How loan sharks target vulnerable communities
Illegal lending
The targeting of the elderly and other government grant recipients, like people with disabilities, is particularly disturbing and concerning trend, said a crime expert.
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ELDERLY people who struggle to put food on the table due to their social grants not being enough to sustain them are “at the mercy” of loan sharks, crime expert Niven Naidoo said.
He said the elderly were handing their SASSA cards, pin-codes and identity documents to loan sharks as a security for their loans from illegal lenders.
“The targeting of the elderly and other government grant recipients, like people with disabilities, is a particularly disturbing and concerning trend.
“In many communities, loan sharks offer small loans in exchange for temporary possession of a person’s SASSA cards, pin-codes and identity documents. These cards are then used to withdraw social grants every month until the debt is repaid. Sometimes the borrower ends up paying the same loan several times over. This is a vulnerable sector of society and they are at the mercy of loan sharks,” said Naidoo.
“There are also small businesses such as tuck shops who participate in this exploitation, exchanging goods or credit in return for access to SASSA funds,” he added.
Naidoo said the fight against illegal lending was not just about financial regulation, but also about protecting vulnerable members of our society from exploitation, intimidation, and ongoing victimisation.
“There is a growing reliance on unregistered loan sharks who use coercion and criminal tactics. We have noticed that the typical borrowers are mostly single-parent households, unemployed individuals, or families facing unexpected expenses or medical emergencies.
“With limited access to formal credit, they are driven to borrow small amounts from loan sharks who operate outside the law. These loans come with exorbitant interest rates, often designed to force the borrower into paying back four to ten times the original amount,” Naidoo added.
He said loan sharks intentionally structured repayments to continue indefinitely.
“Their goal is not to be repaid promptly, but to keep the borrower tied to a stream of ongoing payments, using fear and manipulation to maintain control. Intimidation is a key tactic. Many borrowers report verbal threats, humiliation through public disclosure of debts, and even threats of violence. In some cases, individuals are encouraged to sell personal belongings or borrow from family and friends, all to ensure the next payment is made.
“These practices are illegal and in direct violation of the National Credit Act, which requires all credit providers to be registered with the National Credit Regulator (NCR) and to comply with prescribed limits on interest rates and repayment terms,” added Naidoo.
He said the public should be aware that any agreement with an unregistered credit provider was unlawful and could not be enforced in a court of law.
“Victims of illegal lending practices are encouraged to report such activity to the police or the NCR. Community awareness, strong enforcement, and support for victims are essential to curbing this exploitative underground economy,” Naidoo added.