Scam spawns a class action suit
Law clinic brings suit to high court, to stop internet loan lender from deceiving the public.
Law Clinic wants websites shut down, debit orders to be stopped.
Stellenbosch University Law Clinic is bringing a class action suit to the Western Cape High Court, to stop internet loan lender Lifestyle Direct and 18 other respondents from deceiving the public into applying for bogus loans.
Customers who signed up complained they did not receive any loans, but had their bank accounts debited for so-called “legal services packages”.
The Law Clinic also wants the court to stop Lifestyle from debiting the accounts of people who applied for what they thought were loan agreements, and from harassing or threatening them for payment.
Lifestyle was approached to comment on this article before publication. Its only response, via Henno Bothma of attorneys Abrahams & Gross, which is defending most of the respondents, was that Lifestyle will defend the case.
Asked how Lifestyle intends to answer the claim of misleading the public, Bothma says numerous clients who qualified for loans were referred to lenders and received loans.
The Law Clinic says the lending practices of Lifestyle violate the Consumer Protection. It wants any money deducted from consumers misled by these websites to be returned to them, as well as for the respondents to compensate them for wasted bank charges.
The loans are offered to the public via websites such as Loan Quest SA, Loan Locator SA and Loan Hub SA, none of which are registered credit providers.
Complaints started dribbling through to consumer website Hello Peter in 2016 when “loan applicants” reported funds disappearing from their accounts, followed by harassing phone calls, after filling out what they assumed to be an online loan application.
Those who signed up thought they were applying for a loan or for assistance in finding a loan. They did not believe they were entering into an agreement to purchase unwanted services.
All the websites have virtually identical terms of service and legal disclaimers, and require the applicant to provide the date of salary payment to facilitate successful debit orders.
Some offer a 30-day cooling-off period during which applicants can cancel the agreement, but none knew they had entered into an agreement. Consumers also report that their pleas to cancel the unwanted agreements during this cooling-off period fell on deaf ears.
The Law Clinic has applied to the court for an ‘opt-out’ class – meaning anyone who has been adversely affected is assumed to be a member of the class unless specifically opting out.
The Law Clinic is also asking the court for recognition as a class, and for an interim interdict to shut down the offending websites.
The websites are all connected to each other and to company directors Damian Malander and Nandie Paich.
All but one of the companies that operate the relevant websites were registered on the same day, and all share the same directors. Their websites are also hosted on the same server.
The case for the interdict to stop these websites from operating in this misleading way (or at all) will come before the court on November 27.
For more on this story, visit Moneyweb.co.za