The DA welcomes the ruling made by the National Consumer Tribunal (NCT) in which it declared Allied Capital’s predatory “pawn your car and still drive it” scheme unlawful and prohibited by the National Credit Act.
In 2016, the DA laid a complaint with the National Credit Regulator (NCR) against Allied Capital for illegal credit agreements and illegal advertising of credit to the public.
Last week, after a long battle, the NCT ruled against Allied Capital and ordered that:
• they return all of the cars they “bought” under the illegal agreements,
• refund all fees and interest to consumers,
• change their business model or shut down their operations,
• withdraw all advertising that was identified as being illegal in terms of the Act.
This is a major victory for thousands of consumers who have been targeted by Allied Capital. The company’s predatory business model preyed on vulnerable consumers and entrapped them in a contract that saw them lose ownership of their cars, and charged them excessive interest and fees.
The business model was such that when a consumer approached Allied Capital for a loan, they were made to enter into an agreement which stripped them of ownership of their cars. Allied Capital then assumed ownership of the vehicle while the consumer was made to pay “rent” to use it.
South Africans already struggle with being overburdened with debt, struggling to make monthly payments. The predatory and illegal practices of some unscrupulous lenders is completely indefensible. It keeps South Africans trapped in debt, living in anxiety and fear.
It is unacceptable for lenders like Allied Capital, and many like them, to prey on the vulnerabilities of indebted consumers. We hope that this ruling will act as a serious deterrent to companies who are engaged in similar illegal lending.
The DA commends the actions taken by the NCR to follow up our complaint, and in taking on Allied Capital to stop them from further profiting from vulnerable consumers. We call on the NCR to ensure that the ruling made by the NCT is implemented fully and the affected consumers compensated without delay.