Blacklisting of Customers

[jazz]

I work in an organisation that falls under 'incidental credit' however at this point in time we do not levy any interset on arrears balances. Are we able to blacklist clients, what would this have on our organisation bearing in mind that that our agreemnt is not completely subjected to the NCA

Regards
Jazz

[Dave A]

I've had a quick skim through from Section 70 - which seems about the place to start unravelling this aspect.

I can't see anything that prevents us from blacklisting a defaulting client under an incidental agreement, other than meeting the prescribed notice period of the intention to the client (which seems to be 20 days).

As I said - a quick skim at this point.

[stephanfx]

What are the "requirements" for blacklisting a client? Only defaulting on payment of an account, or is more necessary?

[Eugene]

All credit bureaus and subscribers accepted a code of conduct indicating the responsibilities of the Credit Bureau as custodians of the data and the responsibilities of the individual subscribers. Typically only large companies are subscribers to bureaus as they also make use of them for their credit scoring on order to establish creditworthiness. Some extracts from the code include:

1. Data collection and disclosure notification: Subscribers of credit bureau are encouraged to include a standard notification and consent clause in their credit application form. This clause should notify consumers that personal information and payment behaviour may be accessed from and supplied to a credit bureau for risk management purposes.

2. Duty to supply accurate, correct, up-to-date, relevant and complete data: Subscribers must take reasonable steps to ensure that all data supplied to the credit bureau is accurate, correct, up-to-date, relevant, complete and valid. Information must be supplied within a reasonable time period.

3. Prior notice required before Default listing: Subscribers must give their customers 28 days written notice of their intention to submit default information regarding the customer’s payment performance to the credit bureau. This notification shall be to the customer’s last known address, preferably by registered post.

4. Default listings in respect of prescribed debts: Subscribers shall not submit default information to credit bureau in respect of debts that have prescribed

5. Duplicate Default listings: Subscribers shall not submit default information more than once in respect of the same debt.

Turning to the NCA and section 70 which deals with credit bureaus it is noted that only registered credit providers (section 70(2)) may submit details to the credit bureau upon payment of a submission fee. One must bear in mind that default judgments issued by the Courts are automatically lodged at the relevant credit bureaus. The “bad paying consumer� (payment history) could only be listed if you are a credit provider and a subscriber at the bureau.

With regards to “incidental credit agreements� it would indicate that the company is not registered as a credit provider and therefore the bureau is under no obligation to accept the report (section 70(2)). Should you however reach a stage where you have more than 100 incidental credit agreements, registration as a credit provider will be imminent as required by the NCA and you would then be in a position to lodge your payment profiles of defaulting consumers to the bureau if you are a subscribed member or paid the submission fee.

[Dave A]

Eugene, what I got under 70 (2) (a) is this:

(2) A registered credit bureau must-

(a) accept the filing of consumer credit information from any credit provider on payment of the credit bureau's filing fee, if any;

I'd take it from this the credit bureau needs to be registered, but not necessarily the credit provider?

[Eugene]

Dave as I understand it, the credit bureau must be registered as well as the credit provider. It seems that the then looking at the wording of section 70(2)(a) with reference to "credit provider" one must bear the definition of credit provider in mind as stipulated in the NCA. On first glance it seems that only registered credit providers might list defaulters, which seems unfair. We have a Cape Law Society Seminar on the 30th of June with Mr Gabriel Davel (NCR) and I will raise the question.

[Dave A]

Originally Posted by Eugene

We have a Cape Law Society Seminar on the 30th of June with Mr Gabriel Davel (NCR) and I will raise the question.

Thanks, Eugene. I for one would be most interested in the response. The threat, or actual blacklisting seems on average to be the far quicker and more cost effective route in producing a result than taking the legal collection route nowadays.

[Eugene]

Will keep you guys posted!

[Brett Bentley]

Dave A "...actual blacklisting seems on average to be the far quicker and more cost effective route in producing a result than taking the legal collection route nowadays."

You obviously need a more effective attorney and collection procedures... ;-)

On a more serious note I am still firmly of the opinion that there is no requirement to be a registered credit provider in order to be able to list a debtor with credit bureaux.

[Dave A]

Originally Posted by Brett Bentley

You obviously need a more effective attorney and collection procedures... ;-)

Quite possibly. We don't have much of a bad debt problem. But when we do, some debtors can be really squirmy and hard to get a summons properly serviced upon. And more recently I had one that simply did not respond to anything - and then successfully applied for recision of the default judgement. Pretty much start again

Finally, the delay in getting a defended matter on the roll for some courts is simply not funny. And then they want to settle at the last minute anyway.

With blacklisting you suddenly get this screaming banshee who just wants to get off the list asap because it's screwing up their car/home/whatever purchase. It normally comes with heaps of verbal and having a record of all the phonecalls you made before you blacklisted them proves useful.

Which is quicker? Ultimately, it depends how often they are getting finance, but the worst offenders (the non-responders and service avoiders) seem to be playing with financed transactions quite regularly.