Law Debt Collection (LDC) and its director John Stuart Campbell have been ordered to pay a total of $115,500 in fines and emotional harm reparations for breaching the Fair Trading Act. Mr Campbell and his company pleaded guilty to making misleading representations when collecting debt, following a Commerce Commission prosecution.

Competition, Fair Trading and Credit General Manager Vanessa Horne says debt collectors have the right to pursue money legitimately owed but must do so fairly and honestly and not exploit their position over vulnerable consumers.

“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,” Ms Horne says.

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

“Debt collectors will often be working with vulnerable consumers, making these cases even more important. We want consumers to know they’re not powerless in these situations.

“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.

“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,” Ms Horne says.

Mr Campbell and LDC misled debtors by lodging, or threatening to lodge, credit defaults in situations where they had no right to do so.

“A credit default can have a significant impact on a borrower's credit score, making it harder to get approved for loans, credit cards and mortgages. This is an incredibly serious threat,” Ms Horne says.

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

In some cases, LDC also wrongfully claimed collections costs of up to $1,507 on top of debts.

“Debtors being told absolute statements about what they must pay are entitled to assume that what they are being told is true,” Ms Horne says.

Background
LDC is a debt recovery business, founded by Mr Campbell in 1986. Its website describes the business as having grown from a small debt recovery agency into a specialised firm providing a range of debt recovery and credit services. LDC was instructed on approximately 1,600 debt collection matters per year.

LDC has traded through various entities during this time, including Law Debt Collection (NZ) Limited and Law Debt Collection Limited, which are the entities subject to the prosecution.

The Court has fined Mr 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).

The Commission commenced an investigation into LDC and Mr Campbell’s conduct following a number of complaints and previously issued a warning to him in 2019 for likely harassment, coercion and misleading representations.

The Commission has investigated a number of other debt collection companies. In December 2023, the Commission also issued a warning to debt collection company Intercoll Holdings Limited (now trading as DebtManagers), for making misleading representations, which likely breached the Fair Trading Act.

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