KUALA LUMPUR, July 26 — They may be registered with the Ministry of Local Government Development and regulated by the Money Lending Business Act 1951 (Act 400), but the modus operandi of certain licensed money lenders is It is no different from a loan shark or “Aaron.” They charge exorbitantly high interest rates and resort to blackmail if customers fail to repay on time.
Although Law 400 clearly states that licensed lenders can only charge 12 percent annual interest on secured loans and 18 percent on unsecured loans, some lenders charge much more. They are known to charge high interest rates.
In fact, these companies even go so far as to store customers' Automated Teller Machine (ATM) cards to facilitate the collection of monthly dues.
Many people fall prey to the high-pressure tactics of such moneylenders. According to the Kuala Lumpur Consumer Safety Association, it receives more than 200 complaints a month about unscrupulous money lenders, including from public servants.
However, association president Samsuddin Mohammad Fawzi told Bernama that the daily figure is much higher, as typically only 30 per cent of victims come forward to report to the association. He said it was possible.
He said many of them, especially civil servants, do not dare seek help because they are threatened by moneylenders that they will lose their jobs if they report.
“We receive many complaints from victims, but in order to assist them, they have to come to our head office (Kuala Lumpur). However, many of them have financial constraints. or because they live in other states such as Sabah or Sarawak.
“Many of them became victims due to financial problems…The situation is worrying as most of them are in the productive age group of 30s and 40s. Some of them are retired. ” he said.
expected to rise
Samsuddin said the association had received more than 5,000 complaints from victims of licensed moneylenders since 2012, with 800 to 1,000 complaints up to May this year alone, and 95 cases of lawsuits. % has already been resolved, he added.
He said Sabah and Sarawak accounted for the majority of the cases, which needed to be resolved quickly as some of the complainants had mortgaged their land and houses to moneylenders. added.
The association said it expected the number of complaints to increase this year, as more people may be forced to seek loans from money lenders given the current economic situation.
He also said that contrary to popular expectations, not all victims were from low-income or B40 groups. He said many of them are in the M40s and even T20s, and the loan amount is based on the needs of the income class.
Asked if licensed moneylenders could hold borrowers' identity cards and ATM cards, Mr Samsudin said in the negative that it would be a violation of the Moneylending Act 1951.
He pointed out that relying on threats such as money lenders coming to a customer's home or place of work is actually a violation of Section 29 of the same law, which clearly prohibits money lenders or their agents from coming to their customers' homes or places of work. It said that it was in violation of Article (B). workplace.
He said if this happens, a police report can be filed against the company and the company can be prosecuted in court under Article 506 of the Penal Code. . This section provides for a penalty of two years' imprisonment or a fine, or both.
modus operandi
Mr Samsuddin said fraudulently licensed lenders were tricking customers into obtaining loans at much higher interest rates by forcing them to sign blank documents as a condition of loan approval. Borrowers are not given a copy of the loan agreement.
As a matter of fact, the lender is obliged to provide the complete details of the loan for the customer to check before concluding the loan agreement. For each of these agreements, companies must use the format prescribed by the Ministry of Local Government Development: Schedule J (for unsecured loans) or Schedule K (for secured loans).
However, many lenders trick their customers, especially those applying for secured loans, into signing real estate transfer documents or powers of attorney, such as Form 14A, which is a land office document, instead of a Schedule K.
These lenders can use property transfer documents to seize a customer's property, which is a legal offense and is classified as a commercial crime.
“Under the Money Lending Act 1951, a (licensed) money lending company can only seize a borrower’s property through court proceedings.
“If the borrower is unable to settle the loan, the appropriate action would be to auction off the mortgaged property through public auction. The proceeds from the auction will be given to the concerned lender and the remainder will be handed over to the borrower.” he explained.
Not enough executive personnel
Mr Samsuddin feels that the enforcement constraints of the Ministry of Local Government are the reason why certain licensed money lenders are openly deceiving customers. The ministry only has about 40 enforcement officers to monitor more than 4,000 licensed money lenders across the country.
In view of this, he called on the government to place the enforcement of Law No. 400 under the jurisdiction of the Ministry of Internal Trade and Cost of Living, which has a sufficient number of enforcement personnel.
“Naturally, Act 400 should not come under the jurisdiction of the Ministry of Local Government Development as it has no relevance to the Ministry. The Rental Purchase Act of 1967 and the Direct Selling and Ponzi Scheme Prevention Act of 1993 also fall under the jurisdiction of this ministry, which has over 2,000 enforcement officers,” he added.
He said the Ministry of Internal Trade and Cost of Living has offices in each district where people can lodge complaints. Meanwhile, the Ministry of Local Government Development only has three locations where complaints can be lodged: one in Putrajaya and two in Kota Kinabalu and Kuching.
Meanwhile, two victims of unscrupulous licensed moneylenders told Mr Bernama about their harrowing experiences after receiving loans.
The single mother from Batu Pahat, Johor, who only wanted to be identified as Ross, applied for a loan of RM3,000 from a licensed moneylender, but after receiving the money, the monthly repayments for a certain period of time were not met. He said he was told it would be RM460. In two years, she would have repaid RM11,000. This was more than three times the amount originally borrowed.
“Of course I can’t afford to pay that much,” she said.
She told Bernama Municipality that some people had recently come to her house and threatened to take away her son and lock her up if she defaulted on the loan.
As a “penalty” for not clearing the loan immediately, they forced her to sign another agreement to repay the RM25,000 loan for 10 years with monthly payments of RM210.
“I certainly can't afford this and I'm living in fear right now,” she told Bernama.
Another victim from Kuala Lumpur, who only wanted to call herself Lina, said she borrowed RM10,000 to repay a car loan and her child's school fees.
“Their interest rate was unreasonable…I was told to pay RM1,300 every month for 18 months, making a total of RM23,400. I also received an ATM card.
“As I could no longer afford to pay the remaining loan amount, I had to take out another loan of RM4,000 from another approved money lender, which required me to pay RM650 every month for a year. Total payment amounted to RM7800.
Lina, who works as a promoter at a supermarket kiosk, laments, “I am now in debt and have to use my entire salary to pay off the loan.''
Sains Islam Malaysia senior lecturer Muhammad Ikmal Hisham Kamaluddin said victims who have been harassed by money lending syndicates should report it to the police and also to the National Fraud Response Center by dialing 997. said.
He advised them to collect all evidence regarding their transactions and communications with the money lenders involved and to seek legal advice. — Bernama
