House debates

Tuesday, 16 November 2010


Telecommunication Scams

10:08 pm

Photo of Bruce BillsonBruce Billson (Dunkley, Liberal Party, Shadow Minister for Small Business, Competition Policy and Consumer Affairs) Share this | | Hansard source

It is my melancholy duty to again raise before this parliament the outrageous telco scam that is afflicting thousands of Australian small businesses in particular as well as community organisations. Just by way of background, this is the scam that saw aggressive and overly enthusiastic telecommunication sales representatives offer a discounted telecommunication service to small businesses primarily, as well as community organisations, including so-called free equipment. What has emerged in a number of cases is those telecommunication service providers have folded and what has remained is a claimed outstanding lease financing debt that apparently was related to the free equipment that was provided to the victims of this scam.

These matters have been before a number of courts as the finance companies seek to recover the debt they claim they are owed, a debt incurred as a consequence of what I can only describe, in the nicest possible way, as highly dubious circumstances. I am careful with the choice of my words because the legality of these transactions is yet to be tested, and this is at the heart of the concerns that were raised with me by a dozen telco scam victims today in this parliament in a committee room not far from here, where I was joined by my friends and colleagues the member for Gippsland, Darren Chester, and the member for Hughes, Craig Kelly. So concerned are these local members, and I know this concern operates right across the parliament because of the reaction on previous occasions when I have raised this matter, that we must continue to pursue the concerns that are at the heart of this telco finance scam.

There are court proceedings underway and there has been some coverage involving Macquarie Bank, and they are but one of a number of finance providers that have been caught up in this process. I would say that Macquarie has proceeded with some care and thoughtfulness in resolving the outstanding debts and has settled many of those debts at a significant discount of the face value of the debts that could have been pursued through legal recovery, but those settlements were arrived at with the dark cloud still hanging over the transactions about the extent to which they were lawful and enforceable. But Macquarie seems to have shown some degree of thoughtfulness in the way they have resolved those matters.

But there remain thousands of other Australian small businesses that are still the subject of debt recovery actions, and so widespread is this that we do not actually know how many are involved. Today, in discussions with the victims, there were a number of action steps that I think this parliament and the government need to take. First we need to stop this scam, and I hope again that in raising this issue, as the Four Corners report from two weeks ago did, it will alert the Australian public to the risks of this scam and the fact that it is still being perpetrated because people see this as a very clever way of making lots of money at the expense of small business. Secondly, we need to do what we can to expedite a judgement about the lawfulness and enforceability of these transactions, and I have been encouraged by the Attorney-General’s assurance that my call for the government to provide public interest litigation funding to support that action is being actively considered and I urge an expeditious consideration of those applications.

But it is not just the lawfulness. There are other factors. Section 73 of the Trade Practices Act is another avenue that I believe should attract public interest litigation funding. Section 73 recognises that a consumer can enter into a contract with a linked credit provider of a corporation and that that transaction, including the provision of credit and the supply of some kind of good or service, actually links the parties. I use that as an example to highlight that where the telco service provider has folded, and in some cases re-emerged phoenix like, the credit provider is in most cases acting as if it was distantly and quite remotely related to the telco that fell over. I feel they have a residual obligation for being involved in that transaction and that should be worth pursuing.

There is also a need to encourage the ACCC to continue with its work—not only with the case it is a party to, but by exercising the provisions available under the Trade Practices Act for the ACCC to assist other parties where it is in the interests of implementing fair competition and consumer protection laws. This would extend to trying the provisions relating to unfair contract terms in the Independent Contractors Act. Finally, I ask that ASIC do its job. I have seen some of the responses to requests for ASIC to investigate directors of telco companies involved, and I have been underwhelmed by their response. They have given a glib, noncommittal response to what has been serious conduct that requires very careful investigation, and I ask that ASIC does its job properly and protects the victims. (Time expired)