The Commerce Commission says it has warned debt collector Intercoll Ltd for possibly breaching the Fair Trading Act when it told a debtor that if she wanted to question her debt she should contact the company to which she originally owed money.

It says the debtor was told that she needed to pay Intercoll the disputed amount, and if the dispute with the original lender was successful, then Intercoll would pay the money back.

"This was incorrect because Intercoll had purchased the debt and the debtor should have been able to dispute the debt direct with Intercoll," the Commission says.

The Commission says it has also advised Intercoll to take care in the future to avoid making statements to debtors which may have given the impression that court action was inevitable if the debtor did not make payment, when in fact this consequence was only a possibility at the time the representation was made. Unless the creditor has approved the debt for collection through the courts, the Commission says that these claims may mislead consumers about their position.

Commissioner Anna Rawlings says complaints to the Commerce Commission about debt collection have increased in the past year and debt collectors need to ensure that they have systems in place to ensure compliance with their legal obligations to debtors.

“While debt collectors often need to discuss the nature of a debt and the consequences of non-payment with a debtor, they must not use misleading techniques to pressure debtors into paying or to deter them from pursuing genuine disputes. This includes saying that a debtor cannot dispute a debt, telling them that court action will commence within a certain timeframe when it may not or giving the impression that certain outcomes are inevitable if they are not,” she says.