Hope for alleged victims as class action launched against online loan company

Stellenbosch University’s Law Clinic has announced that it will be launching a class action lawsuit against Lifestyle Direct Group International.
Stellenbosch University’s Law Clinic has announced that it will be launching a class action lawsuit against Lifestyle Direct Group International.
Image: Thinkstock

Dare the thousands of victims of an alleged online loan scam hope that the company responsible will soon be forced to shut down their misleading websites and refund all those they bullied into making payments for a “phone advice subscription service”?

Stellenbosch University’s Law Clinic has announced that it will be launching a class action lawsuit against Lifestyle Direct Group International, its affiliate websites - including Loan Locator, Loan Choice, Loan Picker and Loan Quest - and its collection firm, Lifestyle Legal, on behalf of the thousands of desperate South African loan seekers who were allegedly duped by those sites.

Customers thought they were applying for loans - a misconception fuelled by the website names - but in fact, the terms and conditions, hidden behind clicks, committed them to a 12-month “service mandate agreement” for phone advice they neither wanted nor needed. Such advice, for car accident claims, legal issues and the like, is supposedly provided by “third party contractors”. It cost around R430 for the first month, and R99 a month for the remaining 11 months, whether the service was used or not.

The promise of a loan was, and still is, the carrot, but those Ts and Cs state that the company will “submit a loan application on the applicant’s behalf to various financial institutions”, as they see fit. And if the unwitting subscribers fail to pay, they receive demands for payment of the entire year’s subscription from Lifestyle Legal of Century City, Cape Town, followed by threats of blacklisting and legal action and phony summonses.

The Law Clinic alleges that Lifestyle Legal’s conduct in connection with their demands for and/or collection of payment is unconscionable in terms of the Consumer Protection Act, or unlawful under common law.

The are seeking an interdict ordering Lifestyle Direct to shut down the websites in question and restrain them from debiting bank accounts and “threatening consumers who have fallen prey to this scam”.

And that’s not all.

“Ultimately, the applicants also request restoration of moneys illegally debited and compensation for resulting losses,” the university said in a media release.

The application was filed by the Law Clinic in the Western Cape High Court on behalf of eight of its clients, representing hundreds of others who have complained on social media, including the “Action against Lifestyle Legal” Facebook page. It’s expected to be heard at the end of November.

TimesLIVE has followed up with many people who received demands and threats of legal action two or more years ago. The harassment continues but no legal action has been taken.

“Don’t pay,” is the National Consumer Commission’s advice to the victims of the “loan” sites. The commission has been threatening to take action against the company for some time.

Meanwhile, the sites continue to lure unsuspecting loan seekers.

Last week “Rebekah” sought help from TimesLIVE on behalf of her husband.

"A couple of months back my husband went online to apply for a loan via Loan Choice SA. He didn't realise this was a legal service package, and now they have emailed him stating he owes them R2,500, saying he has two accounts with them.

"He has not received any money or used their services.

“If you look at HelloPeter it's not just my husband who thinks it's a loan application; so many people have been robbed…”

For more information on the court case, visit www.sulawclinic.co.za or speak to senior attorney Stephan van der Merwe on 021 808 3600/2707.

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