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Consumer experiences of Avco - 2.8
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Debt collection practices
2.8.1 Debt collection practices
Consumers complain of inappropriate and unreasonable harassment by Avco employees if they are late with their repayments.
Despite having the court processes available to it, Avco sometimes elects to adopt confronting and intrusive debt collections tactics. Where the loan is unsecured, or a person’s financial position is such that a court is unlikely to order them to pay by instalments, it may be that Avco considers this is the best way of getting money out of consumers.
| Case study 25
The borrower worked on a casual basis as a product seller at a large department store. In May 1995 she entered into a continuing credit contract with Household Financial Services. Some time later she was advised that the loan was now being administered by Avco.
At the time the borrower took out the loan she requested life insurance. She was told she was not eligible for this, and was sold sickness insurance instead.
The borrower generally made the payments due under the contract in full, although she might be a few days late. In June 1996 the borrower suffered from a serious illness and was unable to work for two months. Because she was a casual employee she received no sick pay. The borrower attempted to claim on the sickness insurance and was told that she was ineligible to claim because she was a casual employee. However, premiums for the insurance continued to be deducted from the borrower’s account.
As a result of her ill-health, the borrower fell behind in her payments. Once she was back at work she started making payments again. She was in a position to pay off the arrears within a few months and advised Avco of this. Avco refused to accept a payment arrangement and continually harassed the borrower at work. An Avco employee would ring her at work at least once a week, and on some occasions on several days in a row. These phone calls would upset the borrower and reduce her to tears. Furthermore, the nature of her work meant that she had to appear calm and composed while speaking into the microphone. On at least one occasion she was unable to work because she was so upset. Repeated requests to deal with a financial counsellor that was assisting her were ignored by Avco staff. |
Avco has demonstrated hostility to consumers seeking advice about their rights.
A Local Court in suburban Sydney came up with an important initiative. The area the Court serviced contained a very high level of people from non-English speaking backgrounds. The Court thought that a brief pamphlet in community languages containing information about the court process should be attached to each statement of claim issued by the Court. The Court ruled do not allow the Court to require this, so the Court asked plaintiffs to co-operate. Avco was the only major plaintiff that refused to have the pamphlet attached.
A financial counsellor was contacted by the manager of the local Avco debt collection department. The manager told the financial counsellor that he did not appreciate her assisting her clients to apply for bankruptcy. The financial counsellor explained to the manager that her job was to advise her clients of their rights and options and that, although she did consider bankruptcy to be a last resort, she would continue to advise clients about bankruptcy.
The manager became very irate and told the financial counsellor that if in the future a client was considering bankruptcy she should contact Avco first and Avco would negotiate with other debtors or consolidate the loans. The financial counsellor did not agree to this.
The financial counsellor asked the manager to put any complaint he had in writing to her employer. The manager refused to do this. The financial counsellor was later told by one of her clients that the manager had asked the client if she knew the financial counsellor at a social event, and had gone on to tell her that the financial counsellor had no right to advice people to apply for bankruptcy. |
Case study 8
The borrower was in default on an Avco loan. She advised Avco that she had an appointment with a financial counsellor, but it was only in three weeks time. She was told by an Avco employee not to contact the financial counsellor as “they just cause trouble”. The borrower specifically asked Avco not to call her while she was waiting for her appointment. Despite this specific request, she continued to receive regular phone calls. She contacted the financial counsellor who then rang the Regional Manager for Avco and repeated the request that Avco staff stop contacting the borrower. The phone calls then ceased. |
Case studies 7, 8, 15, 23, 24, 25, 26, 29, 35, 49, 52, 54, 55, 57, 59, 61, 64, 65, 66, 67 and 68 in Appendix A contain more examples of the collection activities undertaken by Avco.
2.8.2 Consumer concerns
Section 60 of the Trade Practices Act (Cth) 1974 makes it an offence to use “physical force or undue harassment or coercion” in connection with payment for goods and services [See also Fair Trading Act (NSW) s.55; Fair Trading Act (SA) 1982 s69; Fair Trading Act (WA) 1987 s23; Fair Trading Act (Tas) 1990 s26; Fair Trading Act (ACT) 1991 s26; Fair Trading Act (Vic) 1985 s22; Fair Trading Act (Qld) 1989 s50; Consumer Affairs and Fair Trading Act (NT) 1990 s55]. It is possible that some of the tactics used by Avco to collect debts amount to “undue harassment”. |
