New Zealand Law Society - Commission criticises debt collector's tactics

Commission criticises debt collector's tactics

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The Privacy Commission says a debt collector failed to check information correctly before using it as it attempted to collect monies.  

It found the collector, Law Debt, incorrectly believed the debt was not disputed.

A father of two young children complained to the Privacy Commissioner about a disputed debt with a childcare centre. The man had withdrawn his children from the centre over safety concerns.

The centre billed the father for one month of fees for each of his children because it required a month’s notice before withdrawing children.

Law Debt demanded the outstanding sum be paid by a set date. The man immediately phoned Law Debt, but the firm said it never knew of the message left. The man also sent an email with the same information.

Law Debt replied to that, asking him on what basis he was disputing the debt and why he had waited until now to advise the firm of this. The man pointed out that Law Debt had only made one attempt to contact him, and that he had responded quickly.

The Commission says it was unable to find any evidence that Law Debt responded to the second email.

Law Debt then posted four letters demanding payment.

The man wrote to both Law Debt and the childcare centre explaining why he was disputing the debt. Law Debt says it did not receive that letter until the man attached it to an email some weeks after the collector first contacted him. However, by that time, Law Debt had already referred the debt to a credit reporting agency.

The Commission found Law Debt did not take reasonable steps to check that the information was accurate, up to date, and not misleading.

It also found Law Debt did not provide any evidence showing it contacted the childcare centre to check whether the man had disputed the debt.

The Ministry of Education upheld the man’s complaint about a lack of safety and the Disputes Tribunal also found in the man’s favour over the debt.

The Tribunal’s decision resulted in the childcare centre writing off the debt.

The man told the Commission the case had caused him additional stress and anxiety, forcing him to take time off work.