Class action by Stellenbosch University Law Clinic set to go ahead

The path has been cleared for the Stellenbosch University Law Clinic to finally launch a class action case against the Lifestyle Direct Group’s bogus loan-application operation. 

This follows the dismissal by the Constitutional Court of an application for leave to appeal in the high-profile case relating to the alleged defrauding of thousands of consumers by the Lifestyle Direct Group International from 2015 to 2019 

The class action will be the first of its kind to be brought by a South African university law clinic. 

The clinic applied for the certification of a class action against the websites and their owners who allegedly duped consumers into believing they were applying for a loan when in fact they were locked into a subscription for “legal services”. 

The Western Cape High Court certified the class action — only the 10th class action in the country to be successfully certified — in 2021. After the certification, those responsible for the alleged fraudulent scheme lodged three unsuccessful attempts at appealing the certification order. A final appeal attempt was submitted to the Constitutional Court at the end of last year. 

“We are delighted that the final attempt at frustrating the institution of the class action on behalf of thousands of deceived consumers has failed and that we may now launch the class action trial proceedings. More information about the class action will follow in due course,” said Dr Stephan van der Merwe, senior supervising attorney at the law clinic and a lecturer at the university. 

The high court class certification gave the law clinic permission to go ahead with its bid to “undo” certain agreements which Lifestyle — under companies named Loan Locator, Loan Tracker, Loan Quest and several others — allegedly concluded with thousands of consumers.

It also gave the clinic permission to go ahead with its bid to reverse the debit orders the companies actioned on their victims’ bank accounts, and compensate them for the losses allegedly incurred “as a consequence of a fraudulent scheme”.

The university said its law clinic is involved in many aspects of the legal profession, including the provision of legal services.

The clinic has provided direct legal services to more than 6,300 people — many of whom would otherwise have been unable to access or afford legal advice — in the past five years. 

The clinic’s managing attorney, Prof Theo Broodryk, said because many South Africans were unable to afford legal services, the clinic’s contribution to improving legal access was significant. 

According to the clinic’s social impact report 2018-22, 41% of those who consulted at the clinic qualified for legal aid, with many — 35% — seeking help for family-related matters. Just more than a third of all consultations were related to eviction issues.

The clinic said teaching was its core focus and final-year law students were encouraged to develop important skills in a clinical setting by providing legal services to Stellenbosch’s indigent community.

The institution said the law clinic has engaged in several high-impact litigation cases in recent years. One matter that garnered public interest was the clinic’s written submission in 2018 to the National Treasury to have feminine hygiene products listed as zero-VAT items.

The so-called tampon tax was scrapped after various representations made, including those of the clinic, a year later, bringing SA in line with countries such as Kenya, Canada, Germany and Australia. 

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