Cleared or Conned? Watch Out for Fake Debt Review Exits

Many consumers are desperate to exit debt review, but beware—scammers promise to “clear your debt review” without following the proper legal process. If you have not fully settled your debts, any shortcuts or fake clearance certificates could lead to serious financial and legal trouble. You may still owe money, risk legal action from creditors, and damage your credit record further.

Debt counsellors must also uphold the highest ethical standards. Issuing fraudulent clearance certificates, falsifying documents, or accepting illegal payments will not only harm consumers but could also result in severe penalties, including deregistration and fines.

Always ensure you work with a reputable, registered debt counsellor who follows the law. If an offer sounds too good to be true, it probably is!

Summary of the Main Dishonest Actions by the Debt Counsellor:

National Credit Regulator v Sethole (NCT/276596/2023/57(1)) – National Consumer Tribunal, Centurion.

1. Fake Clearance Certificates

The debt counsellor wrongly claimed that several consumers’ accounts were fully paid, even though they were still active.

2. Using Fake Letters

They submitted fake letters to credit reporting agencies that falsely stated debts were paid, some of which came from unrelated creditors.

3. Forged Bank Statements

The counsellor used fake bank statements to support their claims for issuing clearance certificates.

4. False Information to Credit Agencies

They provided incorrect documents, like altered court orders, to change how consumers appeared on credit reports.

5. Incorrect Transfer Records

Consumers who switched from other debt counsellors received clearance certificates without properly checking their outstanding debts.

6. Falsified Legal Documents

A fake court order was used to support a clearance certificate, although it was not legitimate.

7. Changing Credit Status Without Permission

Consumers’ credit statuses were changed in the Debt Help System without proper documentation.

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Key Findings from the Tribunal

1. Fraudulent Status Changes

The debt counsellor unlawfully changed consumers’ status in the Debt Help System, creating bogus clearance certificates and misleading credit bureaus.

2. Poor Record-Keeping

They failed to keep necessary records of their debt counselling work, breaking certain regulations and not having required documents.

3. Illegal Fees

Charged consumers R450 for clearance certificates without valid documentation, which goes against the rules.

4. Direct Payments from Consumers

They accepted payments directly, rather than through a registered payment distributor, which is against the regulations.

5. Misleading Documents

Issued fake paid-up letters and clearance certificates, causing confusion for credit providers and credit bureaus, and profiting from these actions.

6. Serious Violations and Unprofessional Behavior

They committed many illegal acts and acted unprofessionally, ignoring consumer rights and the integrity of the industry.

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Tribunal Orders

1. Cancellation of Registration

The debt counsellor’s registration has been revoked immediately.

2. Required Audit of Consumer Files

They must hire an auditor to review consumer files for compliance.

3. Refund of Illegal Fees

They must return any unlawfully charged fees to affected consumers.

4. Administrative Fine

A fine of R25,000 is imposed, payable within 60 business days.

5. Transfer of Consumer Files

They must give all consumer files to the applicant within 10 days and help transfer consumers to a new debt counsellor.

6. Invalidating Fraudulent Certificates

Clearance certificates issued based on false information are declared invalid.

Full case law here: 36. Judgement – NCR v C Sethole (fraudulant debt review exit)