Regulator warns of misleading debt counselling adverts

The National Credit Regulator (NCR) has in recent times noted advertising practices by debt counsellors and unregistered persons that are misleading and deceptive, unlawful and contrary to the National Credit Act (NCA) and its regulations.

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This has caused harm and distress to unsuspecting consumers.

This press release should warn consumers against such advertising practices and request consumers to report these practices to the NCR.

Advocate Kedilatile Legodi, the manager of the NCR debt counselling department, said in recent times, there has been a surge in advertising for ‘debt review removals’ and some consumers are charged in the excess of R8 000 to have their debt review flag removed.

“Consumers are warned that this ‘debt review removal’ is not supported by law,” warned Legodi.

“In a recent high court judgment, delivered by three high court judges, the court stated debt review removal is not possible for consumers who have been declared over-indebted, and that consumers need to pay up all debt, except where a bond is not in arrears, to be removed from debt review.

“Where a consumer has a debt review court order, no court, not even the high court, can rescind such judgment.”

Legodi requested consumers to access the NCR Withdrawal Guidelines issued in 2021, from the NCR’s website, which clearly states the circumstances under which a consumer can exit debt review.

“If any company offers a service contrary to the NCR Withdrawal Guidelines, even attorneys, consumers are running a risk of paying for a service that has no prospect of success with no recourse against persons not registered with the NCR,” she said.

She warned that before any consumer pays for such services; they are urged to contact the NCR or access the website to verify the registration status of such a person offering such service.

In addition, she elaborated on the unlawful practice of consumers being contacted telephonically by ‘NCR agents’ to discuss their debt review status or debt review flag removal.

“The NCR does not have any personal information of consumers and will at no stage contact a consumer to discuss their debt review status,” Legodi said.

“Consumers are requested to report these ‘NCR agents’ to the NCR Complaints Department at complaints@ncr.org.za or on 0860 627627 and not be scammed by these practices.

“It has further been noted that there are companies that advertise they work with the NCR to investigate debt counsellors.

“The NCR has the exclusive mandate under the law to perform an investigation into registrants and cannot outsource such a mandate to any outside company.

“Consumers are urged to request an official inspector certificate issued by the NCR from such companies before engaging with them.

“If such a certificate can not be produced, consumers are requested to report such companies to the NCR’s complaints department.”

The NCR noted the prevalence of advertising, especially on social media platforms such as Facebook, Tumblr and Instagram, of claims that debt counsellors can:
• Get debt written off by credit providers.
• Payment of a large amount of debt in a brief period.
• Government-approved method to get debt written off.
• Government-approved debt relief for over-30s/40s/50s/60s (Bait marketing).
• Pictures of senior government officials advertising debt relief.
• Save consumers 63%/60%/55%/43% on debt repayments.

Legodi warned that if it is too good to be true, it probably is.

“Debt relief measures under the NCA should repay all debt to credit providers with certain interest concessions and extended terms to facilitate relief to consumers.

“It is not a savings plan or magic trick to let debt disappear. Consumers remain responsible for debt repayments and there are no provisions in the NCA or the regulations that can facilitate the claims made in these advertisements.

“Don’t be fooled or scammed by such unlawful and false advertising,” she said.

Consumers should not trust any advertising that does not contain the NCR registration number of the debt counsellor.

“If the debt counsellor is not identified in the advertising, how can a consumer verify the identity and status of the debt counsellor or the validity of the service?” asked Legodi.

Therefore, consumers should be vigilant and report any advertising to the NCR where the advertiser cannot be identified.

Consumers should also keep in mind that no person, not even attorneys, can provide the services of a debt counsellor if they are not registered to do so.

“Always ask for the NCR registration number before engaging with any person, even attorneys who claim to be debt counsellors or to provide any service surrounding your credit agreements,” Legodi warned.

Finally, consumers must be made aware that it is unlawful for debt counsellors to receive any payments of money directly from consumers.

Legodi explained Regulation 11 of the NCA prohibits debt counsellors from taking any money from consumers and can be deregistered for doing so.

Consumers are requested to report to the NCR if the debt counsellor request payment of any monies to them directly.

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