The Consumer Ombudsman demands that the Market Court prohibits Alektum Oy from collecting collection costs related to standing subscriptions in violation of the Debt Collection Act. Alektum has increased the collection costs illegally by sending the debtor more collection letters subject to a charge concerning consecutive unpaid shipments of goods based on the same contract than what is permitted by the Debt Collection Act. Alektum has also charged higher costs for a part of these payment demand letters than what is allowed in accordance with the law.
Alektum collects outstanding debts related to contracts made by consumers online and by telephone. Consumers have ordered socks, underpants, razor blades, health food supplements and slimming products from companies such as Westerfield, MMBG and Fennotuonti. The contract has often included an inexpensive or free-of-charge sample shipment, after which the contract has continued either until further notice or for a fixed period.
When the consumers have not paid the invoices related to the products sent, the companies have transferred the collection of invoices to Alektum. Alektum has processed each shipment of goods costing a few dozen euros based on the same order agreement as a separate contract, because in accordance with the company’s interpretation, the consumer has always had the opportunity to terminate the order agreement or cancel the next shipment by the date stated in the previous invoice. Based on this, Alektum has sent the consumers two payment demands subject to a charge for each invoice for a shipment of goods that has fallen due. The collection costs of the first demand have been the maximum permitted by the Debt Collection Act, or EUR 14, and the costs of the second have amounted to half of the first one, or EUR 7. For example, the collection costs for a shipment of goods costing EUR 10 amounted to EUR 210.
The Consumer Ombudsman considers Alektum’s actions to be in violation of the Debt Collection Act. In principle, the Debt Collection Act limits the number of payment demands subject to a charge and related to the same order agreement to two. This number can be exceeded, if there is a special reason to send more payment demands. In the view of the Consumer Ombudsman, a fixed-term order agreement concerning a single product, or one that is valid until further notice, constitutes one contract and the debt accumulated based on it falls due in several instalments. When collecting an outstanding debt based on such a single contract, the number of two payment demands can be exceeded and a new payment demand subject to a charge sent when a new shipment of goods has been sent to the consumer and the amount of the outstanding debt has increased due to the new shipment. However, under the Debt Collection Act the amount of collection costs claimed for these subsequent payment demands may be one half of the collection costs of the first payment demand at maximum. Therefore, as an example, the collection costs incurred by the payment demands of 10 shipments of goods may be EUR 21 at maximum for the first shipment and EUR 63 for the subsequent nine shipments, or EUR 84 in total at maximum.
The prohibition application submitted by the Consumer Ombudsman to the Market Court only concerns the interpretation of the Debt Collection Act and how many payment demands subject to a charge it is acceptable to send concerning a single agreement on a subscription for goods under the Debt Collection Act. This case does not concern the validity of the order agreements subject to collection by Alektum. The Market Court does not settle disputes concerning the validity of consumer contracts; instead, they are settled by ordinary courts and the Consumer Disputes Board.
The Consumer Ombudsman has assisted individual consumers in ordinary courts, and district courts have rejected claims based on unjustified or invalid outstanding debts of ACN, Homeenter, Westerfield AG and MMBG AG collected by Alektum. The consumers, from whom Alektum collects contested debts, can contact the Consumer Advisory Service.
The Regional State Administrative Agency for Southern Finland that monitors the activities of collection agencies has also considered whether Alektum’s collection activities are appropriate, and it has terminated the company’s debt collection licence on 31 December 2018 due to activities in violation of the Debt Collection Act.
Aluehallintovirasto on peruuttanut perintäyhtiö Alektum Oy:n toimiluvan. (The Regional State Administrative Agency has terminated the licence of Alektum Oy.) Press release by the Regional State Administrative Agency, 11 January 2019. (In Finnish.)
Instructions for consumers when contacted by collection agency Alektum to collect Westerfield and MMBG’s receivables. Press release by the Finnish Competition and Consumer Authority, 14 December 2017.