The Power Report: Bullying letters may fall foul of the law

Aggressive notices of demand are 'unconscionable conduct

Nobody likes being threatened. Whether it's formal or informal, sanctioned or not, it's always unpleasant.

I've experienced my fair share of such nastiness over the years, but it's an occupational hazard journalists have little choice but to accept.

What I'm loath to accept, however, are the so-called legally sanctioned "threats" that consumers are subjected to on a daily basis by corporate South Africa.

Certain letters of demand from debt collection agencies acting on behalf of large reputable companies have the potential to cause as much anxiety as strange calls in the dead of night.

Making it worse is the fact that, thanks to admin bungles, many of these letters are sent out in error. I've received two letters of demand in the past few years and both were mistakes. The bills had been paid, but due to "system errors" I was threatened with being "handed over".

And, judging from a "pre-legal letter" forwarded to me by a reader this month, I've gotten off lightly.

The disturbing correspondence from ITC Business Administrators, acting on behalf of a client owed less than R1000, "shouted" at the recipient in bold, capitalised letters.

"We are about to recommend to our client that they APPLY FOR JUDGMENT ... this may result in the attachment and SALE OF YOUR ASSETS or a court ordered DEDUCTION FROM YOUR SALARY ... " the April letter reads.

"In order to ARREST this process you are required to pay IMMEDIATELY."

And then it tagged on at the end: "Should payment have been made, please fax a copy of the receipt ..."

Apart from the threat of judgment, loss of assets and salary, the use of the word "ARREST" (in capitals but not in bold, mind you) instead of "stop" seems nothing short of underhanded.

Nobody uses the word "arrest" in this context. It's hard to think of any reason for doing this other than to intimidate.

National consumer commission chief Mamodupi Mohlala agreed - she says the letter appears to be in violation of the new Consumer Protection Act.

Under section 40 of the act, this type of debt collective mechanism is called "unconscionable conduct" - meaning morally unacceptable - and it's illegal.

The law says a supplier or his or her agent may not use coercion, undue influence, pressure, duress or harassment, unfair tactics or any other similar conduct to demand or collect payment for goods and services by a consumer.

"The wording in this letter, such as 'pre-legal',' apply for judgment', 'sale of your assets', 'deduction from your salary' and 'arrest', might be construed to induce fear and harassment to subdue the consumer into submission and pay immediately," said Mohlala.

She said section 40 was intended to prevent any "creativity" in creditor correspondence that could undermine a consumer's right to fair and honest treatment.

It should be sufficient, Mohlala said, to tell defaulting consumers to pay their debt before a specific date or legal action would be taken.

"No letter of demand should be pre-emptive of what a court judgment could be. It's not a letter issued by court, so terms suggestive of a court order shouldn't be used," she said.

But ITC chief executive Julie Wiggins has defended the letter.

"Our letters have historically been vetted by our attorneys and, for this reason, we do not believe that they are in any way unconscionable or in breach of the Consumer Protection Act ..."

However, in light of the query, Wiggins said, all letters had been referred back to ITC's legal counsel for "further review".

ITC clients include Discovery, MTN, Edcon, Foschini, Lancet and Virgin Mobile.

Wiggins said such a letter was not the first sent to defaulting consumers: "Prior to this, a number of attempts are made by the client and ITC in the form of calls, smses and letters to make contact with debtors ... far softer letters go out before this."

She said that in May, a client requested the word "arrest" be changed to "stop", following a debtor complaint. However, it was still included in letters sent on behalf of various other clients, Wiggins said.

Not for long. After I contacted the Council for Debt Collectors, with which ITC is registered, CEO Andries Cornelius said the company would be asked to remove the word.

The council will also investigate ITC's statement in the letter that it would recommend its client "apply for judgment".

"This may very well be misleading. Before one can apply for judgment you first have to issue summons. On the face of it, this looks as if summons had already been issued and there has been no notice to defend," said Cornelius. Under the council's code of conduct, a debt collector may not give any false or misleading information that may be detrimental to a debtor.

However, regarding the other potentially threatening wording, Cornelius said informing a debtor of the consequences of failure to pay his or her debts could not be construed as harassment or coercion. He said the council's code allowed a collector to threaten legal action if there was an intention to carry out such a threat.

"This effectively deals with your concerns regarding (the words) 'pre-legal', 'apply for judgment', 'sale of assets', and 'deduction from salary'," he said.

Well, not quite. The new Consumer Protection Act supersedes any and all codes of conduct. Surely debt collection agencies are aware of this?

"Either they and their lawyers are oblivious to the law or they're waiting to see if someone will be taken to task," Mohlala said.

"Possibly they want to first see if the act bites, and only then change their ways. Once consumers are alerted to this, there'll no doubt be an escalation of complaints," she said.

I'm banking on it.

SUNDAY SMILE

At British Airways for speedily sorting out an online booking problem for reader Marti Janse van Rensburg. When the website returned error messages twice, a staffer called Eleanor stepped in and, within an hour, had completed the booking over the phone, ensured the phone booking fee was waived, and sent a confirmation e-mail.

SUNDAY SNARL

At Medihelp medical scheme for threatening to terminate a reader's membership - after 40 years - three weeks after he mistakenly underpaid R45 on his June premium. He was warned to settle within a month or face the consequences. An inappropriate and heavy-handed approach under the circumstances.