The conviction of East Coast Credit Control Ltd and its sales manager Alan Murray is a warning to the whole debt collecting industry, Commerce Commission Chairman Alan Bollard said today.

Dr Bollard said the conviction clearly spells out the industry's and consumers' rights.

"Debt collectors cannot simply add collection fees to money they are collecting. The person owing the money must be told when they order the goods or services that if they do not pay on time fees may be added," Dr Bollard said.

"If they have not been made aware of that, debt collectors do not have the right to claim collection fees or any other extra fees from them."

East Coast Credit, the country's second biggest debt collector, and Mr Murray pleaded guilty to breaching the Fair Trading Act in the Christchurch District Court today. They were ordered to pay fines and costs totalling $2,390 for misleading a person that the company had a right to add a $50 collection fee to a debt it was recovering. The case was brought by the Commerce Commission.

Judge Strettel said he fined Mr Murray and the company, both first offenders, as a warning to others that deterrent penalties will be imposed by courts. He added there is a range of penalties that can be used depending on the seriousness of the offending. Courts can impose fines of up to $100,000 on companies and $30,000 on individuals.

Judge Strettel said there is an obligation on companies and their managers to understand the Fair Trading Act.

East Coast Credit was fined $2,000 and ordered to pay court costs of $95. Mr Murray was fined $200 and ordered to pay court costs of $95.

Media contact:Vince Cholewa, Communications Officer

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