Law Debt Collection and its director, John Stuart Campbell, have been ordered to pay a total of $115,500 in fines and compensation for emotional harm.
The company admitted guilt in the Manukau District Court to deceptive debt collection practices following a case brought by the Commerce Commission.
According to the commission, Campbell and Law Debt Collection deceived debtors by registering, or threatening to register, credit defaults without having the legal authority to do so.
“Mr Campbell and Law Debt Collection crossed a line when they misled debtors about possible consequences of failing to pay and what debt collectors could do when chasing payment,” ComCom’s competition, fair trading, and credit general manager Vanessa Horne said.
“This likely caused unnecessary distress.”
“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. This is an incredibly serious threat.”
Horne noted that debt collectors wield influence, which, in this case, ComCom believes was abused, and that most people have little understanding of the legal boundaries that agencies must follow when collecting debt.
“Debt collectors must not take advantage of this and must not make misleading representations when collecting debts.”
“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.”
The commission launched an investigation into Campbell and his company following multiple complaints. According to the commission, Campbell called the threat of credit defaults his most effective tool, stating that “if the debtor really needs finance, they will have to settle the amount.”
The commission also found that Law Debt Collection, in some instances, unjustly demanded collection costs of up to $1,507 in addition to the original debt.
Campbell had previously received a warning from the commission in 2019 for potential harassment, coercion, and deceptive practices while serving as an account director at Twenty Five Station Limited.
That company has since gone into liquidation.