Media release: Collection Point misleads client and sues his lawyers

Consumer Action Law Centre has succeeded in a Victorian Civil Administration Tribunal (VCAT) action against money retrieval agency, Collection Point, and recovered the sum of $1,108.85 for one of its clients.

Consumer Action Co-CEO, Catriona Lowe said the client sought to recover monies from Collection Point alleging the company sent him an unsolicited letter advising of unclaimed money he was entitled to and offering to collect it on his behalf. The claim set out that Collection Point then retained more than 25% of the sum as a fee.

‘Collection Point did not inform our client that the money was unclaimed superannuation funds that he could claim himself at no cost, and VCAT found the reasons given to the client by the company for not disclosing the source of the funds were unjustified,’ she said.

‘Our client alleged that Collection Point, through one of its staff-members, had falsely represented that it was a government agency and that there was no charge for recouping his money,’ Ms Lowe said. ‘VCAT accepted that both these representations were made and that our client had relied on these when entering into the agreement.’

‘Our client alleged that he was unaware of the cost involved in this service and VCAT concluded that Collection Point had not made sufficient effort to ensure its agency authority clearly stated there was a 25%, plus GST, collection fee,’ Ms Lowe said.

‘VCAT therefore determined that Collection Point was not entitled to claim the full amount of $2,439.47 but found it would be unfair to pay Collection Point nothing and reduced its fee to $1,330.62.’

VCAT did not find that Collection Point had breached its fiduciary duty or engaged in unconscionable conduct (also alleged in our client’s claim).

Ms Lowe said their client’s case became more complicated when Collection Point’s lawyers launched proceedings in VCAT against Consumer Action and two of its lawyers, suing them for misleading and deceptive conduct under the Victorian Fair Trading Act and for the tort of injurious falsehood, in relation to a media release issued by the Centre. Collection Point had originally threatened defamation proceedings but has not proceeded with that claim.

‘As Consumer Action doesn’t engage in trade or commerce, it’s difficult to see how a claim of misleading and deceptive conduct could succeed. The tort of injurious falsehood is an obscure cause of action that is difficult to prove but it’s become more common since reforms to Australia’s defamation laws. Those reforms were made, according to the Victorian second reading speech, to address, in part a worrying trend of well-resourced corporations misusing their economic power by initiating defamation actions to silence public debate or criticism’.’

Collection Point was originally permitted to seek an injunction in VCAT at the same time as Consumer Action’s client’s case but did not do so. Ms Lowe says she is surprised that Collection Point’s lawyers would ask VCAT to hear a matter of this sort.

‘This division of VCAT only has jurisdiction in disputes between a consumer and a trader. Consumer Action is neither,’ Ms Lowe said. ‘Also VCAT has no power under the Fair Trading Act to grant an injunction restraining behaviour. Our concern at the time was that VCAT might have granted Collection Point’s request to move both matters to the County Court.’

‘Moving our client’s case from the no or low cost VCAT forum to the full costs jurisdiction of the County Court would have involved a financial risk disproportionate to the amount of money our client was claiming and would almost certainly have seen our client abandon his case against Collection Point,’ Ms Lowe said.

Ms Lowe said that while this case ultimately had little impact on their client’s claim against Collection Point, she remains concerned that the legal system leaves open the possibility that other consumer cases could be affected in this way.

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