New Centrelink glitch could leave you in serious debt

A few days before Christmas, a woman received a letter from Centrelink saying that she owed them money. The letter
News
Hundreds have received a letter asking them to clarify their earnings or risk paying a huge sum of money. Photo: YouTube/Department of Human Services.

A few days before Christmas, a woman received a letter from Centrelink saying that she owed them money. The letter asked her to clarify her earnings or risk paying what she “owed”. But that’s not everything – her debt could include a “10 per cent recovery fee”, and the only way she can get out of it is to proof that she had correctly reported her earnings in 2014.

“When I got this letter I was very worried,” said the woman to The New Daily, who asked not to be named.

“The information they sent was incorrect and [they] basically got me to do their work to prove I didn’t owe a cent.”

This woman is not the only person who has received the nasty surprise. Welfare recipients say they have been receiving automated debt letters over the Christmas and New Year. The automated debt recovery is part of the federal government’s welfare crackdown announced earlier this month and included in the mid-year budget update.

The government said the new initiative was allowing it to retrieve $4.5 million in excess Centrelink payments every day. But the system has come under fire since the announcement, with independent MP Andrew Wilkie calling for an investigation.

Centrelink’s new automated system to secure overpayments has come under fire amid growing concerns that people are being incorrectly accused of owing thousands of dollars.

Labor said the system should be paused:“Many former and current Centrelink customers are being sent threatening letters demanding payment of debts – which they do not in fact owe,” Labor’s acting spokeswoman for human services Louise Pratt said.

Before this new system was introduced, Centrelink staff would check records manually and then contact claimants via phone or letter.

Despite the complaints, a spokesman for the Department of Human Services said in a statement the department was “confident in the online compliance system”. “Over 70 per cent of people who received an online compliance letter since September this year have completely resolved the matter,” he said.

RMIT University academic Dr Kay Cook said the automated system placed an unfair onus on welfare recipients, of which many were already vulnerable.

“It’s setting up a David versus Goliath situation where people need to take on the federal government to remedy the situation,” Dr Cook told The New Daily.

“For people in the benefits system, who are the most vulnerable, the balance of power in that and the responsibility for correct payments is completely wrong.

Have you been in this situation before? Do you think a manual system could be a better solution?

  1. Dee  

    I’m certain this is a government ploy. They deliver bad news over the Christmas period at a time when their offices aren’t manned much. They hope there won’t be much of an outcry and that many will just pay up because its just too hard to contest it……despicable!

  2. Farmer  

    Its Christmas for F#%k sake. Get out of our faces for a few days. Dont forget, your our employee’s.

  3. Colene Frood  

    All Government Departments need a serious attitude adjustment. The Department Directors down to the front counter, these people are unelected, unaccountable and untouchable; and have therefore become so out of touch with the real reason they are employed in their roles in the first place. They are public employees, they are our employees. We through our taxes pay their salaries and benefits, by benefits I refer to their retirement packages which are in excess of what those of us who are employed in the private sector receive.

    How many of my fellow private sector employees know that most if not all of public sector employees get 50% to 100% more Super Guarantee Levy contributions than we do.

    Remember, we pay their “salary packages” out of our taxes and rates, because WHY?

    The Government has no money. The Government can never give you anything for “FREE”.
    The GOVERNMENT, of any level, can only take from some and give to others, and collect a handling fee.

    • Jan  

      Why did they not look at people player correct.tax. Offshore accounts. Need heaps of changes to tax system but will never happen as it suits the rich. The people this will affect are people that have paid taxes These are the lifters not the leaners.

  4. Pamela  

    Whenever you contact Centrelink, keep a copy of everything each way – letters, forms to them, letters, forms from them, details of phone calls – date, time, person’s name, record number and subject discussed (if possible record it).

    Then if they ask questions, you pull out the required documentation from your file to prove your situation.

    • L Dancey-Ball  

      Have spent long times on the phone dictating weekly earnings for a financial year – did the right thing and got my receipt number. Fast forward a month and another letter – phoned up compliance line again – you guessed it ,to dictate weekly earnings for a financial year and they had no knowledge of previous call or receipt number. Really need to keep records of everything cause you can’t depend on them. Hoping our matter will be resolved in the new year.

      • Jayjen  

        Like you I kept receipts, file copies with a Centrelink date stamp etc. etc. Still didn’t make any difference when I supplied all this. The fact that they hadn’t updated their records correctly was still my fault. Oh yeah!!!!

      • Rob  

        No good asking the persons name. they will either not give it, or if they do it will be a fasle one. You ring back and ask to speak to the person (name) and get the response “No one of that name works Here”\

  5. David  

    Over 70 per cent of people who received an online compliance letter since September this year have completely resolved the matter,” he said.

    Yeah found out they didn’t owe anyone anything. Only a bureaucrat (or an LNP politician) could think this is acceptable.

  6. L Dancey-Ball  

    My son was told he owed them $439 from a 1 month period in 2012. I have spent hours on the phone confirming his weekly earnings for 2011/2012 financial year. They were not sure if he owed and I was told they would investigate further but in the meantime to pay the debt or be put in the hands of a collection agency. Let’s just hope they get their sums right this time and refund the money. A very worrying and upsetting experience.

  7. Sheila  

    They want to save money by attacking people who have worked and paid taxes!! Stop unmarried mothers pension and stop paying ex politicians huge amount. They will save billions

  8. MD  

    I’ve been a 70 yo Age pensioner and my treatment started in November 2015.My automated debt is almost $30,000 what made me sick. I tried to seek help in many ways unsuccessfully and at the end I was told they believe in my innocent but I have no chance to win, so better if I agree to pay . But it is not the end of the story. My pension reduced in 2015 by 70% and my punishment will last for another 10 months.

  9. Michael A Manley  

    I am not convinced that using a Government Department is the best process for dealing with Centrelinks idiotic automated “Debt/Compliance” system.
    Follow this:-
    I received a debt collection notice from Centrelink in Nov 2016 stating that I owed $1699.00 from / within the period of 1994 to 2014 (no specifics).
    I have several issues with this claimed “debt”.

    a] The time frame:- read: Statutory barred debt:-
    Under the Limitation of Actions Act 1958 (Vic) (“LOA Act”), a creditor only gets a limited amount of time to sue a debtor for a “simple contract”. Most debts arise from simple contracts. If judgment has not been entered against you in a court, the time limit is six years. If a creditor does not bring court action against you within the relevant time limit, the debt becomes “statute barred” and you have a complete defence to any court action brought against you.

    Ergo: sending me a debt collection notice claiming debt owed within a 20 year period. As it is now 2017, the debt notice for recovery of claimed debt then should be for the period of 2011 to 2017.

    b] A complete and total failure to inform people of their legal rights and what actions they can take.
    Note that in Collection House Limited v Taylor [2004] VSC 49 a debt collector was held to have engaged in unconscionable conduct in breach of section 7 of the Fair Trading Act 1999 (Vic) (the current equivalent provision of which is section 20 of the Australian Consumer Law) when pursuing a statute barred debt (see Consumer protection laws, for more information about unconscionable conduct). This entitled the debtor to be repaid $5,000 that she had paid to the debt collector using her credit card to settle the debt. At the time of accepting the $5,000, the debt collector knew or at least suspected that the debtor was ignorant of the limitation period, impecunious and suffering from emotional difficulties.
    Collection House, Australia’s largest consumer debt collection agency, later stated in a media release that it and its subsidiary Lion Finance would no longer pursue collection of statute barred debts.
    If your debt is statute barred, it is recommended that you write to the creditor and request that they stop contacting you for payment because the debt is statute barred. In any letter to the creditor on this basis, it is vital to include a sentence such as, “I deny that I am liable for the amount demanded”.
    Centrelink, are you reading this???
    If judgment has been entered against you, the relevant time limit is 15 years, not six years, from the date of judgment. That is, after 15 years a creditor cannot bring a new action on a judgment (e.g. some bankruptcy proceedings), but can still commence proceedings enforcing that judgment (e.g. a warrant of seizure and sale), although in the latter case the court’s consent may be required before the creditor can take action (see Dennehy v Reasonable Endeavours Pty Ltd [2003] FCAFC 158).
    If you have given a mortgage for payment of the debt (e.g. over a house or a car), the relevant time limit is 15 years from the date of the end of the term of the mortgage. However, the LOA Act states that this time period only relates to the recovery of the principal lent by the creditor, not the interest. It is likely that action for interest on a mortgage must be brought within six years.

    c]Paragraph 1237A:of the Act – Waiver of debt arising from error

    Administrative error

    (1) Subject to subsection (1A), the Secretary must waive the right to recover the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received in good faith the payment or payments that gave rise to that proportion of the debt.

    Note: Subsection (1) does not allow waiver of a part of a debt that was caused partly by administrative error and partly by one or more other factors (such as error by the debtor).
    (1A) Subsection (1) only applies if:
    (a) the debt is not raised within a period of 6 weeks from the first payment that caused the debt; or
    (b) if the debt arose because a person has complied with a notification obligation, the debt is not raised within a period of 6 weeks from the end of the notification period;
    whichever is the later.
    Underestimating value of property
    (2) If:
    (a) a debt arose because the debtor or the debtor’s partner underestimated the value of particular property of the debtor or partner; and
    (b) the estimate was made in good faith; and
    (c) the value of the property was not able to be easily determined when the estimate was made;
    the Secretary must waive the right to recover the proportion of the debt attributable to the underestimate.
    Proportion of a debt
    (3) For the purposes of this section, a proportion of a debt may be 100% of the debt.

    NOTE: “must waive” – Centrelink “must waive” the debt but that is not occurring so Centrelink is deliberately defrauding welfare recipients. How do you stop it happening to you? If Centrelink refuses to waive a debt caused by their error, lodge a fraud complaint with both the Commonwealth Ombudsman and on Centrelink’s own fraud reporting hotline. TIP: When you give Centrelink documents, ask them to photocopy and date stamp the copies. Alternately, take 2 copies to Centrelink and get them to copy your original documents and date stamp your photocopies. NEVER, NEVER get rid of these. Centrelink can and will hit you for mistakes made years ago and if you refuse to repay, that will file fraud charges against you even though it is Centrelink who is committing the fraud. (Few lawyers know about the 6 week rule and they sometimes tell welfare recipients to plead guilty!!!)

    d]</b Contacting Centrelink Debt Collection Office.
    Automated stupidity:- Request an online review of their process that claims a debt is owed. Receive automated answer 12 hours later. YOU OWE US!…..(no I don't !!.)
    Ring their office to settle the matter and find out they have already handed the matter over to a debt collection agency….OH REALLY !!.
    Then contacted by a debt collection agency. They were politely informed that a 20 year period in which a debt was claimed was not enforceable as as the time frame without specifics mostly fell into the period called 'Statutory Barred Debt'. The debt collector was then informed that I would pay a nominal $5.00 per week on the understanding that there was no agreement that I owed the debt, and that I would only make a nominal payment not in recognition or agreement of the claimed debt, but to use their documentation to begin the legal process of taking both the debt collection agency and Centrelink to court to claw back any monies paid to Centrelinks debt collection office or it's proxy ( debt collection agency).
    The debt collection agency stated that they would send a BPay code by text . I politely refused and informed Centrelinks proxy that only a formal claim of intent to recover debt from me, MUST be in writing on a letter clearly stating the proxies business name, address, contact phone numbers and precisely who they were acting on behalf of.
    They were also informed that when that document was received immediate legal action would begin.
    SIX weeks later I still have not received that letter.

    e]</b Unconscionable conduct: via A.C.C.C
    Understanding what unconscionable conduct means
    Unconscionable conduct does not have a precise legal definition as it is a concept that has been developed on a case-by-case basis by courts over time. Conduct may be unconscionable if it is particularly harsh or oppressive. To be considered unconscionable, conduct it must be more than simply unfair—it must be against conscience as judged against the norms of society.

    Business behaviour may be deemed unconscionable if it is particularly harsh or oppressive, and is beyond hard commercial bargaining.

    For example, Australian courts have found transactions or dealings to be 'unconscionable' when they are deliberate, involve serious misconduct or involve conduct which is clearly unfair and unreasonable.

    Determining whether conduct is unconscionable
    There are a number of factors a court will consider when assessing whether conduct in relation to the selling or supplying of goods and services to a customer, or to the supplying or acquiring of goods or services to or from a business, is unconscionable.

    These include:

    the relative bargaining strength of the parties
    whether any conditions were imposed on the weaker party that were not reasonably necessary to protect the legitimate interests of the stronger party
    whether the weaker party could understand the documentation used
    the use of undue influence, pressure or unfair tactics by the stronger party
    the requirements of applicable industry codes
    the willingness of the stronger party to negotiate
    the extent to which the parties acted in good faith.
    This is not an exhaustive list and it should be noted that the court may also consider any other factor it thinks relevant.
    It also means that Centrelink and its proxies are not informing clients and debtors of their legal rights, hence unconscionable conduct.
    Failing to inform people of the Six Week Rule and Statutory Barred Debt in particular clearly shows that Centrelink is not even following or behaving in a manner that is consistent with their own legislation.

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