The National Automobile Dealers’ Association (NADA) has sounded the alarm over a growing scam that could lock consumers into long-term debt review without their knowledge.
Brandon Cohen, NADA Chairperson, explained: “South Africans are increasingly receiving unsolicited calls from organisations offering debt relief services. By participating in a brief survey and answering a series of questions with a simple ‘yes’, consumers may find themselves enrolled in a debt-review programme without giving explicit consent.”
Debt review is a legitimate legal process for over-indebted consumers, but it should not be entered into lightly. It becomes a binding court order and can last several years. During this time, no new credit can be granted, and future borrowing may be affected even after the process ends due to its impact on credit records.
Cohen stresses that while debt review can be helpful for some, there are alternatives to consider, such as negotiating directly with banks or consulting an independent financial adviser.
The automotive industry is feeling the effect, with an increase in rejected car finance applications because applicants are unknowingly under debt review.
“Do not consent to anything you do not fully understand and until you have had a chance to think about it,” Cohen warns. “Ensure that debt review is the right option by conducting independent research and only make use of the services of registered debt counsellors with a proven positive track record. We also recommend using caller identification software to help avoid these unsolicited calls that can lead to the debt review trap.”
