Are you looking for a loan? Be warned
Think carefully about approaching "an online loan provider because you might be signing up for a service" instead - and get deeper into debt, writes Georgina Crouth.
|||Think carefully about approaching “an online loan provider because you might be signing up for a service” instead - and get deeper into debt, writes Georgina Crouth.
On Friday last week, the National Credit Regulator (NCR), the City of Joburg and metro police officers targeted illegal advertising in Midrand as part of the regulator’s “Misleading Advertising” campaign.
Jacqueline Peters, the NCR’s manager for investigations and enforcement, commented at the time “that the National Credit Act was clear on the required content for credit adverts - and that certain words and phrases were prohibited.
Language matters, and adverts suggesting: “No credit checks required”, “blacklisted consumers welcome” and “free credit” are simply illegal.
“Despite these clear regulations, we still find a substantial number of these unlawful adverts of this kind, even in the mainstream media. The NCR is engaging in a concerted effort to eliminate these unlawful adverts,” said Peters.
Judging by the adverts plastered all over lamp posts for “penis enlargement”, “bring back lost lover” and “blacklisted welcome” - never mind the classifieds sections in some tabloid newspapers advertising everything from faith healing and raising the dead to “the philosopher’s stone" and other pie-in-the-sky schemes - the regulator and metro police are seemingly embarking on an impossible enforcement task.
But examples must be made of these charlatans.
One area that needs their attention is the online micro-loan sector, which is rife with promises of “no credit checks” to the blacklisted.
Our economy is in poor shape and desperate times mean some stressed people “are making reckless financial moves”.
The Wongas of this world are not obfuscating their business model: payday loans. Such loans are generally small amounts loaned at high interest rates and linked to the borrower’s pay day.
What, though, of companies that appear to offer loans, by making grandiose claims like: “Our success in finding the perfect micro-finance every time is due to our strong partnership with many lenders and brokers across the country.” They even have the word “loan” attached to their names, so it’s reasonable to expect them to offer loans, right?
A reader by the name of Morgan contacted me “with a heartbreaking story “ about three companies he approached for loans “only to find all they offer “ is advice” - and it’s “certainly “ not free.
He wrote: “These companies fool desperate individuals like me looking for a loan.
“Early this year, I was in need of a loan to pay my children’s school fees as they were taken out of their classroom until their fees were paid. I searched the internet and came across the company Loan Quest which disguises as a loan-offering company and I applied for a loan.
“I also came across Loan Hub and Loan Spotter, hoping I would be successful in one of these loan companies. I didn’t realise I was applying to the same company using different names with the aim of deducting money from my account month to month without offering me a loan.
“For two months, they deducted money from my account and I was not aware until I checked my bank statement and realised. I told them what I needed was a loan, not for them to deduct money from my account.
“These companies then sent my information to Lifestyle Legal which has been sending me letters of demand and threatening to summon me to court for non-payment. Lifestyle Legal has sent three letters of demand from the three companies. The summonses were emailed to me and they don’t indicate an issuing court.
“I’ve tried to ignore these companies but they continue with their harassment. I checked on the internet and discovered a number of people have fallen victim to them.”
To my mind, such companies are engaging in cynical, false advertising: consumers see the word “loan” in a name and have a reasonable expectation of such a service.
For instance, Loan Hub’s website says: “No more worries! We’ll help find what you’re looking for!”
But their “A-grade service” extends only so far as finance and paralegal advice.
Though their online sign-up page asks for your financial details, what you need the money for and how much you require, it’s a red herring because if you look at the terms and conditions, their 12-month fixed-term agreement “is for “a convenient service package”, which amounts to telephonic advice and DIY links to download documents for personal injury, litigation, criminal matters, will and testament, and other “advice assistance”.
No mention of a loan, though a “complimentary” loan-finding service is available. That’s splitting hairs and is tantamount to “advising you to approach a bank directly for the money”. They gave you the advice, right?
Then, after a year, the contract rolls over on a month-to-month basis until they’ve been notified otherwise. The costs?
A “convenient” R399 initial sign-up and R99 a month for 11 months thereafter.
The sign-up pages and T&Cs for all three “loan” companies mirror each other and were clearly pulled off the same template right down to the flashing banners, listings and clause numbering.
All three are based in Cape Town and their collection agency, Lifestyle Legal, wasn’t subtle about their debt-collection tactics. The clients - or victims rather, as they insist - were emailed unstamped summonses.
A contact in the National Prosecuting Authority perused the documents and said: “The summons have not been issued or they would have a court stamp. Summons that are not issued have no effect. It looks like blatant extortion as they do not provide the kind of services they purport to (loans), yet they penalise the customer for their failure to deliver on their promise.”
There are numerous complaints about such operators on social media - all for “loan providers” including Loan Tracker SA, Loan Tracer, Loan Connector and Loan Zone SA. One complainant set up a WhatsApp group and invited me to join in their conversations.
Most of the victims deny completing an online application.
They might have inadvertently though. One and the same company perhaps?
I asked Loan Hub, Loan Quest and Loan Spotter for comment; none responded, although Henno Bothma from Abrahams & Gross - who represent Lifestyle Legal - did, saying they had no interests in these companies and were merely representing their clients - then threatened legal action should I defame their clients or tarnish their reputations.
Tellingly, a bookkeeper wrote in response to a complaint about the “loan” providers: “I am having the same problem with Loan Tracer. First, they tried debiting money from my account without permission (I reversed the transactions every time) and according to them, I did an online application.
“After I questioned them, they sent me the application with an IP address, which I found belongs to a store in a town I have never even been to, so they said I must open a case of fraud, but they’ve handed me over to their lawyers.”
Another wrote: “They trick people on their site. I went on to their site, entered my details just for more info on what they provide. I never signed anything or agreed to anything and now they are sending me letters of demand.”
The National Consumer Commission is on to them though. Its spokesman, Trevor Hattingh, told me they’re investigating, but couldn’t comment.
Deputy credit ombudsman Reana Steyn told me: “There are entities on the internet who advertise that they can source a loan for you - they are not offering to grant the credit themselves. The consumer agrees to the T&Cs, they tell the consumer they could not find him or her a loan, but their fees are still payable.
“They are quick to hand over this amount and start to demand payment and legal action.
“Consumers complain bitterly. But it was not a credit agreement, and second, it is not with one of our members, so we cannot assist.
“The only thing to do is refer the matter to the consumer commissioner and their offices are well aware of these claims. It is a misleading advertising/product/service issue under the Consumer Protection Act. But the entities are getting away with murder.
“Consumers do not read, but they click to say they have read and understood.
“Consumers do need to be warned.”
Wise up . Here’s how!
Tread carefully: Reading the terms and conditions on any contract is an act of self-preservation. If only “Morgan” wasn’t in such a hurry to sign up for the “loan” he would have realised they weren’t offering what he wanted or needed.
Complain: If you’ve had a similar experience, contact the National Consumer Commission about it. Call 012 761 3000, mail complaints@thencc.org.za or visit www.thencc.gov.za.
*Georgina Crouth is a consumer watchdog with serious bite. Write to her at consumer@inl.co.za
Follow on Georgina Crouth on Twitter: @askgeorgie
The Star