File picture: Waldo Swiegers

Pretoria - The Credit Ombud has warned the public to steer clear of adverts like “blacklisted customers welcome” as this could be a trap.

Despite efforts by the government to promote a fair and transparent credit market; protect consumers and their rights; level the playing fields between credit providers by standardising the way in which credit is granted and regulating all credit providers, debt counsellors and credit bureaus, many consumers who are struggling financially find themselves in a desperate position and are prepared to do anything to get their hands on cash.

Some are so desperate that they turn to unlawful, unregistered loan providers, also known as mashonisa, who may be charging exorbitant interest and fees and have questionable collection practices.

Credit Ombud Nicky Lala-Mohan said: “Desperate consumers may be misled by false and unlawful advertising. These posters are popular on lampposts and street corners.

Often, they’ll say:

* Need a loan? Blacklisted welcome!

* Blacklisted? Call for a loan!

* Loans up to R200 000, call

Lala-Mohan said these advertisements are illegal and are aimed at vulnerable consumers.

Some advertisements are not on street corners but online and even more difficult to detect and regulate.

Often consumers don’t understand what they are really applying for until they are sitting with debt collectors phoning to collect on agreements which have little to do with loan applications.

“These loan providers are not doing consumers any favours by giving loans without doing the necessary checks to ensure that they are able to afford it and will be able to pay it back.

“To grant a loan which the consumer cannot afford is exactly how consumers end up in a debt spiral or over-indebted,” Lala-Mohan added.

Consumers often end up with a number of these loans because they have to resort to borrow from one lender to pay the next one.

The interest is usually so high that consumers need to keep on borrowing.

All credit providers are regulated by the National Credit Regulator (NCR) and the National Credit Act (NCA) which sets out rules for the agreements as well as the steps required to ensure consumers are not over-indebted.

Interest charges and fees are also regulated in order for consumers not to be exploited.

Consumers are warned against loan providers who are not interested in their credit status and who do not conduct the necessary checks to ensure they will be able to afford the loan.

These organisations/persons are usually not registered with the NCR and are not compliant with the Act - and therefore will not stick to the rules and regulations when it comes to lending, interest and fee charges and collection processes.

Lala-Mohan gives consumers the following advice:

* Check whether the advertiser is legitimate by verifying the full details of the creditor with the NCR.

* Check for full contact details and the physical address of the creditor in order to be able to visit the store and look out for the NCR registration certificate.

* Before engaging with any service provider, always ask for references and talk to other consumers who have used their services to verify their experience.

Consumers can contact the office of the Credit Ombud for free assistance if there are any issues relating to emolument attachment orders (garnishee orders), credit bureaux listings and problems with their non-bank credit agreements.

The office can be contacted on 0861 66 28 37. You can also check the website. Or email [email protected] or send an SMS to 44786 and they will call you.