It’s against the law to use physical force, coerce or unduly harass a consumer. Undue harassment means unnecessary or excessive contact or communication with a person, to the point where that person feels intimidated, tired or demoralised. Coercion involves force (actual or threatened) that restricts another person’s choice or freedom to act.
Unlike harassment, there is no requirement for behaviour to be repetitive in order to amount to coercion.
Financial institutions are allowed to try and collect debts but it may be undue harassment or coercion if it involves frequent unwelcome approaches and requests or threats for payment.
Laws relating to privacy, harassment and misleading or deceptive conduct apply to all businesses – including debt collection agencies. The maximum civil and criminal penalties for harassment and coercion are $1.1 million for a body corporate and $220,000 for an individual.
Example 1: a woman went into arrears on her credit card debt when she lost her job and had to care for her ill mother. The bank sold the debt to a debt collection company. The company told the woman that, if she left Australia, she would not be able to return while the debt was unpaid. The company called her family and friends and used this information to embarrass the woman. They continued to call her, despite her request that they contact her through her financial counsellor. The company’s actions would be considered harassment.
Example 2: a retirement village was sold by its owners. This led to a change in management. During the transfer of ownership, an energy company salesperson visited residents. The door-to-door salesperson explained to all residents that because the management of the complex was changing, their power would be cut off unless they changed energy supplier immediately. Almost all of the residents signed with the new supplier. This caused confusion, issues with payment plans, concessions, and multiple bills. The salesman’s statements could be considered coercion.