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Page last updated at 11:35 GMT, Tuesday, 16 June 2009 12:35 UK

Mistaken identity debt case payout

By Bob Howard
BBC Radio 4's Money Box

A man wrongly identified as owing a debt has received a payout of thousands of pounds from the debt collection agency concerned.

Mike Thompson, Money Box listener
Dr Mike Thompson received a payout of over 6,000

Dr Mike Thompson was contacted in August 2007 by debt collection firm Aktiv Kapital which was seeking £640 it said he owed to a finance company.

Dr Thompson knew the debt did not belong with him and he had never heard of the finance company involved.

When Aktiv Kapital threatened court action to recover the money, Mike told the firm it had got the wrong Mike Thompson and that it should produce evidence of the debt.

In January, he believed he had finally convinced the firm he was not the person they were seeking.

But then he discovered the firm had placed a default on his credit record.

He told BBC Radio 4's Money Box: "I was obviously outraged but at that time I had a very good firm of solicitors acting on my behalf."

"I was informed that was the point at which we could take legal action in the High Court."

Reputation

Mike's solicitor told Aktiv Kapital that unless it paid damages and apologised, there were grounds for him to consider suing for defamation.

That was because details of the debt Mike did not owe could now be accessed by any finance company checking his credit record, adversely affecting his reputation.

After weeks of negotiations, Aktiv Kapital paid him £6,725 in damages and costs and issued a public apology, published in the London Gazette.

It said: "Aktiv Kapital (UK) Limited now accepts that Dr Thompson has neither been indebted to, nor defaulted on any account with Aktiv Kapital (UK) Limited."

The claimant would have to show the company had been reckless
Sarah Webb, solicitor

"Aktiv Kapital (UK) Limited wishes to express its regret to Dr Thompson for this error, and apologises unreservedly to Dr Thompson for any embarrassment and inconvenience which may have been caused to him."

Sarah Webb, head of media and defamation at Russell Jones & Walker Solicitors, believes a claimant like Mike would have been in a strong position if the case had gone to court.

However, to succeed he would have to overcome significant legal protection known as "qualified privilege" given to the firms involved.

Ms Webb told the programme: "The claimant would have to show the company had been reckless in passing on the wrong name, that they'd got the wrong person."

To win, claimants would also have to be prepared to overcome financial hurdles as well.

Dr Thompson's solicitor, Simon Cook, a partner at law firm Ormerods, says anyone not on a high income might struggle to fund their case.

"You can't get legal aid for defamation. Most people can't afford the costs of the proceedings. Even if he'd won, he wouldn't have necessarily received all of his costs," he said.

Sufficient safeguards

The two credit reference firms contacted by Money Box - Experian and Equifax - said they were happy with their existing procedures for making sure data entries are accurate.

James Jones from Experian believes his company already has sufficient safeguards in place.

"We test the data before it's added to credit reports, we monitor the data on an ongoing basis and report any discrepancies back to the organisation," he said.

There's a certain amount of scepticism at the start
Kurt Obermaier, Credit Services Association

"We also monitor the things that consumers are querying with us."

The Credit Services Association, which acts as the trade body for the debt collection industry, has recently issued new guidelines to companies attempting to trace people.

It admits occasional mistakes are made by members trying to identify people who owe debts but denies this happens on a regular basis.

Kurt Obermaier, the association's executive director, said his members have a difficult task but take complaints seriously.

"The very essence of our industry is to deal with people who say 'that's not me' or 'I don't owe this money', so there's a certain amount of scepticism at the start," he said.

"If you continue getting collection letters, they are required to have a proper complaints procedure and you can complain to the chief executive."

BBC Radio 4's Money Box was broadcast on Saturday 13 June at 1204 BST.



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