Privacy Act: Fact sheet 2 - Mercantile agents (debt collection agents)

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• Can a mercantile agent have access to the records held by a credit reporting agency?
• What information can a credit provider disclose to a mercantile agent?
• Can a mercantile agent also be a credit provider?

Can a mercantile agent have access to the records held by a credit reporting agency?

Under Part IIIA of the Privacy Act, a mercantile agent is not be permitted to have direct access to consumer credit reports issued by a credit reporting agency for the purpose of collecting overdue payments on behalf of its clients. Mercantile agents are permitted to receive from a credit provider certain items of personal information from a credit report issued by a credit reporting agency for the purposes of assisting that credit provider collect debts owing to it.

The legislation does not regulate the obtaining of commercial credit references (that is, information about a business or an individual's business activities) by a mercantile agent in the course of collecting overdue commercial debts.

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What information can a credit provider disclose to a mercantile agent?

Where a credit provider uses a mercantile agent to collect an overdue consumer debt, the credit provider may disclose certain information derived from a consumer credit report obtained from a credit reporting agency. Such information is limited to:

• identifying information about the individual;
• information about overdue payments; and
• information about court judgments and bankruptcy orders (publicly available information).

The credit provider may also disclose to the mercantile agent other information in the possession of the credit provider as long as the information was not originally contained in, or derived from, a credit report issued by a credit reporting agency, and the information is provided only for the purpose of collecting overdue payments.

When collecting an overdue commercial debt, a credit provider may only provide a mercantile agent with information contained in a credit report that is identifying information and information about court judgments and bankruptcy orders

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Can a mercantile agent also be a credit provider?

A mercantile agent may also be a credit provider in circumstances where it allows its own clients to defer payment for the services provided. It is assumed that the mercantile agent will be giving commercial credit (that is, the clients are companies, partnerships, sole traders). In such instances, the mercantile agent may freely obtain commercial/trade references from other organisations and commercial reporting agencies.

However, if the mercantile agent wishes to obtain a consumer reference about its client from a credit reporting agency or another credit provider, for example, information about a director of a company, a sole trader or a partner of a partnership, the mercantile agent would need the written agreement of the individual concerned. It is important to note that the mercantile agent is only permitted to obtain consumer references about those clients who are being allowed to defer payment owed to the mercantile agent, in other words, clients who are being provided with credit by the mercantile agent.

The legislation imposes heavy penalties for unauthorised access to personal credit information.

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