Vehicle pawn scheme declared illegal
JOBURG – Company of a vehicle pawning scheme ordered to return consumer's vehicles.
The National Consumer Tribunal has ruled as unlawful, Allied Capital company’s advert, ‘Sell your car and still drive it.’
This follows an investigation of a complaint by the National Credit Regulator (NCR) regarding the scheme which is also advertised on mobile trailers on roadsides.
The scheme required consumers who were in need of loans to sign a series of documents. The company would then transfer ownership of a consumer’s motor vehicle into the company’s name with the consumer remaining in possession of the motor vehicle but paying the company a rental fee and an administration fee.
The tribunal ruled that:
- The company failed to conduct affordability assessments when lending money to consumers under the scheme
- The company charged consumers interest and fees in excess of the maximum allowed under the Consumer Credit Act
- The company didn’t provide consumers quotations and credit agreements in the form prescribed by the Act.
The tribunal’s order:
- Prohibited and interdicted the continuation of the scheme
- Directed the company to appoint independent auditors, at its own cost, to compile a report on all consumers and refund those who would have been overcharged interest and fees
- Directed the company to return all motor vehicles repossessed from customers, and credit those whose vehicles were sold
- Suspended the registration of the company for a period of 18 months from the date of the order of the tribunal.
Jacqueline Peters, manager of investigations and enforcement at NCR said, “Consumers only wanted to borrow money from the company using their cars as security and did not intend to sell them to the company and rent them back.”
Peters also cautioned consumers against using their cars as security for loans or pawning them, to avoid risking losing them if they failed to repay credit providers’ loans.
She said they would conduct an urgent investigation to ensure the scheme was stopped and would seek immediate execution of the judgment to prevent more repossession of consumers’ vehicles.
Details: Lebogang Selibi NCR 011 554 2722
Read: Credit regulator’s tips on wise spending
If you were a victim of the scheme, WhatsApp your experience on 079 439 5345.
