Garnishee fraud remains rampant – expert

Despite the Constitutional Court’s landmark ruling on the illegality of certain practices in the administration of garnishee orders – made more than a year ago – activists claim that fee-gouging and fraudulent court orders are continuing unabated, according to Business Day. Lisinda Bailey, one of the applicants in the Western Cape High Court case on garnishee orders that was confirmed by the Constitutional Court, says her life was ruined by the irresponsible granting of credit and subsequent garnishees. ‘(After the ruling) they forgot about us,’ she says, ‘just like that.’ Clark Gardner, who runs Summit Financial Partners, which works with public and private payrolls to audit garnishees on the books, says the company’s biggest issue with garnishees is those not passed by the court. ‘These are fraudulent orders,’ he says. ‘I’ve just stopped 1 300 of these at a single payroll. We looked at the orders and checked them against the court. The court had no record of them. That’s R1.5m a month being stolen from the dirt-poor by thieves,’ he says. ‘The man on the street who has had R500 deducted from his pay cheque every month for the last five years can do nothing about it. Nothing.’ Summit frequently sees forged consent to judgments from large collection agencies, including one that has a debtors book of R1bn. 'And these guys (the collectors) are billionaires…. It really is a crazy, crazy, one-sided game.’ Gardner says there was no happy ending for the debtors involved in the Stellenbosch case. ‘It was a good start, but we know it isn’t ‘case closed’ because I still see (fraudulent) garnishees every day.’

On the other side of the argument, Association of Debt Recovery Agents CEO Marius Jonker is adamant that garnishee abuses do not reflect industry failure and that garnishees are an essential debt enforcement tool. According to the Business Day report, he believes the industry is being tarnished by the acts of a few rogue elements, and largely unregistered and unregulated ones. Many collection agencies complain about a ‘culture of non-payment’ in SA – the idea that many do not want to service their debt or actively seek to avoid paying. Marina Short, CEO of credit bureau Consumer Profile Bureau, says the statistics support this. ‘To define a culture of non-payment I would look at the payment behaviour of the consumers. (Many) consumers are in arrears by one to three months, and (the incidence of) adverse listings and judgments is still increasing. Every day our debt book is increasing. ‘Payment behaviour patterns indicate that people are not servicing their debt. Either they cannot pay or they simply don’t want to pay,’ she says.