War unto moneylenders who still keep consumers bank cards or Sassa cards as a means of ensuring timeous repayments of the loans by consumers or overcharge interest rates.

The National Consumer Tribunal handed down a judgment in favour of the National Credit Regulator (NCR) to nip this unfair business practice in the bud.

Nomsa Matshegare, the chief executive officer of the NCR, said in its judgment the tribunal made a finding that child support and foster care social grants cannot be used as an income of a caregiver as it is intended for the minors.

Matshegare said credit providers must heed this judgment.

"Credit providers are warned to observe this judgment and ensure that they do not allow consumers to use child support and foster care social grants as income in credit applications," Matshegare said.

The National Consumer Tribunal handed down the judgment last week in favour of the NCR against Aristoscan, a micro-lender trading as JMK Cash Loans.

This unregistered credit provider was found guilty of various contraventions of the National Credit Act, including reckless lending.

She said for reckless lending, the National Consumer Tribunal has ordered that once the audit was completed, the NCR can apply to have the consumers' rights and obligation (debt) set aside.

The NCR presented evidence which showed that JMK Cash Loans extended credit to consumers who received child support and foster care social grants, she said.

"This judgment clarifies that child support and foster care social grants are not to be used as consumer income in credit applications.

"They are intended to be used for the care and support of the children", Matshegare said.

She said her office appointed an inspector to investigate Aristoscan in February last year.

The inspector was assisted by the commercial crime unit of the Hawks, the consumer protection office and Sassa who were in possession of a warrant of search and seizure, she said.

"Members of the Hawks searched the premises of Aristoscan and found and seized consumers' bank cards and Sassa cards."

Matshegare said their investigation showed that MJK Cash Loans retained consumers' bank cards and Sassa cards as means of ensuring timeous repayments of the loans by consumers and that it charged excessive interest rates.

Based on the evidence obtained by the inspector, MJK Cash Loans charged an interest rate of 30% per month on extended loans.