A man with an intellectual disability received a Centrelink debt of more than $14,000, and the department didn't support him through the process, a Senate inquiry has heard.
But government officials have disputed how much help is made available to people who are asked to explain discrepancies in their incomes, saying staff are trained to help people who ask for it.
A Senate committee is probing Centrelink's online compliance system, commonly referred to as "robo-debt," where tax office income data is measured against reported income to Centrelink. If a discrepancy of more than $1000 is detected, a person is required to provide bank statements and pay slips to prove they haven't been overpaid.
Principal solicitor at the Welfare Rights Centre Katherine Boyle told senators about a case where a man born with an intellectual disability was required to prove he did not owe Centrelink $14,500.
The man - whose mother gave permission for Ms Boyle to share his story - worked as a supermarket trolley collector and was asked to provide pay slips dating back to 2012.
Senators were told the man didn't understand the documentation that had been sent to him, and his case is currently being appealed.
"If he didn't have his mother or us, he would be paying back that debt without it being properly established if he owed that money," she told senators.
Centrelink knows he has a disability because he receives welfare for that reason, Ms Boyle said.
"It is exploitative of people with disability, because they really have no understanding of what's going on," she said, pointing to a lack of transparency in Centrelink's calculations.
Later in the day Centrelink officials insisted staff would help people who had trouble getting hold of documentation of their earnings, for example if their employer no longer existed or they had changed bank accounts. More than 1000 employers had been contacted since February 2017, Jason McNamara, general manager of Integrity Modernisation said.
Acting Deputy Secretary Annette Musolino said people having having difficulties were encouraged to engage with the department to get help.
Labor Senator Deborah O'Neill pushed the officials, asking why only 1000 employers had been contacted by the department when almost 700,000 people had received notice to explain their income.
"And you've been able to assist 1000 people in terms of their contact with their employer, that leaves 699,000 Australians who've done this all by themselves."
"That's a lot of work you didn't have to do any more," Senator O'Neill said.
"We only assist people who actually need assistance," Mr McNamara said.
The latest inquiry is the second in less than three years, while the scheme is also facing a class-action lawsuit.
Robo-debt is expected to cost more than $500 million over the next three years, for a benefit of $2 billion to the federal budget.
Ms Boyle told senators about a case where a family received a robo-debt for their relative who had passed away.
"They had died and yet the robo-debt system rolled on."
Senator O'Neill said 80 per cent of debt notices were repaid, questioning if people were too scared to challenge the government over its figures.
The scheme matches tax office and Centrelink data to claw back overpaid welfare payments.
Liberal senator Matt O'Sullivan questioned why people had trouble accessing bank statements from institutions they no longer had accounts with.
"Remember, we're not talking about people who are very confident or able to advocate for themselves," Ms Boyle said.
"They're not used to dealing with big institutions like that."
He was pointed to another case where someone was told it would cost $45 to access a bank statement from a closed account, which they could not afford.
Ms Boyle recalled one instance where someone had to provide pay slips dating back 10 years, while other people were told they had to pay back welfare when a debt collector turned up at their house.
The Australian Council of Social Service acknowledged changes had been made to the system since its inception, but argued it did not alter fundamental design flaws.
The government has admitted about one-fifth of debt notices have been wrong.