Stellenbosch University's law clinic has submitted a founding affidavit in a proposed class action lawsuit against more than a dozen online loan companies which it says misled consumers into entering into agreements and then launched a "barrage of threats and harassment" against them when they complained or didn't pay.
The law clinic, in court papers filed in the Western Cape High Court, states that 12 websites – with names such as Loan Hub SA, Loan Tracker SA and Loan Scout SA - all use the same modus operandi to mislead consumers: They invite consumers to submit an application for what appears to be a loan, or help in finding a loan - but buried in the small print is a clause that states by submitting the application consumers have in fact entered into an "agreement" with the company for unrelated legal help.
Users are then debited an initial sign-up subscription fee of between R399 and R429, and a recurring order of R99 for 12 months. When they don’t pay, they are met with "stonewalling and threats" and charged penalties.
Threats and harassment
Stephan van der Merwe of Stellenbosch University writes in his founding affidavit that consumers - who believed they had been browsing for loans – are understandably "shocked" to find they are alleged to have entered into an agreement with a company for legal aid.
"The consumers often receive a barrage of threats and harassment from the respondent when they complain or don’t pay," he writes, including threats of blacklisting.
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