Court awards emotional harm reparations for Fair Trading Act breaches
A district court has fined a director and his businesses, Law Debt Collection (NZ) Limited and Law Debt Collection Limited, $115,500 in total, which included emotional harm reparation payments.
The director in this case established Law Debt Collection (LDC) as a debt recovery business in 1986, according to a news release from the Commerce Commission. LDC then traded through Law Debt Collection (NZ) Limited and Law Debt Collection Limited, the entities subject to the present prosecution.
The commission investigated LDC and its director’s conduct after multiple complaints. In 2019, it warned them about likely harassment, coercion, and misleading representations.
In the present case, LDC and its director pleaded guilty to breaching s 13(i) of the Fair Trading Act 1986 by making misleading representations when collecting debt.
According to case information from the Commerce Commission’s website, the court ordered:
Vanessa Horne – the commission’s competition, fair trading, and credit general manager – said LDC and its director exploited their positions of power and likely caused needless stress when they misled debtors about the potential effects of failures to pay and actions debt collectors could take when pursuing payment.
“The most common misrepresentations were that they had a right to add collection costs when they did not, and that they had a right to lodge a credit default when they did not,” according to the case information from the Commerce Commission’s website.
“A credit default can have a significant impact on a borrower's credit score, making it harder to get approved for loans, credit cards and mortgages,” Horne said in the news release. “This is a dire threat.”
According to the government agency’s news release, in some cases, LDC also wrongfully claimed collection costs of up to $1,507 distinct from the debts.
“Debtors being told absolute statements about what they must pay are entitled to assume that what they are being told is true,” Horne said.
“At a time when more Kiwis are in debt, this case should serve as a warning to all debt collectors that they must follow the rules or the Commission will take action,” Horne said in the news release.
In the government agency’s news release, Horne emphasised that debt collectors should:
“Debt collectors will often be working with vulnerable consumers, making these cases even more important,” Horne said. “We want consumers to know they’re not powerless in these situations.”
