Saturday, 20 February 2021

The Voice - Consumer's Voice

Is this fair?

Around March 2020 I borrowed the sum of P2000 at 25% interest to be paid on April. Unfortunately on the 1st of April we were on national lockdown and I couldn't pay the amount because I was not working and it was impossible for me to make money. On September I paid P1000 and on November I paid P1000.

Now they summons me and demand I pay a total amount of P3291.25. Is this fair and how do I deal with the matter.

Is it fair? Certainly not. Is it possible? Yes, certainly.

We have to remember that microlenders don't lend money because they're feeling generous. They're not charities, they're businesses and they're in busines to make money. Sometimes lots of it. And they make it from those of us who borrow from them.

The first problem with microlenders is that borrowing from them can be outrageously expensive. This one is charging 25% per month which is a wickedly high interest rate. It's many times the interest rate a bank or a large lender might charge. The second problem occurs if you default on the repayments. Your circumstances don't matter in the slightest to the lender, if you're behind with your payments they'll charge you interest on the outstanding amount and then interest on the interest you previously owed. Very quickly you can find yourself in a situation like yours.

The good news (and it's actually not that good) is that the amount of interest the lender can charge you when you settle the debt is limited by what lawyers call the "in duplum rule". This says that when a debt is settled the amount of interest can't be more than the amount of the original amount you borrowed that's outstanding. It means the maximum possible interest they can charge on a loan of P2,000 is another P2,000. They're allowed to add a little extra for their expenses but you should perhaps count yourself lucky they're not demanding more from you.

The most important thing you should do right now is talk to the debt collector who summoned you. Explain your circumstances and do your best to arrange a repayment plan that you can afford. You'll be surprised how willing most debt collectors are to do a deal. They'd rather get something than nothing and slowly rather than never at all.

Finally, if you are summoned to court please make sure you attend and explain your circumstances to the magistrate. If you can show that you're doing your best to repay your debts then you should be lucky.

How to deal with a complaint

We heard from a consumer recently who had made a terrible mistake. He bought building supplies from a supplier last December and when, after a couple of months, they still hadn't been delivered he did what every consumer should do in a situation like this. He cancelled the deal, found the supplies elsewhere and asked for a refund from the first company. Was that his mistake? No.

When the supplier failed to make the refund, he then posted a complaint in the Consumer Watchdog Facebook group. Was that his mistake? Again, no.

The supplier then threatened to sue the customer for complaining in public, claiming that they had lost business as a result of his complaint. They demanded that he apologize "for 5 days'. He refused. Was that his mistake? No.

He then complained to us directly and we got in touch with the supplier who implied that they would sue us too. Was that his mistake? No, that wasn't a mistake either.

Finally, he complained about them to the Competition and Consumer Authority. No, before you ask, that wasn't a mistake either.

So what was his mistake? It's simple. He chose a supplier so arrogant and insecure that they threaten to sue customers who try to exercise their rights. It wasn't his fault but it will be a mistake for anyone else to give that company money. No, we won't name the company although if they do ever sue either the customer or Consumer Watchdog, it will become obvious. And then every consumer can decide whether they're grown up enough to deserve our money.

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