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Thursday 6 July 2017

17-226MR ASIC commences proceedings against credit repair business

ASIC has launched legal proceedings against Gold Coast-based credit repair business, Malouf Group Enterprises Pty Ltd (Malouf Group), and its director Jordan Francis Malouf.

ASIC alleges that between 1 January 2014 and 31 December 2015, Malouf Group made false or misleading representations and engaged in unconscionable conduct in the operation of its credit repair business, including by representing to consumers that Malouf Group could remove negative listings from their credit file when in fact often nothing could actually be done about the listings. ASIC also alleges that in some cases there was nothing in fact wrong with the consumer's credit file. Malouf Group usually charged consumers a fee of $1,095 for its services.

ASIC is seeking:

  • declarations that Malouf Group made representations that were false or misleading, and engaged in conduct that was misleading or deceptive and unconscionable;
  • declarations that Mr Malouf was knowingly concerned in the contraventions by Malouf Group;
  • orders to stop Malouf Group and Mr Malouf from continuing to make false or misleading representations;
  • fines;
  • refunds for consumers; and
  • orders requiring Malouf Group to establish compliance and training programs and to publish corrective notices.

The maximum penalties for breaches of the Australian Consumer Law are $1.1 million for a corporation and $220,000 for an individual.

The proceeding has been listed for a directions hearing in the Brisbane Federal Court on 12 July 2017.

Background

ASIC has commenced these proceedings in the Federal Court following delegation of power from the Australian Competition and Consumer Commission. The delegation gives ASIC functions and powers under the Competition and Consumer Act 2010 to regulate conduct (including taking enforcement action) in relation to credit repair and debt collection.

Malouf Group trades under various business names including Credit Wash, Credit Clean Australia, Credit Fix Australia and Clean Your Credit. 

The collection and reporting of data about consumers’ credit histories is regulated by Part IIIA of the Privacy Act 1988 (Cth) (the Privacy Act). Consumers can seek to have defaults on loans and other credit infringements "negative listings" removed if the listing is incorrect or did not comply with the requirements of the Privacy Act.  

Consumers who want further information about credit repair should visit ASIC's MoneySmart website: Credit Repair

Consumers who wish to report concerns with any credit repair businesses can do so online at Report Misconduct to ASIC.

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Editor's Note 1:

At the first case management hearing on 12 July 2017, the Court ordered, by consent, that Malouf Group and Mr Malouf (Malouf Parties) file their response to ASIC's Concise Statement by 31 July 2017. Other case management orders were made and the matter was adjourned until 30 August 2017 for the hearing of an interlocutory application and for further directions.

Editor's note 2:

On 30 August 2017, the Court granted ASIC's interlocutory application and made further case management orders which include requiring the parties to file an amended concise statement and response. The matter has been adjourned to 18 October 2017 for further directions.

Editor's note 3:

At the Directions Hearing on 18 October 2017, the matter was set down for trial for 10 days to commence 23 April 2018. The matter was also listed for a further Directions Hearing on 8 December 2017.

Editor's note 4:

At the Directions Hearing on 19 February 2018, the Court was informed that the parties have reached terms of settlement in principle.  

The matter is listed for Final Hearing on 23 April 2018 where the parties will make joint submissions on penalty.

Last updated: 19/02/2018 05:10