Case Citation:

R v Medical equipment supplier [2006] PrivCmrA 17

Subject Heading:

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

Law:

Sections 6(1), subsections 18E(1)(b)(vi) and 18E(8)(a) of the Privacy Act 1988 (Cth).

Facts:

The complainant suffered from a medial condition and approached the medical equipment supplier to hire certain medical equipment. The complainant initially rented one product and organised to trial the use of some other pieces of equipment to assess if they would assist their condition. However, the complainant was not satisfied with the equipment and returned the items after a period.

The complainant claimed that the additional equipment had been provided on a free trial basis and was of the understanding that returning the equipment ended their obligations. However, the medical equipment supplier did not agree and sought to collect monthly rental payments it claimed were owed for the hire of the products. The complainant did not pay the fees and so the medical equipment supplier listed a default on the complainant's consumer credit information file held by a credit reporting agency for the amount of $256.76.

The complainant asked the medical equipment supplier to remove the listing as they contended they had not entered into any agreement or understanding to hire the products for a fee, and had therefore not received 'credit'. The matter was not resolved and the complainant then referred the complaint to the Privacy Commissioner.

Issues:

'Credit' is defined in section 6(1) of the Privacy Act to mean a consumer loan, with 'loan' further defined in that section as:

a contract, arrangement or understanding under which a person is permitted to defer payment of a debt, or to incur a debt and defer its payment, and includes:

1. a hire-purchase agreement; and
2. such a contract, arrangement or understanding for the hire, lease or renting of goods or services, other than a contract, arrangement or understanding under which:

1. full payment is made before, or at the same time as, the goods or services are provided; and
2. in the case of a hiring, leasing or renting of goods-an amount greater than or equal to the value of the goods is paid as a deposit for the return of the goods.

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.

Subsection 18E(1)(b)(vi) of the Privacy Act details the criteria relevant to this complaint by which a default may be listed on an individual's consumer credit information file. Under this provision, a default may only be listed in respect of credit provided that is more than sixty days overdue and where steps have been taken by the credit provider to recover the amount outstanding.

The issue for the Commissioner in this instance was whether the arrangements for the use of the products constituted credit in terms of the Privacy Act.

Outcome:

The Commissioner established that the medical equipment supplier was a credit provider, by virtue of the Commissioner's Credit Provider Determination No. 2006-2 (Classes of credit providers), and then investigated the complaint under section 40(1) of the Privacy Act.

The Commissioner considered the credit application and receipt documents provided by the complainant and the medical equipment supplier to assess whether credit was provided.

The Commissioner concluded that in relation to the first product the complainant entered into an agreement or understanding to hire the product for a fee, as demonstrated by their payment of an initial monthly rental fee which was documented on the payment receipt.

However, the Commissioner observed that the $256.76 debt listed on the complainant's consumer credit information file appeared to correspond to unpaid rental fees for two other products. In respect of these products the receipt provided to the complainant on collection of the items did not indicate the monthly charge that would be incurred after the conclusion of the trial period offered for both items.

In addition, the credit application form completed by the complainant (but not signed) did not indicate the specific nature of the credit that the individual was applying for (such as the monthly rental amount or products that are to be rented).

The Commissioner's view was that, in respect of these two products, the amount of credit purportedly extended to the complainant was not specified and overall there was no clear evidence that the complainant had entered into a loan agreement or understanding with the medical equipment supplier. Therefore the debt owed in relation to these items could not be considered credit for the purposes of the Privacy Act and the listing of a default in relation to this debt was therefore inconsistent with section 18E(1)(b)(vi).

The Commissioner noted that it was of particular concern that the medical equipment supplier's standard rental application documents did not clearly indicate that the applicant had entered into a credit agreement with the monthly rental charge specified.

The medical equipment supplier accepted this view and the Commissioner then moved to conciliate a settlement of the matter.

The complainant sought an apology, procedural changes and financial compensation for hurt or damages resulting from the listing of the default on their consumer credit information file. In response, the medical equipment supplier:

• removed the default listing from the complainant's consumer credit information file;
• developed a privacy policy for publication on its website;
• amended its rental terms and conditions to require customers to pay for items by direct debit so the extension of credit on rental terms is limited; and
• implemented a new rental agreement referring to its terms and conditions and privacy policy.

The medical equipment supplier also invited the complainant to itemise their claim for financial compensation and to provide evidence to support the claim. The Office contacted the complainant on several occasions to ascertain whether or not they intended to provide this information, however, they did not respond. Subsequently, the Commissioner decided to close the complaint under section 41(2)(a) of the Privacy Act on the grounds that the medical equipment supplier had adequately dealt with the matter.

OFFICE OF THE PRIVACY COMMISSIONER June 2006