Don’t fall for calls to help with your debt – it could be debt counselling

Consumers are warned not to fall for phone calls from people who say they can help them pay off their debt, as some debt counsellors use this method to trick consumers into entering debt counselling without their knowledge.

The National Credit Provider (NCR) issued an alert to consumers recently to beware of debt counsellors engaging in the deceptive or misleading practice of placing consumers under debt counselling without their knowledge or consent.

“The NCR received an alarming number of complaints and we spotted a worrying trend. Debt counsellors are duping consumers into debt counselling while consumers do not have a full understanding of the process they are entering into and some are not even aware that they have consented to it,” Enica Mpete, manager of the complaints department of the NCR says.

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Prohibited conduct in debt counselling

This prohibited conduct misrepresents the spirit and objectives of the National Credit Act (NCA) regarding the provisions of debt counselling as a debt relief measure. Mpete says debt counsellors are required to conduct debt counselling services in line with the NCA and to conduct these services in a manner that does not bring the debt counselling industry and the NCR into disrepute.

Consumers are urged to be on the alert for this prohibited conduct of debt counsellors who unscrupulously mislead unsuspecting consumers to enter debt counselling or place them under debt counselling without their knowledge or consent, as the consequences of these actions have long-lasting after-effects on consumers’ financial well-being, Mpete says.

Debt counselling trends to watch out for

She highlights these trends that consumers must look out for that can lead to them signing up for debt review without their knowledge or consent:

• Consumers are contacted telephonically to help with debt consolidation or reduction of interest or instalments on their accounts. In other instances, the caller would claim to be calling from the NCR or working with the NCR and government to assist consumers with their debt.
• In most instances, callers already have consumers’ information about their obligations, making consumers believe they are really working with the NCR and government.
• Consumers are misled to provide and/or confirm personal information telephonically with the understanding they are providing it for something other than debt counselling, such as debt consolidation or reduced interest or instalment on accounts.
• Debt counselling application forms are sent to consumers via a link to their phone to sign electronically and all information obtained telephonically is later transferred to the Form 16 or debt counselling application.
• Some consumers only become aware of debt counselling when they apply for credit, which is rejected because they are under debt counselling.

ALSO READ: Debt review: should you or shouldn’t you?

What to remember about debt counselling

What consumers must know:

• Debt counselling or debt review is a formal process introduced by the NCA as a voluntary debt relief measure to assist over-indebted consumers.
• A consumer is over-indebted when your income is not enough to cover all your living expenses and debt repayments.
• Consumers have a right to fully understand and consent to any financial decision and must not be pressured to sign any document without reading it and fully understanding its implications.
• Consumers should approach a debt counsellor for assistance and voluntarily apply for debt counselling, not the other way around!
• It is prohibited conduct and in contravention of the NCA for a debt counsellor to mislead consumers into debt counselling or place consumers under debt counselling without their knowledge and full understanding or consent.

“Remember, if you are placed under debt counselling you will not be able to access further credit until the application is rejected by the debt counsellor or the magistrate’s court, or until all your current debt obligations are fully settled,” Mpete warns.

ALSO READ: There is life after debt counselling – here’s how to get there

This is what to do if you get this kind of call

What to do if you get this kind of call:

• You have a right to ask the caller where or how they obtained your information without your consent.
• Do not sign documents on your phone on the first day and/or during the first call.
• Always ask for a copy of the document to read it first before signing anything.
• Be cautious of unsolicited telephone calls helping with your debt obligations and do not fall victim to these scams.
• Stay informed and educate yourself to understand your rights and options as a consumer in relation to debt review and its implications on your financial future.
• Report any related prohibited conduct to the NCR for further investigation.

“The NCR encourages consumers to communicate in writing or in person instead of over the phone when they need to make decisions concerning their finances. If you suspect that you may be a victim, need more information or to report this prohibited conduct, please contact the NCR.

“The NCR will continue to monitor these trends and ensure that appropriate enforcement action is taken against debt counsellors who are found to be engaging in this type of unscrupulous and prohibited conduct,” Mpete says.

If you suspect that you may be a victim, for more information or to report this prohibited conduct, contact the NCR’s complaints department on 0860 627 627 or send email to complaints@ncr.org.za.