SOCIAL grant beneficiaries have been warned not to enter into private agreements with money-lending companies following complaints of unlawful deductions for loans already paid in full.
Thousands of grant recipients, who have entered into private loans, have switched their South African Social Security Agency (Sassa) card to a smart card, also known as a “green card”.
In 2012, Sassa awarded a five-year, R10 billion contract to Cash Paymaster Services (CPS), a subsidiary of Net1 UEPS Technologies.
The DA in the North West said in a recent statement that without disclosing the full terms and conditions, pensioners were being offered loans or funeral cover.
“The loaning company then takes the pensioner’s Sassa card and exchanges it for a so-called green card. They are thus taking control of the pension money and pay the balance, after their deductions, into the green card,” said DA spokesperson on Social Development, Tutu Faleni.
“Upon taking the green card, pensioners are compelled to pay back the loan from the company at an extremely high interest rate.
“It is unacceptable that the Department of Social Development has allowed such fraud to occur.”
It is believed that more than 1.5 million grant beneficiaries have migrated to the so-called green cards since June 2015.
Local beneficiaries yesterday complained to the DFA that unlawful deductions are being made from their social grants even after they have paid their outstanding loan in full.
One of the beneficiaries said that he only received R265 from his pension grant after money was deducted from his account.
“I went to a loan company and they lent me R800 as I was in need of some extra money to meet my demands. The R800 that I had loaned was deducted the following month when I received my grant.
“I went to make another loan of R800 and that was then also deducted the next month when I received my grant. I then decided not to take any further loans as I realised I would find myself in a continuous cycle. However, further deductions continued on my account even after I had paid my loan in full,” the pensioner said.
He said that he approached the loan company but did not gain any clarity on why the deductions had continued.
“I went back to the company and asked an employee why they kept taking my money. She got angry and said it must be because I still owed them money. I told her that all my debt had been paid and that they must stop the debit orders. That has not happened and it is still ongoing.”
He added that this had placed him under immense strain and he had even approached Sassa to intervene.
“One of the employees at Sassa told me that they cannot assist as I no longer had my Sassa card and that all my personal information was now with the loan company. I feel like I am trapped in a corner with no way out.”
Another beneficiary, who is also in possession of a green card, said that her Sassa card was deactivated when she took out funeral cover.
“I took out a funeral policy and they gave me the green card. I still have my Sassa card but can no longer use it as my grant is being paid into my green card account. I also take out loans with retailers and they debit their money straight from the green card. Sometimes they deduct twice the amount on the same day we get our grants and we have to pay an interest of about 30 percent on the loans we received,” she said.
She added that they chose loan companies that did not charge high interest rates. “Some loan companies charge 100 percent interest.
“I want to pay off my loan speedily and then take stop the loans as I cannot see where my money is headed or even buy basic essentials with the money left in the card.”
Most beneficiaries were also in the dark with regards to how their grants would be paid out after the contract between CPS and Sassa ends next year.
“We cannot use our Sassa cards any longer. We were not told what will happen to the money we paid on the funeral cover. The people (loan companies) will have to give back our money or find a way to let us use our Sasa cards again in order for them to deduct the money from the Sassa cards,” they said.
Sassa provincial spokesperson, Inno Khunou, warned beneficiaries not to give their personal information and Sassa cards to loan companies.
“Beneficiaries, privately without involving or informing Sassa, approach CPS or moneylenders to lend money. They are then issued with a green card and they then stop using the white Sassa card that was issued to them to access their grants. These beneficiaries only approach Sassa once they realise the loan deductions continue even after their debt has been settled with the moneylenders.
“Sassa distances itself from any card not issued by them. There is only one official social grant card and that is the white Sassa card with its logo and the colours of the South African flag.
“If beneficiaries enter into loan agreements with loan services providers, they are advised to approach those service providers to lodge complaints about settled debt,” Khunou warned.
Khunou said that Sassa was, however, investigating the unlawful deductions of electricity and airtime from the beneficiaries’ accounts.
This was after the agency was inundated with complaints from beneficiaries regarding the deductions.
“Sassa has put a customer care application system in place to manage unauthorised deductions of electricity and airtime. Beneficiaries are encouraged to approach their nearest Sassa office if they want to register any unauthorised deductions,” said Khunou.
Net1 did not respond to requests for comment.