A debt collector and his company have been ordered to pay $115,500 in fines and emotional harm reparations.
Director John Stuart Campbell and his company Law Debt Collection pleaded guilty in the Manukau District Court to making misleading representations when collecting debt after a prosecution by the Commerce Commission.
Campbell had previously been warned by the commission in 2019 for likely harassment, coercion and misleading representations when he was an account director with Twenty Five Station Limited. That company went into liquidation.
In the latest case, the commission said Campbell and Law Debt Collection misled debtors by lodging or threatening to lodge credit defaults where they had no right 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,” said Commerce Commission competition, fair trading and credit general manager Vanessa Horne.
“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 said debt collectors were in a considerable position of power, “which we believe in this case was exploited”, and most people have “limited knowledge” about the rules of what agencies could do when collecting debt.
“Debt collectors must not take advantage of this and must not make misleading representations when collecting debts.”
She also warned: “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 began investigating Campbell and his company, which was founded in 1986, after receiving complaints.
The commission said Campbell referred to threat of credit defaults as his “greatest tool” and “if the debtor really needs finance, they will have to settle the amount”.
In some cases, Law Debt Collection also wrongfully claimed collections costs of up to $1507 on top of debt, it said.
“Debtors being told absolute statements about what they must pay are entitled to assume that what they are being told is true,” added Horne.
The court fined Mr Campbell and his businesses, Law Debt Collection (NZ) Limited and Law Debt Collection Limited a total of $115,500 (including emotional harm reparation payments for some victims).
