Credit regulator warns of false advertising
These advertisements are conducted in the form of SMS messages emails and telephone calls
THE National Credit Regulator (NCR) is embarking on a campaign to educate consumers about misleading advertising.
This campaign will take a two-pronged approach in which debt counselling advertising will be dealt with first, followed by credit provider advertising.
‘The NCR has noted with great concern debt counselling advertisements that are false and misleading to consumers,’ said NCR debt counselling manager Kedilatile Legodi.
‘These advertisements are conducted in the form of SMS messages emails and telephone calls.
‘They usually promise consumers a saving on monthly installments by a certain percentage, predominantly up to 60 percent, before they conduct an assessment on the consumer’s finances.’
Legodi explained when doing an assessment for debt counselling, some debt counsellors, who usually operate call centres, inflate consumers’ monthly expenses to reduce the amount available to repay debts.
‘This is unethical, misleading and a misrepresentation of what debt counselling is.
‘A debt counsellor must first conduct an assessment of the consumer’s income against the living expenses such as school fees, groceries and so on, to determine the amount that can be used to negotiate reduced payments.
‘Consumers should be aware that it is incorrect for debt counsellors to promise specified upfront reduction of installments before conducting a proper assessment.’
Debt counselling is 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.
Legodi advised consumers not to go under debt counselling for reasons such as a ‘payment holiday’, as they have an obligation to continue making payments.
‘Consumers should be aware that there are applicable fees that must be paid when under debt counselling, and these fees must be disclosed upfront and in writing at the point of application by the debt counsellor.’
Registered or rogue
‘Also important for consumers to note is that the NCR registers debt counsellors in their individual capacity and not as companies,’ said Legodi.
‘As a result, only a registered debt counsellor can assist consumers with the debt counselling application as per the National Credit Act.
‘It has come to our attention that some debt counsellors are using call centre agents and administration staff who are not duly authorised to offer debt counselling.
‘Consumers are advised to ensure that they know who their debt counsellor is throughout the process.’
Consumers who receive misleading SMS messages 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 email to dccomplaints@ncr.org.za
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