A unit of South African retailer Pepkor Holdings has been sued by the National Credit Regulator for selling unemployment and disability insurance to pensioners on welfare who would never be able to claim those benefits.
The High Court case against JDG Trading, which sells furniture and offers financial services, accuses the company of taking advantage of some of South Africa’s poorest and least financially literate people.
In 2015, the regulator initially took JDG to the National Credit Tribunal over the practice in a case that was unsuccessful.
JDG sells the insurance as a mandatory requirement for customers who wish to buy goods from its stores on credit.
The cover enables the company to be repaid in the event of the shopper’s death, unemployment or disability, even though only the first of those applies to some buyers, including pensioners.