Know what you’re re­ally pay­ing for when sourc­ing a loan on­line

Con­sumers who ap­ply for loans on­line say they are be­ing charged for ser­vices they did not, in fact, re­quest. re­ports Things to look out for when you’re ap­ply­ing for a loan

Weekend Argus (Saturday Edition) - - FRONT PAGE -

MAKE sure you un­der­stand the terms of ser­vice on web­sites that claim to source loans from fi­nan­cial in­sti­tu­tions, or you may end up pay­ing for prod­ucts or ser­vices you do not want, warns the Na­tional Con­sumer Com­mis­sion (NCC).

The com­mis­sion has launched an in­ves­ti­ga­tion into on­line com­pa­nies that are al­legedly not fully up­front about the ser­vices con­sumers are, in fact, buy­ing. The NCC has re­ceived a num­ber of com­plaints from con­sumers who say they were charged for ser­vices such as le­gal ad­vice when they were un­der the im­pres­sion they had ap­plied only for a loan.

Trevor Hat­tingh, a spokesper­son for the NCC, says the in­ves­ti­ga­tion is nearly fin­ished, and the com­mis­sion will de­cide soon whether to re­fer the mat­ter to the Na­tional Con­sumer Tri­bunal for prose­cu­tion.

“The mis­take that most peo­ple com­mit is that they don’t fully read the terms of ser­vice be­fore they click the ‘sub­mit’ but­ton, as such sites keep the terms of ser­vice way be­low the ac­tual ‘loan ap­pli­ca­tion’ form.

“We must en­sure that the Con­sumer Pro­tec­tion Act is ad­hered to, and that any com­pany that sells prod­ucts and ser­vices to the con­sumer first makes the con­sumer aware in a frank man­ner of what they are ac­tu­ally pay­ing for. This is what is at the heart of this mat­ter,” Hat­tingh says.

Per­sonal Fi­nance re­ceived a com­plaint from a con­sumer who was deb­ited for an “ac­ti­va­tion fee” of R399 on a “Con­ve­nient Ser­vice Pack­age” she had ap­par­ently bought from an on­line com­pany claim­ing to source loans.

Con­sumers are in­creas­ingly turn­ing to on­line plat­forms for loans and other fi­nan­cial ser­vices, be­cause they are con­ve­nient and re­quire less pa­per­work. They also ob­vi­ate the need to read pages of terms and con­di­tions, and this is where some on­line plat­forms can take ad­van­tage of you.

I fol­lowed up on the reader’s com­plaint and vis­ited the web­site in ques­tion to find out how the site op­er­ates and what in­for­ma­tion is made avail­able to con­sumers so they can make an in­formed choice.

CON­FUS­ING

On en­ter­ing the web­site, I saw im­me­di­ately why con­sumers could eas­ily be con­fused about what they are buy­ing.

On the home page, the site de­scribed the “Con­ve­nient Ser­vice Pack­age” as a tele­phonic as­sis­tance plan that com­prises ser­vices rang­ing from ad­vice about a will and per­sonal in­jury as­sis­tance, to a “complimentary loan-find­ing ser­vice”. The site claimed to source a loan, but af­ter read­ing this, I was per­plexed, be­cause the loan ser­vice is only “complimentary”.

The site then alerted me that its core busi­ness was not to pro­vide loans, but to sell the above-men­tioned ser­vices. “Please note, the Con­ve­nient Ser­vice Pack­age fees have no as­so­ci­a­tion to the loan-seek­ing ser­vice/fa­cil­ity or the loan ap­pli­ca­tion as a whole. The loan-seek­ing fa­cil­ity is a complimentary added ben­e­fit to [the site’s] con­ve­nient ser­vice pack­age of­fer­ing.”

I de­cided to fol­low the same route the com­plainant took and went to the sec­tion that al­lows con­sumers to ap­ply for a loan. This sec­tion was fairly stan­dard for on­line loan and other fi­nan­cial ser­vices web­sites. It re­quired me to en­ter my name, iden­tity num­ber, loan amount and bank­ing de­tails, among other things. YOU should be aware of the fol­low­ing when you are look­ing for a loan, says Mpho Rama­pala, the ed­u­ca­tion and com­mu­ni­ca­tions man­ager at the Na­tional Credit Reg­u­la­tor (NCR):

• Do not pro­vide your bank­ing de­tails when ap­ply­ing for a loan on­line, be­cause if you click the “sub­mit” but­ton, you may find that you have agreed to sub­scribe to a tele­phonic ser­vice;

• Do not use web­sites or re­spond to ad­ver­tise­ments that claim you can ap­ply for a loan even if you have been black­listed, or that your loan ap­pli­ca­tion will not be sub­ject to a credit check;

• Walk away if you are asked to

Af­ter I clicked the “sub­mit” but­ton, I im­me­di­ately re­ceived an email say­ing: “This email con­firms that you suc­cess­fully pur­chased the ... Con­ve­nient Ser­vice Pack­age. Thank you.”

The email asked me to pro­vide copies of my iden­tity doc­u­ment, pay slips and bank state­ments, fail­ing which the com­pany would not be able to pro­ceed with my ap­pli­ca­tion.

I con­cluded that this was not, in fact, a loan ap­pli­ca­tion and ended the process. What is star­tling is that this did not stop the com­pany from pro­ceed­ing with my “ap­pli­ca­tion”, even though I had not pro­vided the re­quested doc­u­ments.

Come pay day, my bank ac­count was deb­ited for an ac­ti­va­tion fee of R399, with a bal­ance of R948 to be pay an up­front fee;

• Find out whether a credit provider is reg­is­tered with the NCR by check­ing its reg­is­tra­tion num­ber against the num­ber on the NCR’s web­site (www.ncr.org.za);

• Un­der­stand ex­actly what you have com­mit­ted to buy­ing be­fore you click “sub­mit”;

• Eth­i­cal com­pa­nies that source loans do not charge you for ap­ply­ing for a loan; and

• It is bet­ter to ap­ply for a loan di­rectly with a reg­is­tered credit provider. If a reg­is­tered provider de­clines your ap­pli­ca­tion, it will not “sud­denly” ap­prove your ap­pli­ca­tion sim­ply be­cause it was ap­proached by a third party on your be­half. paid in in­stal­ments of R90 over 11 months. I im­me­di­ately re­versed the debit or­der and in­structed my bank to stop such debit or­ders in fu­ture.

This was the com­pany’s re­sponse af­ter I re­versed the debit or­der: “Our records re­flect that your ac­count is out­stand­ing to the sum of R1 347 as of 25/07/2017. In or­der to avoid be­ing in ma­te­rial breach on your agree­ment en­tered into on 28/06/2017, we urge you to set­tle the out­stand­ing amount as soon as pos­si­ble.”

If, when ap­ply­ing for a loan, you find your­self tricked into buy­ing ser­vices you do not want, con­tact the NCC. Call 012 761 3000, email com­plaints@thencc.org.za or visit www.thencc.gov.za.

ka­belo.khu­malo@inl.co.za

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