As if legitimate debt collection agencies don’t have enough to worry about with scam artists posing as collectors, a story out of Australia underscores the peril of trying to do things right. This time the fake collector wasn’t working on behalf of himself for quick cash, he was created by a company that should have been a client of the ARM industry.

The Federal Court of Australia late last week ruled that a telecommunications firm set up a fake complaints hotline group and used a fictitious debt collector to pursue late-paying customers.

Excite Mobile was found guilty by Federal Court Judge John Mansfield of “unfair”, “unconscionable” and “misleading” conduct, according to The Esperance Express.

Excite was first brought to officials’ attention in 2011 when the Indigenous Consumer Assistance Network complained about the company’s targeting of Aboriginal communities.

Customers that fell behind on their payments would receive collection notices from a debt collector that purported to be a third party. After investigation, the debt collector was shown to be a part of Excite. “The letters were not from a debt collector or a representative of a debt collector but were created and sent by Excite Mobile,” Judge Mansfield wrote in his judgment.

The company and three individuals, including directors Obie Brown and David Samuel, were also misleading about an internal complaints handling department they had created to limit customers filing complaints with the independent Telecommunications Industry Ombudsman. To facilitate this, the company had established its own organization called “Telecommunications Industry Complaints.”

Excite Mobile faces fines of up to $1.1 million for each breach of trade legislation, an Australian Competition and Consumer Commission spokesman said.

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