Warning: This story contains content that may be distressing to some, including about self-harm.

Debt collection agencies that facilitated Robodebt and figured in some of its victims’ suicides face calls to return the money they made from the illegal scheme.

Three debt collection companies made $11.6 million between them to collect nearly 300,000 debts raised under the unlawful and inaccurate Robodebt scheme, a royal commission report revealed last week.

Data released by the commission on Friday that, despite being given strong financial incentives by the government, debt collectors succeeded in recovering little more than 10 cents in every dollar owed. Some $955 million in Robodebts were referred to collection agencies, which recovered only $97 million.

The companies were contracted to “badger” people on welfare payments and made threats of legal action over debts, the inquiry heard.

Consumer groups and advocates for victims say that was a form of unconscionable harassment.

“The millions of dollars of public money wasted on external debt collectors is a shameful reflection of the aggressive and unrelenting pursuit of Australians for debts they did not owe,” Cassandra Goldie from the Australian Council of Social Services said.

“We need to now make sure that people directly affected [by Robodebt] have justice. It would be absolutely the least that could be done for those that are left in the dark to be returned.”

Debt letters

Six years ago, Rhys Cauzzo took his own life on Australia Day, about 10 weeks after a debt collection company began to chase him over a $17,000 debt that would later be refunded and reduced to zero.

Days later, his mother discovered her son in his Melbourne home, where she also found his personal effects and a self-portrait that foretold his suicide.

Debt collectors had sent Mr Cauzzo six such letters, called him 13 times and texted him, too, in the weeks leading up to his mother’s discovery, the royal commission report concluded.

Evidence presented to the commission exposed the nature of the communications used by the company chasing Mr Cauzzo – Milton Graham, a debt collection agency that consumer groups say subjected victims to a form of unconscionable harassment by threatening them with lies.

A Centrelink-approved script used by the company’s call centre workers tendered as evidence to the royal commission reveals Milton Graham would open the first phone contact by saying:

“This [call] is regarding an outstanding amount of [$17,000]. This account has been escalated to Milton Graham for immediate collection, and we require payment in full today.”

A taskforce established by former Coalition human services minister Stuart Robert the year before Mr Cauzzo’s suicide, and which was defended by his successors, sent letters about Robodebts carrying the logo and the authorisation of the Australian Federal Police.

“Our role is to detect people who are deliberately withholding or providing false information to dishonestly receive welfare payments,” they read.

Telephone scripts used by debt collectors included instructions for operators in cases where people were experiencing hardship, threatening self-harm or were from vulnerable backgrounds.

“[This happens] more often than I’d like,” said Robert Whelan, a representative of one company, ARL Collect, who maintained such cases were not common.

Eighteen months before his death, Centrelink had found Mr Cauzzo was afflicted by a permanent psychiatric disorder. No note was made on his file, in an apparent lapse by the department.

Unconscionable

Government Services Minister Bill Shorten cancelled external debt collection contracts in April.

But the conduct of debt collectors pursuing Robodebts could figure in a bid for compensation for its victims based on what lawyers say was fresh evidence unearthed by the royal commission of an abuse of government process.

Disproportionate threats were included in debt collectors’ approaches by design, a coalition of consumer advocacy groups led by Financial Counselling Australia has argued.

They want the debt collectors that enforced Robodebt to be referred to regulators for what they allege was a breach of their legal obligation not to lie to people who owed money about what would happen if they did not pay, or expose them to harassment.

Letters sent by Milton Graham, the debt collector in Mr Cauzzo’s case, warned that failure to repay debts could stop people from travelling overseas or expose them to legal action.

But only people who owe child support, not Centrelink debts, are usually stopped from leaving Australia.

And government procedure states that lawsuits over debts should be mounted only in cases where more than $10,000 is owed by someone who has the capacity to pay it back.

“[The misrepresentations] were calculated to intimidate or demoralise, tire out or exhaust a debtor,” the groups wrote.

In its final report handed down last week, the royal commission laid the blame for this conduct at the feet of the government.

“The debt collectors did what debt collectors do: They badger people for payment,” Commissioner Holmes concluded. “The evil in this case was the government’s unleashing them on social security recipients.”

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