For many businesses, registering a default listing against a debtor with a credit reporting agency is common practice and assists in the debt recovery process. However, many businesses are not aware of the steps that must be taken under the Privacy Act 1988 (Cth) (“the Privacy Act”) and could render a listing invalid, such that it must be removed.
In Australia, the Privacy Act governs the use of default information and credit reporting. Of particular relevance are sections 6Q and 21D and the processes that must be complied with when listing a default.
In the current economic climate, many businesses are seeing an increase is debtors and are utilising default listings. To ensure your business is complying with the Privacy Act we have put together a brief guide to help your business navigate these requirements.
Default Listing Requirements under the Privacy Act 1988 (Cth)
A credit provider can only list a default on with a credit reporting body if:
- The individual or company is at least 60 days overdue in making the relevant payment;
- You have provided the individual or company written notice informing the individual or company of the overdue amount and requesting payment of same;
- You are not statute barred for recovering the amount demanded;
- The amount due is equivalent to or more than $150.
With respect to the notices, they must be sent to the debtor’s last known address, which can be via email if this is the ordinary method of communication with the debtor.
The second notice must be sent at least 30 days after the first and must advise the debtor that you intend to disclose the information to a credit reporting body.
Once this second notice is sent, you must wait at least 14 days before listing the default.
You are considered to have complied with the notice requirements if you can show that it was sent to the debtor’s last known address and contained the warnings set out above.
Once you have listed the default, you must then provide written notice to the debtor that such disclosure has been made.
If you have any questions about default listings, or believe a default has been listed against you that does not comply with these requirements, please contact us for assistance.
We note that the clauses in the terms of some contracts that relate to the disclosure of information concerning defaults to credit reporting bodies may alter these requirements. If your business uses terms and conditions with default listing provisions, please contact us for more tailored advice.
Written by Amelia Hatton.