The National Credit Regulator (NCR) warns customers to be cautious about debt counselling advertisements which are false and misleading to consumers.
This escalating plight prompted the NCR to embark on a ‘misleading advertising’ campaign with the aim to educate and inform consumers about credit related adverts that are misleading.
The campaign will take a two-pronged approach starting with debt counselling advertising and followed by credit providers advertising.
“The NCR has noted with great concern, debt counselling advertisements that are false and misleading to consumers,” said Debt Counselling manager, Kedilatile Legodi.
These advertisements are conducted in a form of SMSes, emails and telephone calls. They usually promise consumers a saving on monthly instalments by a certain percentage, predominantly up to 60 per cent, before they conduct an assessment of the consumer’s finances.
NCR warned that it was unethical, misleading and misrepresentation when debt counsellors who usually operate call centres inflate consumers’ monthly expenses to reduce the amount available to repay debts while doing an assessment.
“A debt counsellor must first conduct an assessment of the consumer’s income against the living expenses such as school fees and groceries to determine the amount that can be used to negotiate reduced payments,” explained Legodi.
Consumers should be aware that it is incorrect for debt counsellors to promise specified upfront reduction of instalments before conducting a proper assessment.
Debt counselling is a debt relief measure meant to provide relief to over-indebted consumers only. A consumer is considered to be over-indebted if money available after payment of essential expenses is not enough to pay all other debts.
The NCR registers debt counsellors in their natural or individual capacity and not as companies. As a result, only a registered debt counsellor can assist consumers with the debt counselling application as per the National Credit Act.
Consumers who receive misleading SMSes and calls are urged to immediately report these with the names of the debt counsellors or their registration number to the NCR on 0860 627 627 or dccomplaints@ncr.org.za
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