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Consumer issues

[There is an] issue with their capacity to make sensible decisions about what they are doing; financial problems, gambling, spending money on drugs and alcohol, preyed upon by other people. The financial problems are fairly common.¹⁸³

That consumer debt is an issue affecting people with a mental illness has been raised in the literature and by both service providers and participants interviewed for this study. The literature suggests that people with a mental illness are in many instances financially disadvantaged,¹⁸⁴ which may place them at risk of accruing debt. This was also raised in the consultations:

I think that debt and credit cards and mobile phones and all that sort of stuff is an area of need … for people with mental illness, as it is for many people without a lot of money basically.¹⁸⁵

Credit and debt [are issues], given that the disability support pension is not adequate.¹⁸⁶

First, a number of participants in this study appeared to have accrued debt as a result of general financial disadvantage:

My mum dying … I have got the debt collectors on about the funeral bill, because it’s all in my name. The funeral guy just came over to me then. I can’t believe he did it; I was sitting there with groceries I [obviously] got from St Vincent de Paul.¹⁸⁷

[I have a] low income … I have many bills to pay … car insurance, the green slip of my car, telephone and electricity, and the pension is just sometimes not enough. I don’t believe I can pay my insurance this year, or I can register my car this year … I have a credit problem. I owe $1300.¹⁸⁸

My phone bill, because my mother passed away the money dropped down so I have been having trouble managing financially … credit card, I have it owing, yeah, rates, water rates, land rates, I have all that owing at the moment. Austar, you name it, I owe money on it at the moment.¹⁸⁹

Secondly, a number of service providers suggested that people may be particularly unwell (e.g. in a manic state), or have an addiction, which influences their capacity to make sensible decisions about purchasing items or entering into contracts:

Issues relating to people who have a mental illness may include capacity (in the legal sense) to enter into a binding contract or understanding of purchase. For example, a person who is in a manic state who has made a purchase; comprehension issues about complex contracts.¹⁹⁰

For example, a solicitor from the Consumer Credit Legal Centre believed that the biggest financial issue for people with a mental illness concerns credit cards, with people over-committing themselves while they are unwell:

I don’t know how many times people have rung me up and said “I was manic and the bank let me spend all this money. I shouldn’t have done it but I was sick.” If you have a mental illness and you get an unsolicited limit increase, you just sign, if you are in a manic stage you just sign.¹⁹¹

A British study on mental illness and social exclusion reported that people with a mental illness can experience problems with credit and debt after they go on “sprees” while unwell. The same study also found that many people with a mental illness who had accumulated such credit-related debt were on very low incomes.¹⁹²

An example of someone entering into a financial agreement whilst they were unwell was provided by the OPC:

X owned an apartment. On the basis of this property X got a loan from a financial institution to buy an investment property. It was a bad investment and X could not rent it out and therefore had no income to finance the interest on the loan. The loaning institution wanted to sell both properties to get back their original loan and the interest owing. X was actually very ill and was admitted as a patient to a mental hospital. X’s psychiatrist gave evidence re the mental state of X at the time X entered into the mortgage agreement. Under the Contract Review Act there was a good case to set the transaction/contract aside and the situation was successfully resolved.¹⁹³

Thirdly, a couple of service providers suggested that some people with a mental illness appear to be vulnerable to high pressure sales tactics. For example:

The way that those sorts of services are marketed, tends to mean that those [people] with a less sophisticated understanding of that [service] get the worst deals. [They] don’t necessarily appreciate what they are signing up for, and are the ones that in the end get the greater debts.¹⁹⁴

People with particular illnesses are susceptible to particular sales tactics. For example, sales tactics that feed into situations where people are in a manic state.¹⁹⁵

Finally, consultations also indicated that people with a mental illness can be vulnerable to financial exploitation and fraudulent activity by other people. The following are examples of this:

A young man with chronic schizophrenia became infatuated with a young woman he knew. She was able to persuade him to borrow money from a lending shark at very high interest rates (40%). He owned half an apartment with his brother and this was used as collateral. He gave the money to the woman and never saw her again. He couldn’t repay the interest on the loan so the loaning institute came after him.¹⁹⁶

I was talking to someone on the internet, and he said he was a “working humanitarian” who gave financial assistance. He said he could help me if I needed help. He said “if I send you a cheque would you accept it?” and I said “yes I would accept it”, and so he sent me a cheque. And then I took it to the bank, and the bank cleared it, but after the bank cleared it, they told me that the cheque had bounced. But I had already withdrawn the money. Then, they told me that I had to pay the money back.¹⁹⁷