MY MONEY

Robodebt victims to receive $1.2 billion refund after class action

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Victims of the Centrelink robodebt saga will share in a further $1.2 billion compensation after a landmark class action was settled on Monday.

The settlement from the Gordon Legal class action, the largest in Australian history, includes an additional $112 million for legal costs.

In 2016 Centrelink rolled out an automated system to detect if Australians were being overpaid. It cross-checked income information from the Australian Tax Office (ATO) with a person's reported income.

centrelink robodebt refund class action gordon legal

If the system detected a difference between the two, recipients were told they had been overpaid and were asked for proof of income or their payments would be garnished.

The consequences, as readers told us, were devastating.

"I have a $16,000 robodebt on me," wrote reader Jim. "They just take $140 each pay. I have no choice to reduce it ... I have chronic PTSD, anxiety and major depression."

Reader Alison commented: "I received a robodebt in 2016 for $4600 - an apparent overpayment which is not correct. I've stressed over this since I received it, so much that I've been hospitalised twice with anxiety. With the robodebt highlighted now I think I'm entitled to receive it back... I'm disgusted with this situation."

Already, $720 million worth of invalid robodebt is in the process of being returned to members of the class action. Those affected should have received a notice through MyGov informing them of their membership in the Gordon Legal class action, with the option to opt out. Those who didn't opt out should have already received a refund or will receive one soon.

According to Gordon Legal, members who had their debt calculated as a result of Centrelink using averages derived from ATO income information and made repayments or had money recovered from them will receive a settlement payment.

The amount that class action members will receive will depend on how much of the debt was repaid or taken from them, coupled with the length of time they went without the money. As such, those who paid back more of the debt and went without it for a longer time will receive a larger portion of the compensation amount to better reflect the extent to which they were affected.

Those whose debts were initially based on ATO averages, but then were recalculated using payslips or bank statements will also be entitled to a settlement payment, which again will be calculated by the amount and length of time they were out of pocket.

Finally, any further outstanding robodebts will be cancelled.

This settlement has yet to be approved by the courts.

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David Thornton is a journalist at Money magazine. He previously worked at Your Money, covering market news as producer of Trading Day Live. Before that, he covered business and finance news at The Constant Investor. David holds a Masters of International Relations from the University of Melbourne.
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