The commission said Campbell referred to the threat of credit defaults as his “greatest tool” and said “if the debtor really needs finance, they will have to settle the amount”.
Commerce Commission competition, fair trading and credit general manager Vanessa Horne said that debt collectors have the right to pursue money legitimately but must do so fairly and honestly and not exploit their position over vulnerable consumers.
“Not only are debt collectors in a considerable position of power, which we believe in this case was exploited, most people have limited knowledge about the rules of what debt collection agencies can do when collecting debt,” Horne said.
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“Debt collectors must not take advantage of this and must not make misleading representations when collecting debts.”
Horne explained a credit default could have a significant impact on a borrower’s credit score, making it harder to get approval for loans, credit cards and mortgages, making it an “incredibly serious threat”.
“Mr Campbell and LDC crossed a line when they misled debtors about possible consequences of failing to pay, and what debt collectors could do when chasing payment. This likely caused unnecessary distress.”
LDC also wrongfully claimed collection costs of up to $1507 on top of debts in some cases.
Campbell responds
In response to the court ruling, Campbell said in a statement to the Herald he was disappointed the commission had decided to lay charges and disagreed with its characterisation of what occurred.
“For nearly 40 years, we have worked diligently on behalf of our clients to recover monies that are owed to them. Often, these funds that we recover are the difference between our client being able to stay in business or not,” Campbell said.
“Sometimes in business, difficult decisions need to be made, and this was no exception. If an error had been made, then we have put our hand up and owned that mistake.”
He said it had never been the business’ intention to deliberately breach any act, let alone the Fair Trading Act.
Campbell said the business would continue to recover monies due to its clients.
The court fined 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.
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Founded in 1986, LDC is a debt recovery business that provides a range of debt recovery and credit services. It was employed on approximately 1600 debt collection matters per year.
Tom Raynel is a multimedia business journalist for the Herald, covering small business, retail and tourism.