The Federal Court of Australia has found the head of Melbourne-based firm Goddard Elliot Lawyers guilty of misleading and deceptive conduct.
In proceedings brought by the Australian Competition and Consumer Commission (ACCC), the Federal Court held that the firm's managing principal, Pippa Sampson, made a number of misleading and deceptive representations to collect small debts on behalf of video rental stores.
The ACCC instituted the proceedings against Sampson in October last year, alleging she had sent four debt collection letters containing false information. The ACCC alleged Sampson said debtors had been served with court documents when they had not, and that her firm could enforce remedies, such as the docking of wages, when such action can only be ordered by a court.
According to the ACCC, Sampson admitted sending approximately 20,000 debt collection notices per month in the 12 months prior to the ACCC instituting proceedings. The notices were sent Australia-wide.
"The scale and flagrant nature of this conduct, and the fact that it was engaged in by a lawyer, is of great concern to the ACCC," said ACCC chairman Rod Sims.
The ACCC took legal action after concerns were raised by the Central Australian Aboriginal Legal Aid Service on behalf of clients who had received debt collection notices making the misleading representations.
"This decision sends a clear message to the debt collection industry that they must take care not to misrepresent or overstate the consequences of non-payment of a debt when communicating with alleged debtors," said Sims.
By consent of the parties, the Federal Court ordered Sampson to stop making the misleading representations; publish corrective notices in a number of national newspapers and industry publications; ensure that she and Goddard Elliot staff undertake trade practices compliance training; and contribute $30,000 towards the ACCC's court costs.
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