Joburg is Illegally Chasing Prescribed Debt!

The Acts

The City of Johannesburg (COJ) is violating the Consumer Protection Act (CPA) and the Prescription Act (PA) by chasing down the prescribed debt of thousands of consumers.

As a rule, the CPA is applied alongside the National Credit Amendment Act (NCA). However, in cases where the CPA and NCA contradict one another, the act that protects and benefits the consumer most will apply.

Whereas, the NCA refers to the Prescription Act, without altering it. The Law of Prescription provides debtors with a defence against credit providers, who fail to take action against them.

Prohibited Conduct

In March this year, an amendment to the CPA came into force, prohibiting credit providers from attempting to recover debts over three years old, classified as prescribed debt under the NCA.

According to the NCA, if credit providers attempt to collect prescribed debt from consumers, as the COJ are doing, they stand to be fined 10% of their annual revenue, which, in this case, would be R1 million.

Owing to the new Credit Control and Debt Collection Policy introduced last month, COJ claims it may attempt to collect debt attached to property, even if the debt has been settled and a clearance certificate issued.

The DA Reacts

On the other hand, The Democratic Alliance (DA) contended that this was illegal.

Vasco da Gama, the DA’s Joburg caucus leader argued that COJ were prohibited from pursuing accounts in arrears for more than three years, as enforced by the Acts.

Da Gama disclosed that COJ is now cutting off consumers’ water and electricity to strong arm them into debt agreements, demanding they pay a 50% deposit and monthly instalments over 60 months.

Da Gama revealed, “We are having complaints from all over. People of Ennerdale are signing a petition against this. For 15 years, the city did not collect arrears; now some are in debt for hundreds of thousands of rand. They can’t afford to pay even half the amount owing.

“They should write off arrears and install pre-paid meters. The city is breaking the law. From March, it was supposed to have purged its accounts of all debt older than three years. This includes interest, disconnection and reconnection fees and legal fees.”

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