Australian Competition & Consumer Commission has started court action against a debt collection firm for "unconscionable conduct" in pursuing Telstra customers.
The watchdog on Thursday accused ACM Group Ltd of "misleading or deceptive conduct, harassment and coercion, and unconscionable conduct" in how it pursued debts of two Telstra customers.
The ACM Group is a business that purchases debts from telcos and banks then attempts to recoup the outstanding amount from the customer. The company is Australia's largest privately owned debt acquisition business, according to the ACCC.
The first alleged victim was "a resident in a care facility" who was harassed between 2011 and 2015, while the second Telstra customer was "a single parent with a limited income" who was pursued in September 2014.
The first victim, according to the ACCC, copped "undue harassment" with repeated phone calls and letters despite ACM's awareness that he had "difficulty communicating, was highly vulnerable and had no capacity to repay the debt".
The second victim was allegedly told that failing to make an immediate payment would affect her ability to obtain credit for five to seven years, even though ACM had no "reasonable grounds" to make such a claim.
The debt collection firm also allegedly informed both consumers that the company was about to start legal action, when this was untrue. The second consumer was told that the company was preparing a summons, even though this was not the case.
The consumer watchdog labelled all of ACM's alleged conduct as "unconscionable" and is seeking "pecuniary penalties, declarations, injunctions, orders for an ACL compliance program, publication orders and costs" in the Federal Court for violations of Australian Consumer Law and/or the Australian Securities and Investments Commission Act 2001.
“The ACCC has brought these proceedings because the alleged conduct by ACM, in seeking to recover debts ACM had purchased from Telstra, was in our view contrary to accepted community values and standards of fairness in dealing with consumers, especially those who are vulnerable," said ACCC chairman Rod Sims.
CRN contacted ACM Group but had not received a response at the time of writing.
A Telstra spokesperson told CRN that the contract with ACM was not renewed upon expiry last October and that the telco had been "working with the ACCC to provide information" since then.
"After a debt is sold, collection activity is being conducted on behalf of the new owner, not on Telstra’s behalf," said the spokesperson.
The telco only sells a debt to a third party as "a last resort", the spokesperson said, after attempts to make alternative payment arrangements fail and the bill remains overdue to "for an extended period".
The ACCC released a report in May 2015 that found "a number of problematic practices remain" in the debt collection industry, with activity that "could be particularly harmful to vulnerable or disadvantaged consumers".