South African businesswoman and philanthropist Wendy Appelbaum is mobilizing her networks and resources to bring unscrupulous credit providers to court next month, Moneyweb said.
The court action, brought by the University of Stellenbosch’s Legal Aid Clinic (LAC) on behalf of 15 consumers, looks set to expose abuses by credit providers and dramatically reduce the number of illegal emolument attachment orders (EAO) plaguing a broken system, the report said.
The action is being brought against 13 credit providers and the law firm that facilitated these EAOs, Flemix & Associates.
The LAC, which is the first applicant in the case, says judgement debtors are duped into signing papers by collection agents who arrive unannounced at their workplaces pretending to be in a hurry and requesting their signature on documentation that debtors can often barely read, let alone understand. “They [collection agents and credit providers] exploit ignorance, ” commented Mathilda Roslee, financial literacy project coordinator at the LAC, Moneyweb said.
Roslee says debtors often sign under the pretense that they are simply acknowledging that the collection agent paid them a visit. In other cases they are threatened with incarceration or loss of property if they don’t sign, the report said.
The applicants are induced into “signing documents consenting to jurisdiction of courts in distant towns the applicants have no hope of approaching for relief”, wrote LAC director, Kruger van der Walt in his court papers. In terms of the MCA, correct jurisdiction is one where a consumer lives or works, the website said.
These binding EAOs are then served on employers who have no option but to comply and deduct the amounts from employees’ salaries.
Appelbaum, owner of De Morgenzon wine estate, says her interest in the case began when she learnt that some of her farmworkers had up to 80% of their salaries attached via EAOs. “They had lost their constitutional and civil rights and it made me unbelievably angry. It affects productivity and human dignity; it’s one of the most appalling things I’d ever seen, ” Appelbaum recalled, the report said.
Having done her research (she got her hands on the National Credit Act and Magistrates’ Court Act handbooks), Appelbaum realized there was much work to be done and began to mobilize her networks, Moneyweb said.
Now, the LAC, together with the 15 applicants (consumers) will be represented by the pro bono practice of law firm Webber Wentzel between February 16 and 20 in the Western Cape High Court. Meanwhile Summit, which protects employees from unscrupulous lenders and collectors fighting invalid EAOs on a daily basis, has agreed to stand surety on any losses the LAC may incur, the report said.
“Judicial oversight, where a magistrate must sit down and carefully consider the consequences and the effect of an EAO on the lives of the poor, I think will make a huge difference, ” Appelbaum added. “People need access to responsible credit and affordable credit. I think this [court case] will reduce enormously the amount of abuse going on in the system.”
Appelbaum, daughter of insurance and property tycoon Donald Gordon, is one of the 10 richest women in Africa with a net worth of over $250 million as of 2012.