Case Citation:

S v Telecommunications Provider [2006] PrivCmr 18

Subject Heading:

Improper listing of a default on a guarantor's individual consumer credit information file.

Law:

Subsections 18E(1)(ba)(ii), (iv) and 18E(8)(a) of the Privacy Act 1988 (Cth) and paragraph 2.9 of the Credit Reporting Code of Conduct.

Facts:

The complainant entered into a contract with a credit provider, in this case a telecommunications provider, as a guarantor for a third party. Later, the account became overdue and the mobile phone was subsequently stolen. About six months after that the telecommunications provider placed a default listing on the complainant's consumer credit information file held by a credit reporting agency for the amount of $687.

The complainant raised the matter with the telecommunications provider advising that at the time the listing was made they were not aware the account was in default and had not received any notices to that effect. The complainant noted they had provided their address to the telecommunications provider at the time of the credit application. The matter was not resolved and the complainant then made a complaint to the Privacy Commissioner.

Issues:

Subsection 18E(8)(a) of the Privacy Act states that:

A credit provider must not give to a credit reporting agency personal information relating to an individual if:

1. a credit reporting agency is prohibited, under subsection (1), from including the information in the individual's credit information file…

The provisions of subsection (1) relevant to this complaint are 18E(1)(ba)(ii) and (iv) which permit a credit reporting agency to list a default against a guarantor if the credit provider has:

• given the guarantor notice of the borrower's default that gave rise to the guarantor's obligation to make payment and;
• taken steps to recover the overdue payment from the guarantor.

  Further to this, paragraph 2.9 of the Credit Reporting Code of Conduct requires that the credit provider advise the guarantor, by notice in writing, of the overdue payment incurred by the borrower before it can list a default against the guarantor.

  The issues for the Commissioner were whether the telecommunications provider had notified the complainant, as the guarantor of the account, of the borrower's default, and whether it had taken steps in writing to recover the overdue amount from the guarantor.

  Outcome:

  The Commissioner investigated the complaint under section 40(1) of the Privacy Act.

  The telecommunications provider advised that, regardless of any obligations under the Privacy Act, it had decided to remove the default listing as it could not demonstrate that it had met its obligations under the Credit Reporting Code of Conduct to advise the complainant in writing of the nature of their guarantee and obligations. The Commissioner acknowledged this step but proceeded with the investigation under the Privacy Act.

  The telecommunications provider advised that its system showed that a number of notices were sent to the mailing address on the application form including an initial overdue reminder, a Service Suspension Notice, an Account Barring Notice and a commercial credit letter. It also advised that it treats the complainant as guarantor for the account and continues to hold them liable for the outstanding amount.

  However, the Commissioner's investigation revealed that the telecommunications provider only sent these notices to the third party's address, which was listed on the application form as the mailing address.

  The complainant's address was recorded on the application form as the borrower's residential address. The address was not recorded separately from the third party's contact details and it was not clear that it related to the complainant as guarantor of the account. The Commissioner observed that this may point to a weakness in the application form which the telecommunications provider used at the time, in that it did not clearly provide for account holders and guarantors to provide their mailing contact details individually. In the Commissioner's view the fact that the application form did not accurately reflect the complainant's status as guarantor and did not clearly show their mailing contact details did not relieve the telecommunications provider of its obligations to comply with the notice requirements under the Privacy Act.

  The Commissioner concluded that the telecommunications provider did not notify the complainant of the default, or attempt to recover the debt from them directly at their address, because its records did not properly reflect the complainant's mailing contact details. The Commissioner put the view that the telecommunications provider's acts and practices in this instance were inconsistent with subsections 18E(1)(ba)(ii) and (iv) of the Privacy Act and paragraph 2.9 of the Credit Reporting Code of Conduct.

  The parties agreed to participate in conciliation at this point. As a result, the complainant accepted the telecommunications provider's offer to give the complainant a letter of apology, an amount of compensation and to waive 50 per cent of the outstanding debt of $687 owed to it.

  The Commissioner closed the matter under section 41(2)(a) of the Privacy Act on the grounds that the telecommunications provider had adequately dealt with the matter.

  OFFICE OF THE PRIVACY COMMISSIONER June 2006