Collect without threat

2010-10-09 14:22

The harassment of consumers by debt collection agencies will soon be a thing of the past when the new Consumer ­Protection Act (CPA) comes into effect in March 2011.

The legislation was initially scheduled to come into force later this month but it has been postponed to allow the trade of industry department (DTI) more time to prepare for its implementation, which will result in the establishment of the National Consumer Commission (NCC). The commission is a statutory body that will investigate complaints and issue orders against companies that contravene the law.

The department’s director for consumer complaints resolution, Prudence Moilwa, says the act prohibits the use of physical force, coercion and harassment when entities demand payment from consumers.

“An example of harassment is when a consumer is called at odd hours of the evening and receives repeated threats from a debt collector that they will be taken to court and have their property attached if they do not pay.

“If the threat is used as a tactic to frighten the consumer into paying, then the consumer is entitled to seek redress from the commission,” she explains.

Moilwa says the department is drafting regulations that will stipulate the times when a consumer can or cannot be called for collection purposes.

“If the business does not comply, the NCC will refer the matter to the National Consumer Tribunal, which can impose an administrative fine of up to 10% of the company’s yearly turnover or up to R1 million, whichever is greater, as penalty for non-compliance,” Moilwa says.

Legal officer for the Council for Debt Collectors Reginald Thulo says debt collectors are regulated by the Debt Collectors Act, which prevents debt collectors from engaging in improper conduct, such as pursuing a consumer when the debt has been settled.

“If a consumer has settled a debt and submitted proof to the debt collector, but the collector proceeds to demand payment, the consumer must report it to the council.
“The debt collector can be found guilty of improper conduct by the council,” says Thulo.

Under this law, the use of force or fake summons to enforce payment is ­considered improper conduct.

Thulo warns that failing to pay a debt on time can result in it escalating when it is handed over for collection.

“By law, debt collectors are entitled to recover interest charges, legal fees, a collection commission fee which is 10% of the debt and fees and expenses incurred by debt collector when collecting debt from a debtor,” explains Thulo.

Moilwa says it is important for ­consumers to keep payment records for at least up to three years.

“This is especially so for the final ­payment to prove that the debt has been settled.

“They must also check with the credit bureaus to see if everything is recorded correctly”, he advises.

Thulo says consumers are also entitled to challenge any demand for payment if the debt has not been collected for three years because the right to claim payment falls away after this period.

“Debt collectors are taking advantage of consumers because they are not aware of their legal rights.

“If they are harassed for debt that has prescribed (expired), they must consult with an attorney for help,” says Thulo.

Co-chairperson of the Law Society of SA Peter Horn says poor consumers can approach the Legal Aid SA for free legal help.

However, Horn says it is not automatic that debts prescribe after three years.

“Some debts older than three years may not have become prescribed because there may have been a payment or acknowledgement of indebtedness on the part of the debtor.

“This would have interrupted ­prescription. Such debts can be claimed,” says Horn.

For any debt collection-related queries, contact the Council for Debt Collectors on 012 804 9808, trade and industry department on 0861 843 384, Law Society of SA 012 366 8800, Legal SA 0860 853 4258

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