Dishonest debt collectors beware!

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Yesterday, the Sunday Times reported that the SABC is under investigation by the NCC for its unscrupulous debt collection methods and wildly inaccurate billing when it comes to unpaid TV licence fees. The interesting thing is that the complaints about the SABC's debt collection methods are methods which will probably be familiar to many debt collectors. According to the Sunday Times the complaints relate to the following practices:

  • The debt collectors claim that they placed 'trace locators' on people's credit profiles which indicate that they are wanted for unsettled debt.
  • The letters of demand threatened that judgment would be listed against a consumer's name for 30 years.
  • The letters of demand also stated that a listed judgment would make it 'virtually impossible' to obtain new credit.
  • The SABC's renewal reminders threatens consumers with a listing at all 'major credit bureaus' if they do not renew their licences.

All of these threats are inaccurate or misleading. For instance, according to the Sunday Times (I have not tested this), the Credit Bureau Association issued an instruction to stop listing SABC debt because there were concerns about incorrect billing and listings. Also, judgments are not listed for 30 years (even though they only prescribe after 30 years - see the Prescription Act). The report also raises concerns about the accuracy of the SABC's billing and tells some disturbing though all to familiar stories.

The more relevant issue for our purposes is that many consumers probably pay these incorrect amounts out of fear of judgments and adverse credit listings. Why is this a CPA issue? Well, section 40 of the Act (which regulates 'unconscionable conduct') provides that 'a supplier or an agent of the supplier [that would be the debt collector] must not use...coercion, undue influence, pressure, duress or harassment, unfair tactics or any similar conduct, in connection with any...(d) demand for, or collection of, payments for goods or services by a consumer'.

For a change the CPA is quite clear. It is illegal to make consumers pay by using incorrect or misleading threats. What is less clear is whether the CPA prohibits any threats of legal action. The inclusion of the word 'pressure' seems to suggest that, but that, in my opinion, would be going too far.