Law Debt Collection and its founder and director John Stuart Campbell has been fined $115,500 after pleading guilty in Manukau District Court for breaches of the Fair Trading Act.

It follows a Commerce Commission investigation.

The commission began investigating the conduct of Campbell and his businesses, Law Debt Collection (NZ) Limited and Law Debt Collection Limited, following a number of complaints.

It had previously issued a warning to Campbell in 2019 for likely harassment, coercion and misleading representations.

The investigation found Campbell and Law Debt Collection (LDC) misled debtors by lodging or threatening to lodge credit defaults in situations where they had no right to do so.

Campbell referred to the threat of credit defaults as his “greatest tool” and said “if the debtor really needs finance, they will have to settle the amount”.

Commerce Commission competition, fair trading and credit general manager Vanessa Horne said that debt collectors have the right to pursue money legitimately but must do so fairly and honestly and not exploit their position over vulnerable consumers.

Tom Raynel is a multimedia business journalist for the Herald, covering small business, retail and tourism.

“Not only are debt collectors in a considerable position of power, which we believe in this case was exploited, most people have limited knowledge about the rules of what debt collection agencies can do when collecting debt,” Horne said.

“Debt collectors must not take advantage of this and must not make misleading representations when collecting debts.”

Horne explained a credit default could have a significant impact on a borrower’s credit score, making it harder to get approval for loans, credit cards and mortgages, making it an “incredibly serious threat”.

“Mr Campbell and LDC crossed a line when they misled debtors about possible consequences of failing to pay, and what debt collectors could do when chasing payment. This likely caused unnecessary distress.”

LDC also wrongfully claimed collection costs of up to $1507 on top of debts in some cases.

The court fined Campbell and his businesses Law Debt Collection (NZ) Limited and Law Debt Collection Limited a total of $115,500, including emotional harm reparation payments for some victims.

“At a time when more Kiwis are in debt, this case should serve as a warning to all debt collectors that they must follow the rules or the commission will take action.”

Founded in 1986, LDC is a debt recovery business that provides a range of debt recovery and credit services. It was employed on approximately 1600 debt collection matters per year.