By Lauren Cohen
Greedy, profit-driven credit bureaus are denying South Africa's poor access to basic rights such as housing and education by selling dodgy credit information.
Some people have been blacklisted for debts as small as R20, but now moves are afoot to regulate the industry. About 3,5 million South Africans have some kind of adverse listing, according to the Credit Bureau Association.
Collette Caine, co-ordinator of the Financial Sector Campaign Coalition, said the number of poor, uneducated people blacklisted had increased by hundreds of thousands since 1999, when the Usury Act was amended to allow the setting up of micro-lending businesses.
"This mushrooming of micro-lenders led to poor people getting themselves into massive debts caused by extremely high interest rates.
"Government investigations show this interest is about 360 percent a year."
Caine also warned of scams by businesses claiming they could take defaulters off blacklists for a fee, saying "they cannot".
"People are being blacklisted for the most trivial amounts, like R50. You don't have to have a judgment against you to be blacklisted - that is just one of the ways of blacklisting someone.
"It is very easy to blacklist someone. You just have to be a client of a credit bureau and pay their fees."
The Credit Bureau Association is reponsible for representing the interests of the credit information industry and regulating the conduct of its members, the four credit bureaus Compuscan, Experian and TransUnion ITC and TradeRef.
The other credit bureaus are the Micro-lending Credit Bureau and Kreditinform. On blacklist.co.za, users pay a R20 fee to blacklist a debtor on the site. The site also offers to blacklist debtors with credit bureaus ITC and Experian at R20 a time. The cost of rescinding judgments ranges from R2 250 to R2 500.
Blacklisted persons who want to establish with a credit bureau why they have been blacklisted, and by whom, have to pay a R25 "administration fee" for a personal credit profile.
But Caine said this could change with the National Credit Bill expected to become law by the end of the year. The bill proposes a number of significant and far-reaching changes to consumer credit laws, such as the establishment of a new body, the National Credit Regulator.
All credit providers will be required to register with the regulator.
The law will redress issues for consumers who have disputes with credit providers through a consumer tribunal which will make determinations, impose penalties on credit providers for wrongdoing and issue declaratory orders.
The body will also offer more protection to the public by restricting loan sharks. Public hearings on the bill were held in parliament this week. Anyone who applies for credit is automatically listed on the CBA database. Of the 18 million people on the CBA database, 2,4 million are blacklisted.
"If you are a credit bureau member you just supply the information about outstanding payments and no questions are asked," Caine said.
People are also blacklisted through court judgments, which are costly and complicated to rescind.
"If there is no court judgment it is your word against the credit granter's and there is a whole process of asking them to remove your name. Usually they won't, even if you have paid the debt."
People are blacklisted for three years, or five years if there is a court judgment. But Credit Bureau Association executive director Ashina Singh said money lenders had to know whether clients posed a risk before approving loans.
Singh said it was businesses which were listing people as default payers, not the credit bureaus.
"Credit bureaus are vital to a well-functioning economy and credit market. No lender will set up business without having a system to check credit," Singh said.