Avoid fees for ‘credit repair agents’ by contacting free Ombudsman services
Recent surveys by the Energy & Water Ombudsman NSW (EWON) show that ‘credit repair’ agents are charging customers a minimum average fee of $1,000 per credit default listing removal and that 70% of complainants using these agents have multiple credit listings. The survey report, endorsed by the Energy and Water Ombudsman Victoria (EWOV), reveals that many consumers are paying thousands of dollars in fees they could avoid by bringing their problem directly to an Ombudsman service. Download the report
More and more people are experiencing credit problems and finding themselves credit listed for utility debts. For anyone who has incurred a credit listing as a result of financial problems, a credit repair agent’s fees are an unnecessary expense that only adds to that difficulty.
“Consumers who have been credit listed because they are struggling to make ends meet don’t need any extra costs,” explained Clare Petre, Energy & Water Ombudsman NSW. “EWON is concerned about consumers in financial hardship paying a business for a service they could access themselves free of charge. Worse still, many consumers are paying an agent who uses an Ombudsman’s free service then charges their client for this.”
With increasing numbers of complaints to Ombudsman services being made via ‘credit repair’ agents, EWON conducted a customer survey to understand why consumers engage these commercial advocates. Parallel to this, EWON conducted a mystery shopper survey of credit repair agents to find out what information they are providing to consumers who present with credit problems.
EWON was concerned to find that when mystery shoppers asked what other options for assistance are available to consumers – in particular those experiencing financial hardship – credit agents typically replied that the only alternative to paying for their service is to wait out the five year credit default listing. None mentioned Ombudsman services. Further, in explaining their process for removing listings, none mentioned that they themselves might take the case to an Ombudsman for resolution, although this is not an uncommon practice as EWON and EWOV are finding.
This gap in credit repair agents’ representation of their process to customers was also highlighted in EWON’s customer survey: 67% of complainants whose credit repair agent had brought their case to EWON reported that they were not advised by their agent that the agent might make use of an Ombudsman’s free services to have the listing removed.
“We want to raise consumer awareness of Ombudsman services, but we also want to raise awareness at the level of the creditors,” Clare Petre said.
“Our customer survey shows that the overwhelming majority of people (88%) don’t know they’ve been credit listed until they make an application for a loan or phone contract and it is rejected. When creditors advise a customer their application has been declined, we’d like to see them mention that consumers can go to the relevant Ombudsman for help if they dispute a credit listing on their record. This timely reminder of the free help that’s available could save people thousands of dollars in avoidable agent fees.”
Energy debts account for a large proportion of all credit listings. These listings can be investigated by the Energy Ombudsman in each state. Telecommunications debts can be investigated by the national Telecommunications Industry Ombudsman (TIO), which supports the recommendations in EWON’s report. In every case this service is provided free of charge.
Where listings are deemed incorrect or disputable, the Ombudsman can request that the company remove the listing. Even if the credit default listing is found to be compliant and therefore cannot be removed, the consumer will not be charged a high fee to find this out.
Other common situations in addition to money problems that can lead to credit default listing for utility debts include: problems with final bills, forwarding addresses being documented incorrectly by the supplier or not provided by the customer, and consumers forgetting to close accounts when they move out.
If you think you may have been listed unfairly or in error by a service provider, contact the company in the first instance. If you are not satisfied with the outcome, contact your relevant Ombudsman service.
Recommendations
Based on the the findings from the surveys, EWON recommends a three-fold approach to raising awareness of free Ombudsman services prior to consumers engaging commercial credit repair services, consisting of:
- Direct promotion to affected consumers of the message that free help is available through Ombudsman services and general awareness raising through existing communications and outreach channels.
- Promotion to creditors that they should advise customers whose applications are declined on the basis of credit reports that they can contact Ombudsman services free of cost if they dispute their credit default listing.
- Working with credit reporting entities to negotiate inclusion of reference to Ombudsman service on credit reports and websites etc.
To make a complaint regarding energy or water, consumers in NSW or Victoria can contact:
EWON (NSW only)
Freecall 1800 246 545
EWOV (VIC only)
Freecall 1800 500 509
To make a complaint regarding telecommunications, consumers can contact:
TIO (national)
Freecall 1800 062 058