ACCC is concerned that poor conduct by some industry participants can mislead consumers,” Ms Rickard said.

The consumer guidance sets out tips that can assist consumers to understand and benefit from comparator websites, including:

  • Making sure they know what is being compared
  • Understanding commercial relationships
  • Know what their needs are.

The industry guidance is targeted at the operators of comparator websites and businesses whose products are listed on them. This guidance sets out how industry can comply with competition and consumer protection laws, including setting out three guiding principles of:

  • Facilitating honest, like for like comparisons
  • Being transparent about commercial relationships
  • Clearly disclosing who and what is being compared.

“Operators should carefully read this guidance as there will be no excuse for non-compliance with the Australian Consumer Law, and the ACCC will continue to take action where necessary,” Ms Rickard said.

The ACCC’s recent review of comparator websites was prompted by consumer and business complaints of misleading information being provided to consumers. The ACCC found that a number of websites, in particular those comparing energy plans, included information that may mislead consumers as to the extent of the comparison service, the amount of savings that could be achieved and the impartiality of the comparisons.

Following contact by the ACCC, website operators quickly implemented appropriate changes to remove or amend the potentially misleading information.

In November 2014, the ACCC released a report The Comparator Website Industry in Australia. The report set out the ACCC’s concerns over a lack of transparency in regards to the:

  • extent of the comparison service, including market coverage
  • savings achieved by using the comparison service
  • comparison services being unbiased, impartial or independent
  • value rankings
  • undisclosed commercial relationships affecting recommendations to consumers
  • content and quality assurance of product information.

The guidance is available at:

 

A Guide To Dealing With Debt Collectors

The Australian Competition and Consumer Commission (ACCC) and the Australian Securities and Investments Commission (ASIC) have launched Dealing with debt collectors: Your rights and responsibilities a free guide that helps consumers in trouble with debt understand their options so they know how to deal with collectors and creditors.

The consumer guide explains:

  • People’s legal rights and responsibilities if they owe a debt;
  • Where to seek help to work out a budget, negotiate a repayment plan, apply for hardship or better understand their financial and legal options;
  • What to do if a debt collector contacts them;
  • What sort of behaviour by debt collectors is not acceptable;
  • How to dispute an alleged debt or its amount; and
  • What to do if they are being taken to court.

Dealing with debt collectors also summarises how and when debt collectors can contact someone and provides examples of inappropriate behaviour by debt collectors.

‘If consumers are having problems repaying their debts, it’s important to take action without delay. This free guide explains the options available to consumers to help them cope with the situation and hopefully get back on track’, said ASIC Deputy Chairman Peter Kell.

‘The ACCC and ASIC encourage consumer advocacy groups and financial counsellors to refer consumers to the booklet to help them understand their legal rights and responsibilities if they owe a debt’, added Mr Kell.

ACCC Deputy Chair Delia Rickard said: ‘It is important for consumers to be aware of their rights when dealing with debt collectors and to know how to complain.

The ACCC and ASIC continue to receive complaints about the behaviour of some debt collectors and creditors. Consumers should expect to be treated professionally and in a manner that complies with Commonwealth consumer protection laws.

‘Where creditors or collectors disregard consumer protection laws and the rights of consumers, we will consider appropriate enforcement action against them’, added Ms Rickard.

Dealing with debt collectors: Your rights and responsibilities can be downloadedfrom ASIC’s MoneySmart or from the ACCC’s website.

Background information

In November 2013, the ACCC prosecuted a company ‘Excite Mobile Pty Ltd’, for engaging in false, misleading and unconscionable telemarketing practices, and using undue coercion in relation to debt collection. The Federal Court ordered the company to pay a penalty of $455,000 and the company’s two directors were ordered to pay penalties totaling $95,000 between them (refer to 266/13 MR).

In 2011, ASIC commenced proceedings in the Federal Court of Australia against one of Australia’s largest debt collection companies. In 2012, the Court found ACM Group Limited had harassed and coerced debtors and engaged in ‘widespread’ and ‘systemic’ misleading and deceptive conduct when recovering money (refer: 12-261 MR).

In July 2014,the ACCC and ASIC updated their industry guidance Debt collection guideline for creditors and collectors to reflect significant changes to the law, such as the introduction of the Australian Consumer Law in 2011 and changes to privacy laws in Australia. This industry guidance provides information and case studies for creditors and debt collectors about:

  • When it is appropriate to contact a debtor, including what constitutes contact and reasonable contact hours, methods or frequency of contact
  • How the need for collection activity will be greatly reduced when debtors act promptly and responsibly, and collectors are flexible, fair and realistic
  • New communication technologies developed since the initial publication, including the use of social media platforms and auto dialers, and the potential pitfalls to avoid in using such technologies; and
  • Key considerations when resolving debtor complaints and disputes.

Regulatory guide 96 Debt collection guideline: For collectors and creditors (RG 96)

ASIC’s MoneySmart website

ASIC’s MoneySmart website at moneysmart.gov.au has comprehensive and impartial information and tools for consumers about all aspects of personal finance, including managing loans and credit.

Debt collection industry research

The ACCC is also undertaking a research project into the debt collection industry to examine a number of concerns about debt collection practices.

The research is intended to inform the ACCC’s understanding of how the industry operates, in particular, the business models adopted in the industry and the influence this may have on activities that take place when collecting debts from consumers. The findings from the research will inform future initiatives designed to address the problems or issues identified.

It is expected that a research report will be issued in mid-2015.