Credit repair in South Africa has become a formidable industry. Only ten years ago, one needed an attorney to improve one’s credit record. Today there are dozens of so-called credit repair agencies and most do not employ attorneys, and many do not have any legal qualifications.

With the proliferation of credit repair agencies, there has also been a rise in fraud committed against defenceless and ignorant consumers. Many of these agencies charge their clients upfront and in full for these services and many consumers complain that the services aid for are not delivered.

Consumers with impaired credit records need to beware. It is unlawful for “credit repair agencies” to charge a fee upfront. Even a so-called evaluation fee to determine if a consumer qualifies fro a credit repair service is unlawful.

Section 126A (3) of the National Credit Act states:

(3) A person who offers to supply, or supplies, any service for the express purpose of –

(a) improving a consumer’s credit record, credit history or credit rating; Or

(b) causing a credit bureau t remove credit information from its records concerning the consumer,

MAY NOT (own emphasis) charge a consumer, or receive any payment from the consumer, for the credit repair service until that service has been fully performed, and must provide each consumer with a disclosure statement in the prescribed manner and form.

In other words, credit repair agencies who charge a fee upfront are in breach of the National Credit Act. According to subsection (4), this does not apply to attorneys.

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