Consumer watch: Class action to be instituted against online loan providers
Economy / 16 September 2019, 07:30am / Georgina Crouth
Cape Town – Victims of an online loan provider scam will soon get some respite. On Friday, the Stellenbosch University Law Clinic announced that it would be launching a significant public interest class action on behalf of thousands of defrauded consumers.
The application was filed with the Western Cape High Court, where the clinic and eight clients hope to institute a class action lawsuit against the Lifestyle Direct Group International, its affiliate websites, and its collection firm, Lifestyle Legal.
The suit is in response to complaints about websites purporting to offer loans or “free loan-finding” services, which lure consumers into signing “agreements” for convenient service packages amounting to unwanted paralegal services and financial advice. It’s also asking the court to hold the directors of Lifestyle Direct Damian Malander and Nandie Paich personally liable, alongside 17 other respondents.
The application is expected to be heard on November 27.
Business Report has reported extensively on the group’s duplicity, which results in strong-arm tactics to force settlement.
The “loan” websites ostensibly offer loans or loan-finding services to financially stressed consumers, who are induced into agreeing to an unwanted 12-month fixed-term agreement.
The terms of service are regularly amended but immediate payments are required, followed by monthly debit orders.
Once consumers realise the loan wasn’t approved, they reverse the debits and are then bombarded with threats and harassment to pay by Lifestyle Legal. Threats are apparently made of of blacklisting, legal action and sham summonses.
The clinic alleges 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 (CPA) 68 of 2008, or alternatively unlawful under the common law”.
It also alleges the respondent’s conduct and demands for payment are unconscionable in terms of the CPA, or unlawful under the common law.
The applicants want an interdict ordering the respondents to shut down the relevant websites and to restrain them from debiting bank accounts and threatening consumers.
They are asking for the certification of the class in order to represent them in the class action against the operators of these websites. They demand that victims must be refunded and compensated for their losses.
Clinic head Professor Theo Broodryk said: “Certification of an opt-out class action will assist to facilitate access to justice for the thousands of vulnerable consumers who appear to have been exploited by the respondents’ reprehensible conduct.”
Senior clinic attorney and lecturer Stephan van der Merwe said the eight applicants are representatives of the class, which include more than 700 members of a Facebook page, “Action against Lifestyle Legal, Loan Hub SA and other scams” and 500 complainants on Hello Peter.
“It’s an opt-out class action, which means anyone, once certification has been done, will be included unless they opt out. Victims don’t have to appoint an attorney; they’ll just receive the benefit of the outcome of the case. If we lose, members of the class will not carry any of the risk.”
For more details on the case, see www.sulawclinic.co.za.
* Georgina Crouth is a consumer watchdog with serious bite. Write to her at [email protected], tweet her @georginacrouth and follow her on Facebook.