12 Dec 2017, 09:00

A couple with young children complained to us after a childcare centre referred a debt to a collection agency, raising issues about the accuracy about the debt information.

The couple said they withdrew their two young children from the childcare centre because they had concerns about the way the centre was being run. They said it had not addressed a number of health and safety issues that they had pointed out.

The childcare centre required four weeks’ notice to be given when children were being removed from the centre. The centre billed the couple for four weeks’ worth of fees. The couple disputed the debt. However the centre eventually listed the debt with a debt collection agency. The collection agency then reported the bad debt to a major credit reporter.

The couple complained to our office. They said they were concerned a negative credit rating from the disputed debt would affect their efforts to fix their floating mortgage. Their complaint focused on whether the disputed debt should have been passed to the debt collection agency.

Principle 8

The complaint raised issues under principle 8 of the Privacy Act. Under this principle, before an agency uses or discloses information, it must take reasonable steps to check that information is accurate, complete, relevant, up-to-date, and not misleading.

In a related case (Taylor v Orcon Limited [2015] NZHRRT 15 (14 May 2015)), Mr Taylor had a dispute over a bill with telecommunications provider Orcon. Before the dispute was resolved, Orcon sent the debt to a debt collection agency, which then listed a payment default on Mr Taylor’s credit report with a credit reporter.

In that case, we found Orcon was in breach of principle 8 because it had failed to take reasonable steps to check the information about Mr Taylor’s debt before referring the debt to the debt collector.

In this case, we found that by the couple’s own admission, there was a debt of four weeks’ worth of fees. The complaint was not about the existence of the debt, but rather whether they should have to pay it.

Reasonable steps

In our investigation, we decided the childcare centre took reasonable steps to check the information about the outstanding payment was accurate. Its enrolment terms said four weeks’ notice was required when removing a child from the centre. The financial management policy said that unpaid fees would be followed up, and if they were not paid within a month, action would be taken - including the use of debt collection agencies.

The centre also advised the couple it would take action to recover the money owed and gave them an opportunity to respond. The couple said they did not think they should pay, based on their safety concerns. The centre considered the couple’s reasons for not paying and decided the reasons were not valid. After the couple refused to pay the fees, the centre contacted the debt collector.  

We decided there had been no interference with the couple’s privacy under principle 8. We informed the couple of their right to bring a case before the Human Rights Review Tribunal and closed the file.

December 2017

Childcare centre – debt collection agency – dispute – reasonable steps – information to be accurate, up-to-date and not misleading – Privacy Act 1993; principle 8