Tales of indebted misery clash with lenders' versions
A woman walked quietly out of the court while Judge Siraj Desai and advocate Piet Louw continued to debate the concept of "free choice" in the context of borrowing money.
At the tea break she explained, as tears rolled down her cheeks, "I was so angry when they were talking about that ... I didn't have a choice..."
It was day three of the Western Cape High Court's hearing into charges that have been brought by Stellenbosch University's Legal Aid Clinic against 13 credit providers and Flemix & Associates, a law firm that manages debt collection for 45 credit providers countrywide.
The specific charges relate to the abuse of emolument attachment orders (EAOs) to secure repayment of "unsecured" loans. It's a story of cash-strapped consumers being preyed on, and dragged into a never-ending cycle of debt repayments.
The woman who walked out of court, who asked to be identified only as Eunice, is one of the law clinic's 16 clients in the matter. She has repaid more than twice what she borrowed four years ago. But because of interest charges, collection charges and legal costs, she still faces a demand to repay an amount equal to about 50% of the original loan.
Her story isn't unique. Eunice took out a loan from SA Multiloan, one of the brands in the Flemix stable, in 2011 when she was already over-indebted.
"My husband was sick, he couldn't work and we'd fallen back on the rent. I thought if I could put all my loans together and pay back an amount every month, things would be OK. They said it wasn't a problem that I was over-indebted."
Four years later, things are far from OK.
Eunice's husband died. She lost the flat and lives with her daughter in her brother's garage in Kraaifontein. In October, she became so depressed about her situation that she didn't go to work for a few weeks and lost the job she'd had for 21 years.
For people who have a job and are rich enough to exist from one pay day to the next without resorting to moneylenders, there is a bizarre Monty Pythonesque sense about Eunice's story.
Yet here she was, speaking candidly outside court, believing she had done wrong [in not continuing to repay] but hoping the legal system would provide some relief.
Adding to her misery is the memory of becoming a "recruiter" for SA Multiloan.
"For a while I recruited for them. they paid me R100 for every loan approved, then they increased it to R150. I did it at night and weekends to pay off my debts ... I'm so sorry I did that."
Eunice said it was easy for the "recruitees" to get loans. "People signed for the loans, they didn't see what they were signing, they didn't get an agreement, they put in R100 for expenses when everyone knew that was wrong."
Eunice's description of the "recruitment" process is in stark contrast to what was described earlier inside Court 9.
There, senior counsel Louw, acting for Flemix, outlined a system with checks and balances to ensure that only people who could afford loans received them.
"Even if a borrower says she has no expenses, we have algorithms that allocate [projected]" expenses," explained Louw.
He later added: "We don't deny there are cases where mistakes are made, where there are collection agents who do commit frauds."
But, according to Louw, the numbers of mistakes and frauds are insignificant and do not warrant the sort of changes to the Magistrates' Act the clinic is looking for.
Louw said the court was being asked to change something that was not broken. "We are dealing with the most regulated business in South Africa." If borrowers had problems, they could always go to the credit ombud and the consumer court.
Louw's description is not only starkly at odds with Eunice's experience, but it is also difficult to reconcile with figures indicating there are between two and three million emolument attachment orders outstanding. About one million of these are problematic and are behind grim stories stretching from Marikana to the winelands of the Cape.
Louw's description is also at odds with the evidence of aggressive marketing by micro lenders, exhorting people to borrow even if they already have judgments against them.
Odette Geldenhuys of Webber Wentzel, which is acting pro bono for the law clinic, says the most vulnerable people are preyed on and encouraged to borrow recklessly because credit providers know they have easy access to emolument attachment orders.