Shoprite acknowledges reckless lending judgment
The retail giant says it noted the finding that one of its subsidiaries extended credit to customers to buy goods from its OK Furniture stores too easily.
JOHANNESBURG - Shoprite has acknowledged a judgment handed down by the National Consumer Tribunal finding it guilty of reckless lending.
The retail giant says it has noted the finding that one of its subsidiaries extended credit to customers to buy goods from its OK Furniture stores too easily.
It says that the matter relates to credit agreements concluded between June 2013 and June 2014, with nine consumers from thousands of its other consumers.
Shoprite says that in all the cases, the credit extended was settled in full by the customers concerned.
Shoprite was slapped with a fine of R1 million.
The National Consumer Tribunal instructed Shoprite to appoint a debt councillor at its own cost to assess the credit of consumers who may now be over-indebted.
NCR chief executive Nomsa Motshegare said: “Some of the conduct of Shoprite that was found to be in contravention of the National Credit Act was that Shoprite, when assessing whether a consumer could afford a loan or not, took into account unverified income of another person, such as a spouse or a life partner.”
The regulator's senior legal advisor Ntupang Magoolego said that consumers should receive loans based on their income.
“In other instances, they deliberately ignored information in the credit bureau, which indicated that consumers were over-indebted.”
Unsustainable levels of household debt, especially in lower-income brackets, is a pressing social and economic problem in the country, which has just emerged from a recession but remains saddled with high levels of unemployment and poverty.
Motshegare added the judgment follows an investigation by the NRC.
“[The investigation] revealed Shoprite entered into credit agreements with consumers without conducting a reasonable and objective assessment of the consumers’ ability to afford the loans.”
Additional reporting by Reuters.
(Edited by Shimoney Regter)