Credit-hungry consumers caught in a of deceit web

Online operator dupes people into signing up for services it doesn’t provide georgina.crouth@inl.co.za

A COLLECTION agency is chasing payments and issuing specimen “summonses” that frighten the wits out of consumers, who either fall for the con and pay up, or reverse the debit order and are terrorised with ceaseless threats of legal action. All for a service they never asked for – nor were provided.

Loan Connector, Loan Hub, Loan Finder, Loan Scout and Find a Loan have operated for years in different guises – some might have changed names, but they don’t change tack. They operate online, appear to offer loans, but hook consumers into contracts for “convenient service packages” with a complimentary “loan referral service”.

Desperate for credit, consumers don’t read the website’s terms and conditions and simply click “accept”, thereby plunging themselves further into debt – and being saddled with a contract for “convenient” services, which amount to telephonic paralegal services.

The Stellenbosch University Law Clinic has been alerted to thousands of complaints about Lifestyle Legal, the in-house collection agency of the Lifestyle Direct Group, based in Century City, Western Cape.

Senior attorney at the clinic, Stephan van der Merwe, says

Lifestyle Legal is a registered debt collector with the Council for Debt Collectors, so presumably they would need to abide by the rules.

“What Lifestyle Direct are saying is they are not advertising for loans – they are selling legal services. My question is why, if I was looking to procure legal services, why would I go to a website that seems to offer loans?

“The way these websites are created and structured, it’s misleading. Where you need to tick, the way it’s set out, creates the impression that you are getting a loan, not legal services. But if you look at the terms and conditions, it turns out otherwise. And if people had been informed, there is no way they would agree to it.”

He notes the Electronic Communications and Transactions Act is clear about the terms incorporated into transactions, and Section 41 of the Consumer Protection Act speaks about unconscionable agreements, which are both at play.

With the search term “loan” at the front and centre of the business model, it’s great for catching people out: desperate consumers land on one of Lifestyle’s numerous sites, are instantly hooked by promises of loans, no matter what, no questions asked. Even for those with bad credit.

Those whose credit record is not squeaky clean are directed to a page titled “Loans for People with Bad Credit”, followed by advice and “practical tips” – only to offer a range of “Featured lenders offering Loans Bad Credit in SA” – featuring the usual Loan Connectors, Loan Locator, Loan Picker SA and more recent iterations, such as ILoans.

“We are committed to helping every South African citizen get finance in order to solve their financial problems. You should not have to be penalised for your past mistakes and your poor financial judgement,” Loan Find says.

They’re not legally registered credit providers, nor do they find loans. Instead, they dupe you into a 12-month agreement for services offered by “third-party contractors” that costs about R400 for the first month and R99 thereafter. After that, the “contract” rolls over on a month-to-month basis and needs to be cancelled in writing.

Most victims, when they see the first amount deducted off their accounts, reverse the debit – only to start receiving letters of demand, threatening calls and notifications of “imminent summonses”.

Social media is rife with complaints: there’s even a Facebook page dedicated to victims of Lifestyle Legal.

How they’ve managed to get away with the deception for so long remains a mystery: they’ve been on the radar of the National Consumer Commission (NCC), and the National Credit Regulator has issued numerous warnings but no action has been taken against them – yet.

The NCC said it completed an investigation into Lifestyle Direct in 2017 and that the report was with the Director of Public Prosecutions, but two years down the line, they haven’t acted. The NCC has told victims not to pay and to report them to the commission.

Some victims say they have been listed at credit bureaus. But Jeannine Naude-Viljoen from TransUnion says they aren’t aware of Lifestyle Legal’s “listings”.

It’s also on the radar of the Debt Collectors Council, who said they’ve received at least 30 complaints since 2016.

Thys Gildenhuys, a legal officer at the council, says: “Lifestyle Legal was charged in 2016 for harassment but found not guilty. [It was also found] not guilty of using simulated documents; guilty of not updating its trust account particulars and guilty of failing to register three employees.”

He says they’re being monitored. “Our view is that the [loan companies] may be at fault, but they do not get investigated by the relevant regulators. The ‘computer contracts’ are the cause for concern, not the debt collector.”

Asked whether the council held its members to a code of conduct, he said: “I think you are confusing Lifestyle with Loan Tracker and the other loan companies. What portion of the code is it alleged that Lifestyle does not adhere to?”

That’s cold comfort for consumers.

Until someone decides to stop this scheme, the advice is this: If you don’t qualify for a loan through formal channels, don’t go online. Read the terms and conditions and never tick “I accept” on a website without understanding what you’re in for. Don’t pay for services not rendered. And don’t contribute towards the lavish lifestyle of the person behind it.