Know your rights to fight rogue debt collectors

It seems to me that a lot of people are being hounded to pay debts they don’t owe, for all sorts of reasons.

In some cases, they have been handed over to debt collection agencies despite having settled their accounts; others have been the victim of identity fraud, and had huge debts run up in their name; and some have fallen victim to a fraudster working at a company they’ve contracted with.

In many cases, through an alleged “system error” – more likely a human error – their ID number, cellphone number or bank account number has become attached to someone else’s debt.

These innocent parties have to go to extraordinary lengths to get the companies concerned to accept they’ve got it wrong, and stop the hounding, often unsuccessfully.

The injustice is appalling.

A huge percentage of the debt on the books of debt collectors has prescribed.

Consumers who don’t understand how the Prescription Act works end up paying old debts – plus a crippling amount of interest and costs – unnecessarily.

The Prescription Act is intended to give consumers protection against debt collectors hounding to pay an old debt that we can barely recall.

In short, according to the Prescription Act, if, in the past three years you have not made any payment towards settling a debt, acknowledged owing the debt in any way – including over the phone – agreed to pay it, or been summonsed in respect of it, it has prescribed, and you can raise this as a defence when asked to pay it.

The collector should close its file on you at that point.

Some collectors trick people into forfeiting their right to claim prescription as a defence by casually asking them, “So if you won the Lotto, would you settle this debt?”

By answering yes, they have effectively acknowledged the debt and are liable to pay it.

It is legal for a debt collector or attorney to demand payment from a debtor for a prescribed debt, and if you succumb to the pressure and pay it, you can’t raise the defence of prescription afterwards.

As many have discovered, mortgage (home loan) debt, taxes and any state-related debt, such as TV licence fees, prescribe only after 30 years.

I deal with a constant stream of complaints from people who feel they’re being unjustifiably hounded for TV licence debt they don’t believe they owe.

In many cases, the root of the problem is that although they notified the SABC of the fact that they no longer have a TV – or that they no longer need a licence in their own name – they didn’t do so in the prescribed way, with all the required documentary proof. (Call the SABC at 011 330 9555 for details.)

And then the payment demands start coming.

Stephen Borain began his battle with SABC’s debt collecting agents, VVM, in February. Despite not having owned a TV set for some years, he said, he’d begrudgingly paid licence fees on receipt of a notice to pay.

Unaware

He received his first SMS from VVM, saying he owed R300, in March, having been unaware until then that he was considered to have been in arrears.

Requests to VVM and the SABC for an explanation were ignored, he says.

Then he received an SMS thanking him for his arrangement to pay VVM, followed by a R300 debit on his bank account. He denied making any such arrangement.

That was in March. And so began months of e-mailing, as the R300 debits continued. Finally, in July, VVM froze the account, and Borain thought the saga was over.

Then, last month, it took a bizarre turn, which is when I got involved.

Having asked his bank, Absa, to investigate the basis on which the R300 deduction was made from his bank account, VVM wrote to the bank stating that last November, in a phone call with a VVM agent, Borain agreed to pay R300 a month via debit order, and supplied his bank details for this purpose.

Oddly, the creditor was listed not as the SABC, but two other companies – MTN and Sanco Development Trust.

Sums of R300 were duly deducted in November, December and January.

“Please note that our agent would not have captured all these correct banking details without the authority of the account holder,” VVM told Absa.

Borain denied ever having had such a conversation, saying the deductions were made illegally, and that he knew nothing about owing any money to MTN or the trust.

“The deductions off my account which I was querying with VVM related to an SABC matter that has been subsequently closed,” Borain told his bank.

“How this has now evolved into a completely different and bogus matter is beyond my understanding.”

I took up the matter with VVM’s complaints manager, Johandrie Wahl.

She said VVM had investigated and concluded that “Mr Borain’s banking detail was erroneously captured on the incorrect account. I have spoken to Mr Borain and apologised for the error.”

He has since been refunded.

But that doesn’t explain what happened. Borain denies having the conversation in which he is alleged to have given his banking details.

And how odd that the SABC debit order amounts and the other “erroneous” ones were all R300.

The mind boggles.

I’m glad my query led to the realisation that Borain’s account was being raided in error, but am left wondering why the bank’s questioning of the rogue debits just a week earlier didn’t elicit the same answer.