You are busy trying to recover a long outstanding debt from a customer – but are you aware that there are debtor rights guidelines issued jointly by The Australian Competition & Consumer Commission (ACCC) and the Australian Securities & Investments Commission (ASIC) about how you can go about collecting it? The debtor rights guidelines explain how Consumer Protection Laws apply to both debt collectors and businesses who seek to collect debts directly. If you are collecting a debt – especially ones that are proving quite difficult to collect you need to be aware of the debtor rights guidelines.
The debtor rights guidelines are extensive. A copy of the guidelines can be obtained at the ASIC website at www.asic.gov.au or the ACCC website at www.accc.gov.au. It is called Regulation 96 – Debt Collection Guidelines for Collectors and Creditors’.
The following are some of the more important points from the debtor rights guidelines.
1. Hours of contact
If contacting a debtor via the telephone you can only contact them between 7.30am and 9.00pm during the week and between 9.00am and 9.00pm on the weekends. For face to face contact you can only make contact between 9.00am and 9.00pm on all days of the week. It is not recommended that contact be made on public holidays.
If you decide to contact the debtor at his or her place of work, then you can do so during the debtor’s normal working hours. However, a debtor can request that contact only be made at certain times or places (eg not wishing to be contacted at home where family members are present). The guidelines state that reasonable wishes of a debtor should be respected and should only be changed if you have been unable to contact the debtor at the times requested.
2. Protecting the privacy of the debtor
When making direct contact with a debtor you must always ensure that the person you are dealing with is in fact the debtor. This must be done every time you contact the debtor before you release any information about the debt.
Extra care needs to be taken if you are contacting the debtor’s workplace. For example, you can’t leave a message with a receptionist to say you are chasing a debt. If you are a debt collection agency you can’t leave a message with the receptionist to say that you are from a debt collection firm.
3. Frequency of contact
There is a general principle that debtors are entitled not to receive excessive communications from debt collectors or creditors. The guidelines recommend that you limit non face to face contact to more than three times a week or ten times a month. Contact should never be more than what is considered necessary and contact that is more than the maximum listed will be considered harassment. For face to face contact, the guidelines recommend that you do not make more than one visit a month.
Given the limited number of times you can contact a debtor, it can be beneficial to engage a professional debt collector who can use their specialised skills to actively encourage the debtor to make payment.
4. Record keeping
The guidelines make it clear that you must maintain accurate, complete and up to date records of ALL communications with the debtor – including time, date and nature of phone calls with the debtor and any face to face meetings. Any payments you receive from a debtor must be recorded with details of date, amount and payment method.
You must also provide a debtor with any relevant documents they request in respect of the outstanding debt. The guidelines state that a failure to provide information may constitute misleading or deceptive conduct.
5. Using a debt collection agency
It is important for creditors to remember that debt collection agents act on their behalf. This means that the original creditor is ultimately liable for the debt collector’s actions. It is therefore critical that you only employ professional debt collection agencies that have a thorough understanding of all relevant legislation and guidelines.