New court case to tackle thousands of dodgy loan deals in South Africa

Stellenbosch University’s Law Clinic plans to institute a class action case on behalf of thousands of defrauded consumers who have fallen victim to dodgy loan websites.

The clinic said it had been alerted to complaints from consumers concerning websites related to a company called Lifestyle Legal.

These websites apply dark pattern marketing methods to misleadingly appear to offer loans and/or free loan finding services. Consumers who frequent these websites are induced to conclude ‘agreements’ for unwanted services and are shocked when they realise amounts are being deducted from their bank accounts.

Consumers who are able to reverse these debits, begin to receive a barrage of threats and harassment from the relevant company, who also threatens to blacklist or take legal action against consumers in the event that consumers do not make payment in terms of the ‘agreements’.

“The clinic alleges that the purported agreements concluded between the relevant consumers (the members of the class) and the relevant websites (19 respondents in total), are unconscionable, unjust, unreasonable and unfair in terms of sections 40, 41 and 48 of the Consumer Protection Act 68 of 2008, or alternatively unlawful under the common law,” it said.

“The clinic further alleges that the respondents’ conduct in connection with their demands for and/or collection of payment, is unconscionable in terms of section 40 of the CPA, or alternatively unlawful under the common law.”

The class action, which has been certified by the Western Cape High Court, is unique in that it is only the tenth South African class action that has been successfully certified, and it is the first consumer law class action in which the court was required to deliver a certification judgment.

Certification of a class action will enable the law clinic to request restoration of money illegally debited and compensation for resulting losses on behalf of thousands of consumers who were affected by the respondents’ conduct.

It will also assist to facilitate access to justice for the thousands of vulnerable consumers who appear to have been exploited by the respondents’ reprehensible conduct, it said.

Read: How much money the average worker gets paid in South Africa

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New court case to tackle thousands of dodgy loan deals in South Africa