56.86 There are concerns about credit reporting information about individuals under the age of 18—especially in relation to the listing of debts by telecommunication companies in relation to mobile telephone contracts.
56.87 A ‘protective’ approach is reflected in the common law, where contracts are not binding on a person under the age of 18 unless it is a contract for ‘necessaries’. The common law applies in all Australian states and territories except New South Wales, where legislation has modified the common law position. Legislation in New South Wales focuses on the contract being for the ‘benefit’ of the child or young person, where the child or young person is sufficiently mature to understand his or her participation in the contract.
56.88 While many companies are mindful of how the law of contract applies to those under the age of 18—and many mobile telephone contracts are signed by adults on behalf of young people—young people, nevertheless, regularly purchase mobile telephones in their own name or sign contracts for future telecommunications services in their own name. Other young people may enter contracts with banks or other financial institutions for loans or credit cards. While some seek loans or credit facilities due to the need to live independently, others may complete offers for credit cards inadvertently sent to them as part of a marketing campaign. Other young people may accumulate a debt by not paying a fine, such as a parking fine, or a fine issued for a public transport ticket violation.
56.89 Where credit obligations are not discharged, telecommunications companies and other credit providers may list overdue payment information with a credit reporting agency. Such information can remain on the individual’s credit information file for up to five years and prejudice a young person’s future access to credit. This may be the case even where the legality of the contract is in question.
56.90 In DP 72, the ALRC proposed that the new Privacy (Credit Reporting Information) Regulations should prohibit the collection of credit reporting information about individuals the credit provider or credit reporting agency knows to be under the age of 18 years.
56.91 Most stakeholders who addressed the issue supported the proposal. Some stakeholders suggested that credit reporting agencies should also be required to delete information about individuals over the age of 18, on being notified that credit was granted or the information listed when those individuals were known (or should have been known by the credit provider) to be under the age of 18.
56.92 Some stakeholders suggested that there should be some exceptions to the general prohibition on the collection of credit reporting information about individuals under the age of 18. The AFC stated, for example, that ‘some qualification may be required for special cases where establishing a credit report for the child may be advantageous to them (eg for teenagers living independently)’.
56.93 The OPC submitted that the new regulations should permit the collection of information about individuals under the age of 18, but make ‘adverse credit listing timeframes shorter, for example 2 years for payment defaults and 4 years for serious credit infringements’. The OPC also suggested that, as an alternative, credit providers and credit reporting agencies could be required to delete credit reporting information about an individual when the individual reaches the age of 18 years.
56.94 The collection of credit reporting information about individuals under the age of 18 should be prohibited. Any regulation to this effect, however, would have to recognise that credit providers and credit reporting agencies may not always know the age of individuals in relation to whom information is collected. The ALRC recommends, therefore, that the new regulations should prohibit the collection of credit reporting information about individuals who the credit provider or credit reporting agency knows, or reasonably should know, to be under the age of 18 years.
56.95 While it is possible that such a reform might have some undesirable effects, for example in prejudicing the ability of some younger people living independently, or those with parents with bad credit records, to obtain credit or services they need, this will be relatively rare. The 11 million files held by Veda Advantage include only 2,137 files on people under the age of 18.
Recommendation 56-9 The new Privacy (Credit Reporting Information) Regulations should prohibit the collection of credit reporting information about individuals who the credit provider or credit reporting agency knows, or reasonably should know, to be under the age of 18.
 See Australian Law Reform Commission, Review of Privacy—Credit Reporting Provisions, IP 32 (2006), [5.141]–[5.147].
Minors (Property and Contracts) Act 1970 (NSW). Some limited exceptions to the common law apply in the other states and territories: see L Blackman, Representing Children and Young People: A Lawyers Practice Guide (2002), 240.
 A 1999 Australian study indicated that 48% of young people under the age of 18 with a mobile telephone signed the contract in their own name: A Funston and K MacNeill, Mobile Matters: Young People and Mobile Phones (1999) Communications Law Centre, 3. Note, however, that in 2005 most telecommunications companies commenced using a new form of contract requiring disclosure of age and not allowing persons under the age of 18 to sign the contract in their own name: Children and Young People Issues Roundtable, Consultation PC 121, Sydney, 7 March 2007.
New South Wales Commission for Children and Young People, Consultation PC 34, Sydney, 18 July 2006.
Australian Law Reform Commission, Review of Australian Privacy Law, DP 72 (2007), Proposal 52–8.
 Australian Privacy Foundation, Submission PR 553, 2 January 2008; GE Money Australia, Submission PR 537, 21 December 2007; Consumer Action Law Centre, Submission PR 510, 21 December 2007; Australian Collectors Association, Submission PR 505, 20 December 2007; Veda Advantage, Submission PR 498, 20 December 2007; Legal Aid Queensland, Submission PR 489, 19 December 2007; Cyberspace Law and Policy Centre UNSW, Submission PR 487, 19 December 2007; Banking and Financial Services Ombudsman, Submission PR 471, 14 December 2007; Law Society of New South Wales, Submission PR 443, 10 December 2007; National Australia Bank, Submission PR 408, 7 December 2007; Dun & Bradstreet (Australia) Pty Ltd, Submission PR 401, 7 December 2007; Australian Finance Conference, Submission PR 398, 7 December 2007; Financial Counsellors Association of Queensland, Submission PR 371, 30 November 2007; Australasian Retail Credit Association, Submission PR 352, 29 November 2007. Optus opposed the proposal on the basis that its ‘existing IT systems would be unable to exclude such records based on date of birth’: Optus, Submission PR 532, 21 December 2007.
 Consumer Action Law Centre, Submission PR 510, 21 December 2007; Cyberspace Law and Policy Centre UNSW, Submission PR 487, 19 December 2007; Banking and Financial Services Ombudsman, Submission PR 471, 14 December 2007.
Australian Finance Conference, Submission PR 398, 7 December 2007. Dun and Bradstreet also referred to the position of consumers under the age of 18 who need to apply for credit in relation to utilities: Dun & Bradstreet (Australia) Pty Ltd, Submission PR 401, 7 December 2007.
Office of the Privacy Commissioner, Submission PR 499, 20 December 2007.
Veda Advantage, Submission PR 498, 20 December 2007.