Do I really care?

I asked myself that question last week. Do I care?

No, I wasn’t having a mid-life crisis, that would be MUCH more exciting. This was prompted by a response to a Mmegi article in April that I posted on our blog. The article was called “Do things change” and covered a complaint we’d received about a loan shark, sorry a money-lender, no, I mean micro-lender.

In April last year a reader borrowed P1,000 from a cash loan company, to be paid back over just two months. He agreed to pay the usual 30% interest each month so he expected to pay back a total of P1,600.

Very soon after taking the loan he had problems making the repayments and ended up in hospital for an operation. His financial situation was very bad and there was no way he could make the repayments. However, despite his problems throughout all of this time he kept the lender informed and thought he might receive reasonable treatment. He told us that the lender “gave me what at the time I thought was a benefit of the doubt by seemingly acknowledging my situation and telling me that I’ll pay him when all is well.”

Unfortunately when he finally recovered he went to the lender and got a full statement of his debt. It now appeared that having borrowed a mere P1,000 he now, according to the loan shark, owed a massive P10,500. What’s more the lender threatened to write to the victim’s employer and to take legal action against him for this new, outrageous amount.

Of course this is all nonsense. I went on to explain the rather wonderful “in duplum” rule which states that, at the time that a debt is settled, the interested charged may not exceed the amount that was borrowed. The lender can demand P10,500 from the victim for a P1,000 loan but no court will ever make him pay that amount. The court will only require the victim to pay an extra P1,000 in interest.

So that was the story that provoked a response. This is what we received:

“Let me use this medium to thank you for your effort in an attempt caring for consumers in Botswana. Importantly, I read your write up about the person who took money from a cash loan in April, 2010 and have not paid back after a year. It seems you only looked at the issue from the consumer perspective. What about the providers of loans who gave out his or her cash for long period of time. You did not consider the lender’s office rent and the salary of workers! Did you ask the debtor, the time interval before the debtor went the hospital? Am also interested in consumers’ welfare, but let’s try to balance issues between consumers and suppliers. This is because both are from households in Botswana and they buy goods and services from the same market. It is also fact that they contribute to the growth of the economy through this exchange. I want you to give it a serious thought, will be fair to pay only 2000 fro a period more than a year?”

The reader of course has a point. Moneylenders are human too. Yes honestly they are. Sort of. They have financial obligations as well and we should remember that. The reader is also right to suggest that people must honour their financial obligations. Of course they should, we all should. But that wasn’t my point. My point was that this consumer DID try to honour his obligations and I think he understood that there would be a penalty to pay for failing to honour them, even though the problems might have been beyond his control.

My point was also that the law is the law. Whether or not this moneylender feels he can charge whatever he wants in interest the law says otherwise. The law says that the interest charged cannot exceed the amount borrowed. The loan shark can demand over 10 times as much as the amount borrowed but no court will ever award him that much.

If the lender doesn’t realise this then quite frankly he doesn’t deserve to do business in the moneylending industry. He doesn’t deserve to operate if he thinks he can exploit customer’s ignorance of the law to make money. I suspect that the loan shark in question tries this one all the time. I wouldn’t be surprised if most unscrupulous moneylenders tried the same trick. Charge enormous amounts of interest and then threaten the victims with legal action unless they pay up. Most people would find that so threatening and would imagine that the court would issue an order forcing them to pay up. To avoid that they just pay whatever the lender demands. They don’t know, and the lender certainly won’t tell them, that the courts would simply throw out the enormous claim for money and replace it with a much more reasonable one.

So the answer is no, I don’t actually care about the poor moneylender’s plight. If he’d treated both the victim and the law with some respect I might be sympathetic but he didn’t and I’m not. People who try and abuse others don’t deserve respect; they deserve contempt and that’s what they’ve got from Consumer Watchdog.

This week’s stars

• Oratile at South African Express Airways for really cheerful and fun service.