Case Citation:
K and Finance Company [2011] AICmrCN 5
Subject heading:
Improperly listing an overdue payment.
Law:
Section 18E in Part IIIA, and Section 6, of the Privacy Act 1988 (Privacy Act) and paragraph 65 of the explanatory notes to the Credit Reporting Code of Conduct.
Facts:
The complainant advised they had signed as guarantor for a loan for a family member. The finance company who provided the loan to the family member subsequently listed a serious credit infringement on the complainant's consumer credit information file held by a credit reporting agency.
Issues:
Section 18E(8)(c) of the Privacy Act, prohibits a credit provider from listing information on an individual's credit file unless it has notified the individual that it may disclose their information to a credit reporting agency.
Section 18E(1)(b)(x) of the Act permits a credit reporting agency to include in an individual's credit file a credit provider's opinion that the individual has committed a ‘serious credit infringement'.
Section 6 of the Act defines ‘serious credit infringement' as including an act done by a person:
(c) that a reasonable person would consider indicates an intention, on the part of the first-mentioned person, no longer to comply with the first-mentioned person's obligations in relation to credit.
Paragraph 65 of the explanatory notes to the Credit Reporting Code of Conduct indicates that, where a credit provider forms a view in accordance with paragraph (c) of the definition of ‘serious credit infringement', a guide as to what could reasonably be considered an intention on the part of the individual to longer to comply with credit obligations may include:
the individual has stopped making payments under the credit agreement/contract or breached it in some other serious way, and the credit provider has made reasonable efforts to contact the individual either in person or in writing, but has been unsuccessful in establishing contact.
Outcome:
The Commissioner investigated the matter under section 40(1) of the Privacy Act.
The Commissioner obtained a copy of the loan contract showing the complainant was not a guarantor for the loan but was a joint borrower with the family member.
The loan contract showed that the complainant was made aware at the time of signing the loan contract that their personal information may be disclosed to a credit reporting agency. Additionally, the finance company had sent a number of demand letters to the complainant's last known address and the mail had been returned marked ‘not known at this address'. A collection agent visited the complainant's last known address and reported the complainant was no longer at the address, the complainant's home telephone number had been disconnected, and messages left by the finance company on the complainant's mobile telephone went unanswered.
Based on the information provided by the finance company, the Commissioner formed the view that, at the time of the listing, the account was overdue and that the finance company had made reasonable efforts without success to contact the complainant.
The Commissioner was also satisfied that the complainant had stopped making payments under the credit contract and that the actions of the complainant would indicate to a ‘reasonable person' an intention by the complainant to no longer comply with their obligations in relation to the debt.
Consequently, the Commissioner closed the complaint under section 41(1)(a) of the Privacy Act on the grounds that the finance company had not interfered with the complainant's privacy.
Office of the Australian Information Commissioner
22 December 2011
