Cape Town - The Ombudsman for Banking Services (OBS) says banks and debt collectors are hoodwinking the public into paying debts that lapsed and no longer need to be repaid, known as prescribed debt.
Ombudsman Reana Steyn said between January last year and July this year her office received and investigated 193 complaints relating to allegations of collections on prescribed debts by banks and that in excess of R1 million was written off or repaid to complainants.
She said 118 complaints were received in 2021 and that in 33% of these cases, the banks in question were found to have been unlawfully collecting or attempting to collect on prescribed debts by the OBS.
Steyn said: “In 2022, the OBS has to date received 75 of these matters.
In 29% of these cases, banks have again been found to have transgressed the Prescription Act as well as the National Credit Act.”
Steyn said: “The majority of the public is left paying for debts that have been prescribed and are therefore legally no longer collectable by creditors.”
She said consumers needed to brush up on the protection afforded by the law.
Consumer expert Moeshfieka Botha said that in 2015, amendments to the National Credit Act made it unlawful for any credit provider or debt collector to sell, or to try and collect payment, on prescribed debt.
“Most debt collectors get commission when they get you to make payment. Often they will tell you that if you pay just R20 or R50 on this old debt, legal action will be stopped. This is a lie, and a tactic that consumers should avoid falling prey to.”
She said if a debt collector gets you to acknowledge old debt and you pay even the smallest amount on it, then you revoke your prescription, and that means that you are now liable for the entire amount all over again.
Botha listed some of the debts which prescribe after three years and said these include, store and retail accounts, cellphone accounts, credit cards, personal loans, gym memberships and vehicle finance.
Botha made it clear however that the law did not encourage people not to pay what they owe.
“Paying your debt is the right thing to do, especially if you can afford it.”
mwangi.githahu@inl.co.za