Friday 20 April 2018

Debt collectors cannot just do as they please in South Africa

Debt collectors cannot just do as they please in South Africa

Debt collectors are bound by the Debt Collectors Act (Act No 114 of 1998). They thus have to adhere to the code of conduct set out in the regulations thereto, and to the act itself.

In terms of s 1 of the act:

'“debt collector” means—


a person, other than an attorney or his or her employee or a party to a factoring arrangement, who for reward collects debts owed to another on the latter’s behalf;


a person who, other than a party to a factoring arrangement, in the course of his or her regular business, for reward takes over debts referred to in paragraph (a) in order to collect them for his or her own benefit;


a person who, as an agent or employee of a person referred to in paragraph (a) or (b) or as an agent of an attorney, collects the debts on behalf of such person or attorney, excluding an employee whose duties are purely administrative, clerical or otherwise subservient to the actual occupation of debt collector;'

In terms of s 14 of the act:

'Code of conduct.—(1) (a) The Council shall, subject to the approval of the Minister, adopt a code of conduct for debt collectors and shall publish such code in the Gazette.

(b) The code of conduct, and any amendment thereof, shall be submitted to Parliament within 14 days after publication thereof in the Gazette.

(2) The Council may, subject to the approval of the Minister, amend or repeal the code of conduct adopted by it: Provided that such code shall not be wholly repealed by it, unless it is simultaneously replaced by a new code of conduct for debt collectors so adopted and approved by the Minister and, provided further, that the Council shall publish any such amendment, repeal or replacement in the Gazette.

(3) The code of conduct drawn up or adopted by the Council and published in the Gazette shall be binding on all debt collectors.'

What follows is an extract from the code of conduct, and an extract from the act, both setting out some of what debt collectors can and cannot do:

'(2) A debt collector, in the process of collecting a debt, shall have due regard for the person, the property and the civil rights of a debtor, and shall ensure that any action taken against a debtor does not humiliate, threaten or cause distress to such a debtor.

(3) In collecting or attempting to collect a claim a debt collector shall not—


collect or attempt to collect for a creditor money in excess of the amount owing by the debtor to the creditor, except for interest and costs legally recoverable;


misrepresent the true nature of his or her business, or threaten to institute legal proceedings, whether civil or criminal, if there is no intention to carry out such a threat;


utilise a communication which simulates legal or judicial processes;


threaten violence or harm to the debtor, those related to him, or his or her or their property;


use obscene, defamatory or threatening language when communicating with a debtor or persons related to him;

( f )

communicate with a debtor when his or her legal adviser has notified the debt collector in writing to communicate with the legal adviser;


abuse or intimidate a debtor in any manner, whether orally or in writing, in order to induce a person to pay a debt;


call on a debtor, or park in front of a debtor’s residential or work address in a vehicle which is conspicuously marked in any way that discloses its purposes and whereby the debtor may be embarrassed;


make telephone or personal calls or send written communications which may constitute excessive harassment of the debtor, his or her spouse or any member of his or her family;

( j)

make telephone calls or personal calls for the purpose of demanding payment of a debt on a Sunday or between the hours of nine o’clock in the evening and six o’clock in the morning on any other day, unless the debtor or his or her spouse requests the debt collector to do so;


engage in any other excessive conduct which can reasonably be expected to harass the debtor or persons related to him or her;


disclose or threaten to disclose information which could adversely affect the debtor’s reputation for creditworthiness, knowing or having reason to suspect that the information is false;


initiate or threaten to initiate communication with the debtor’s employer prior to obtaining final judgment against the debtor, in order to exert pressure on the debtor, although this does not prohibit a debt collector from communicating with the debtor’s employer solely to verify employment status or earnings or where an employer has an established debt counselling service or procedure;


communicate with an employer, acquaintance, friend, relative or neighbour of the debtor, unless such a person stands surety for the debtor, or unless it is to obtain the debtor’s address or telephone number;


disclose or threaten to disclose to a person other than the debtor or his or her spouse if also liable, information concerning the existence of the claim, except through proper legal proceedings, although this does not prohibit lawful disclosure to another person of such information, provided the debtor is notified of such communication;


disclose or threaten to disclose information of a debt which with valid reason is disputed by the debtor, without disclosing the fact that the debtor disputes such debt;


give to any person, by implication, inference or express statement, any false or misleading information that may be detrimental to a debtor, his or her spouse or any member of his or her family;


give, or threaten to give, by implication, inference or statement, to the person who employs a debtor, his or her spouse or any member of his or her family, information that may adversely affect the employment or employment opportunities of the debtor, his or her spouse or any member of his or her family;


make a demand for payment of an account by telephone, personal call or in writing, without indicating the name of the creditor to whom the debt is owing, the balance of the account and the identity and the basis of the claim of the person making the demand, or


commence or continue an action for the recovery of a debt in the name of the debt collector as plaintiff, unless such debt has been ceded to the debt collector in good faith.' (GNR.663 of 16 May 2003: Council for Debt Collectors issued in terms of s 14 the DEBT COLLECTORS ACT NO. 114 OF 1998)

'15. Improper conduct by debt collectors.—(1) A debt collector may be found guilty by the Council of improper conduct if he or she, or a person for whom he or she is vicariously liable—


uses force or threatens to use force against a debtor or any other person with whom the debtor has family ties or a familial or personal relationship;


acts towards a debtor or any other person with whom the debtor has family ties or a familial or personal relationship, in an excessive or intimidating manner;


makes use of fraudulent or misleading representations, including—


the simulation of legal procedures;


the use of simulated official or legal documents;


representation as a police officer, sheriff, officer of court or any similar person; or


the making of unjustified threats to enforce rights;


is convicted of an offence of which violence, dishonesty, extortion or intimidation is an element;


spreads or threatens to spread false information concerning the creditworthiness of a debtor;

( f )

contravenes or fails to comply with a provision of the code of conduct contemplated in section 14;


contravenes or fails to comply with any provision of this Act; or


behaves or acts in any manner amounting to conduct, other than that mentioned in paragraphs (a), (b), (c), (d), (e), ( f ) or (g), which is improper in terms of a regulation.

(2) The Council may in the prescribed manner investigate an allegation of improper conduct by a debt collector submitted to it in the prescribed manner or have it investigated in the prescribed manner by a committee of members of the Council or by a person or persons nominated by it: Provided that a debt collector whose conduct is being investigated shall be afforded the opportunity, either in person or through a legal representative, of refuting any allegations made against him or her.

(3) If the Council finds a debt collector guilty of improper conduct, the Council may—


withdraw his or her registration as a debt collector;


suspend his or her registration for a specified period or pending the fulfilment of a condition or conditions;


impose on him or her a fine not exceeding the prescribed amount, which fine shall be payable to the Council;


reprimand him or her;


recover from him or her the costs incurred by the Council in connection with the investigation;

( f )

order him or her to reimburse any person who the Council is satisfied has been prejudiced by the conduct of such debt collector and to furnish the Council within a specified period with proof of such reimbursement; or


combine any of the penalties under this subsection.

(4) Any penalty imposed on a debt collector in terms of subsection (3) (a), (b), (c) or (g) may be suspended, either wholly or partially, by the Council on such conditions as the Council deems appropriate.

(5) The Council may in its discretion assign any of the powers conferred on it under this section, except a power referred to in subsection (3) (a), to a committee nominated by it in terms of subsection (2), and may rescind or vary a decision of such a committee.' (S 15 of the DEBT COLLECTORS ACT NO. 114 OF 1998)

Nothing herein contained should be relied upon as legal advice. For that, please see your attorney for a consultation.

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