Consumer watchdog to crack down on dodgy debt collectors targeting SMEs
The consumer watchdog will take action against dodgy debt collectors, amid concern of a spike in unfair debt collection practices.
Debt collectors misleading or harassing small businesses will be closely monitored by the consumer watchdog, amid growing concern of a spike in unfair debt collection practices now that COVID-19 support measures have ended.
The Australian Competition and Consumer Commission (ACCC) is concerned that the end of both JobKeeper in March and temporary debt relief measures in January will lead to a surge in debt collection activities.
To discourage debt collectors from using unfair or illegal tactics to recover debts from small businesses, the ACCC is closely monitoring complaints and will take action when necessary.
The ACCC is also encouraging business owners in financial distress to contact a financial advisor or the National Debt Helpline on 1800 007 007.
Debt relief measures wind up
Temporary debt relief measures established last year expired on January 1, and since then the debt threshold for creditors to issue a demand against a company has reverted to $2,000.
The timeframe for a debtor to respond to a statutory demand also reverted to 21 days, meaning that if a demand is issued on or after January 1, the business will have 21 days to respond.
Following these changes, the ACCC updated its debt collection guideline, which outlines the current rules for businesses debtors and debt collectors.
Both the ACCC and the Australian Securities and Investments Commission (ASIC) enforce consumer protection laws that regulate debt collection.
Under current laws, it’s illegal for a debt collector to use physical force or coercion to compel a business or third party, such as a family member, to do something.
Business owners should lodge a complaint with the ACCC if a debt collector harasses them to an unreasonable extent, misleads or deceives them, or takes unfair advantage of any vulnerability affecting them.
Chief executive of the Council of Small Business Organisations Australia (COSBOA), Peter Strong, says if the ACCC is concerned about dodgy debt collectors, then small businesses should be aware.
“If the ACCC is saying that, they’re obviously seeing something, and COSBOA supports them,” Strong tells SmartCompany.
Strong says small businesses get a lot of messages, and one of the problems is ensuring they receive those messages.
“[It’s] why a business should join their association,” he says.
