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ASIC succeeds in obtaining orders against Debt Wipeout

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ASIC has obtained interim orders and injunctions from the Federal Court of Australia against Mr David Murphy, Mr Anastasios Mavroulis, Mrs Kewa Ruwhiu and Mr Mathew Ruwhiu (the defendants) and Debts Knockout Pty Ltd (Debts Knockout) in relation to unlicensed financial services.

ASIC alleges that Debts Knockout and the defendants provided financial services through the business Debt Wipeout. The Debt Wipeout business is operated by Mr Murphy with the business’s name owned by Mr Mavroulis. ASIC also alleges Debts Knockout provided financial services in its own right. The alleged contraventions of the Corporations Act 2001 (Cth) and ASIC Act 2001 (Cth) include:

  • carrying on a financial services business without holding an Australian financial services licence;
  • engaging in misleading or deceptive conduct while carrying on a financial services business;
  • making false or misleading representations while carrying on a financial services business;
  • engaging in unconscionable conduct while carrying on a financial services business; and
  • engaging in conduct that was liable to mislead the public as to the nature while carrying on a financial services business.

Debt Wipeout advertises on billboards, shop-a-dockets, websites, social media and in person, claiming it can ‘extinguish’ a consumer’s debt for an up-front payment of 15 to 25 per cent of the outstanding balance.  Debt Wipeout represents that upon receipt of this up-front payment, the creditor will receive funds to settle the consumer’s debt. Consumers have made up-front payments and their debts have not been extinguished.

ASIC Deputy Chair Daniel Crennan QC said, ‘We will continue to address the impact of the COVID-19 pandemic, which includes taking action to protect consumers in financial stress due to potentially unscrupulous conduct.’

On 6 October 2020, Justice Farrell found, on the evidence filed by ASIC, there was a prima facie case that the defendants and Debts Knockout had engaged in contraventions of the Corporations Act and ASIC Act.

The Court also found there was a need to protect aggrieved persons and made asset preservation orders against Mr Murphy. Additional orders requiring the disclosure of information to ASIC against each of the defendants and Debts Knockout were also made.

A copy of the 6 October ex parte judgment can be found here.

On 9 October 2020, the Court made further injunctions restraining the defendants and Debts Knockout from carrying on or promoting Debt Wipeout. The defendants and Debts Knockout have been ordered to take down the websites debtwipeout.org, debstknockout.org and associated social media promotions.

A copy of the 9 October injunction orders can be found here.

These orders were made pending a final hearing into the conduct of the defendants and Debts Knockout in which ASIC is seeking pecuniary penalties and orders requiring Mr Murphy to refund to any person who has paid an amount in order to have a loan or debt extinguished the amount of that payment, or enough to redress the loss or damage suffered by a person in relation to the alleged contraventions.

The Court adjourned the matter for a case management hearing on 26 October 2020.

Background

In response to the COVID-19 pandemic’s impact on the financial system and the potential for harm that this has created, ASIC has implemented a set of pandemic-related enforcement priorities that guide our response to misconduct. This misconduct includes opportunistic conduct seeking to exploit the current environment, such as predatory lending practices, scams, unlicensed conduct and misleading and deceptive advertising.

Moneysmart.gov.au has information to help consumers with managing debt.

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Regulator Information

Abbreviation: ASIC
Jurisdiction: Australia

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