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consumer

Dealing with debt collectors over disputed consumer bills

Key Takeaway

When a consumer disputes a bill in New Zealand, the Consumer Guarantees Act 1993 provides rights if goods or services are faulty. The Fair Trading Act 1986 protects against misleading or harassing debt collection practices. Consumers should formally communicate their dispute to ensure their rights are considered.

Dealing with Disputed Consumer Bills and Debt Collectors in New Zealand

When a consumer believes a bill for goods or services is incorrect, or that the goods or services provided were substandard, it is considered a disputed consumer bill. If this dispute remains unresolved, the creditor (the person or business owed money) may engage a debt collector to recover the claimed amount. Debt collectors are businesses or individuals who pursue payment for outstanding debts, either on behalf of the original creditor or after purchasing the debt themselves. New Zealand law provides protections and outlines obligations for both consumers and debt collectors in these situations.

Understanding Rights Under the Consumer Guarantees Act 1993

The Consumer Guarantees Act 1993 (CGA) applies to goods and services ordinarily acquired for personal, domestic, or household use or consumption. If a bill is disputed because the goods or services supplied were faulty or did not meet expectations, the CGA may be relevant.

  • Goods: The CGA guarantees that goods supplied to a consumer will be of acceptable quality, fit for any particular purpose the consumer made known, and match any description given [Source: Consumer Guarantees Act 1993, s 6, s 7, s 9]. "Acceptable quality" means goods are fit for all common purposes, acceptable in appearance and finish, free from minor defects, safe, and durable [Source: Consumer Guarantees Act 1993, s 7].
  • Services: Services supplied to a consumer must be carried out with reasonable care and skill, be fit for any particular purpose the consumer made known, and be completed within a reasonable time and at a reasonable price, if not previously agreed upon [Source: Consumer Guarantees Act 1993, s 28, s 29, s 30, s 31].
  • Remedies: If goods or services fail to meet these guarantees, a consumer has rights against the supplier, which may include repair, replacement, or a refund, depending on whether the failure is minor or substantial [Source: Consumer Guarantees Act 1993, s 18, s 32]. A bill for goods or services that do not meet the guarantees under the CGA may be disputed, as the consumer has statutory remedies against the supplier for the failure.

Protections Under the Fair Trading Act 1986

The Fair Trading Act 1986 (FTA) prohibits misleading and deceptive conduct and unfair trading practices by businesses, including debt collectors. This Act is crucial when dealing with debt collection practices, as it sets standards for how businesses, including debt collectors, must interact with consumers.

  • Misleading and Deceptive Conduct: A business or debt collector must not engage in conduct that is misleading or deceptive, or likely to mislead or deceive [Source: Fair Trading Act 1986, s 9]. This includes making false or misleading representations about the existence, nature, or amount of a debt [Source: Fair Trading Act 1986, s 13(g), s 13(i)].
  • Unsubstantiated Representations: A debt collector must have reasonable grounds for any representation they make about a debt [Source: Fair Trading Act 1986, s 12A]. For instance, claiming a debt is owed without being able to demonstrate its validity could breach this provision.
  • Harassment and Coercion: The FTA specifically prohibits harassment or coercion in connection with the supply of goods or services, or the payment for goods or services [Source: Fair Trading Act 1986, s 28]. This means debt collectors cannot use threatening language, excessive contact, or pressure tactics that amount to harassment or coercion to compel payment.
  • Unconscionable Conduct: The FTA also prohibits unconscionable conduct in trade [Source: Fair Trading Act 1986, s 24]. "Unconscionable conduct" refers to conduct that is extremely unfair or oppressive, and it could apply to severe cases of debt collection abuse.

Communicating a Dispute to a Debt Collector

When a consumer has a disputed bill that has been referred to a debt collector, the consumer may formally communicate the basis of their dispute to the debt collector. This communication should clearly state why the bill is being disputed, referencing any relevant guarantees under the CGA or issues under the FTA.

  • Debt Collector's Obligations: Upon receiving a genuine dispute, a debt collector has an obligation to act fairly and not engage in prohibited conduct under the FTA [Source: Fair Trading Act 1986, s 9, s 12A, s 13, s 28]. This may involve ceasing collection attempts while the dispute is being investigated or attempting to resolve the dispute with the original creditor.

When to Seek Independent Legal Advice

If there are complex legal questions, concerns about the validity of a debt, or allegations of severe misconduct by a debt collector, independent legal advice should be sought. Individuals can contact Community Law Centres for free legal assistance or consult with a private lawyer. The Commerce Commission enforces the Fair Trading Act 1986 and handles complaints about unfair trading practices.

Key Resources