I was really looking forward to debating Serge Belamant, the CEO of NET1, on Radio 702 on Wednesday night. Unfortunately, when it came to the crunch, he did not answer his cellphone. So disappointing. Hence, I think it is time to start taking the gloves off.
Let’s start by showing how Serge Belamant tap-dances around the issue of exploiting the Cash Payment Services’ (CPS) database of grant recipients to cross-sell them financial products.
In a sworn affidavit submitted by Belamant to the Constitutional Court dated March 7, 2017 in a case brought against CPS, by among others the Black Sash Trust, he says the following:
“13. … the allegation that CPS and other NET1 subsidiaries engage in unlawful marketing practices is unfounded. As regards CPS, it does not market or sell any goods or products to beneficiaries…. Certain other NET1 subsidiary companies do market and provide financial products to beneficiaries. They do not, however, engage in unlawful marketing practices or conduct ‘ambush marketing’ as the Black Sash suggests.”
But we already know that NET1 subsidiary companies market financial products to grant beneficiaries. It is not the what, it is the how, that matters. So read on.
“14. ….as regards the terms and conditions of beneficiaries’ Sassa-branded Grindrod Bank accounts, these are displayed when beneficiaries are enrolled. Grant recipients are specifically required to agree to these terms and conditions – they do so biometrically by ‘signing’ electronically with their fingerprints.”
We now know that the grant recipients agree to terms and conditions of Grindrod Bank accounts using a fingerprint. I don’t want to be funny, but this is today’s equivalent of “X” used in the Middle Ages when people where illiterate. I would argue that most grant beneficiaries are financially illiterate, as are many other South Africans, particularly when it comes to financial jargon.
“16. …(NET1 and its subsidiaries) fully accept that unauthorised deductions – that is, deductions made without the informed consent of the account-holder – are unlawful and unacceptable…”
So “informed consent”, in the opinion of NET1, is a fingerprint. About that “X” again….
Now let’s bring in the terms and conditions of the EasyPay Everywhere Grindrod Bank accounts which come with a green Mastercard. There are 1.8-million of these accounts opened in parallel to the Sassa-branded Grindrod Bank accounts which come with white MasterCards and are used to disburse grants. When CPS enrols grant beneficiaries on behalf of Sassa, it electronically stores their identity numbers, contact details, fingerprints and other details on the magnetic strips of the white MasterCard. One can thus safely assume that the same data is stored on the green MasterCard. The infamous clause 6 appears again (the same one that features under the original Sassa Grindrod Bank account):
“6.1. You consent to us….. using your personal information… to render the banking services set out in these Terms and Conditions, and to send marketing material from us and our affiliates to you, if you elected to receive same during enrolment (and) providing your personal information to our third party service providers, subsidiaries and affiliates for the express purpose of providing you with the banking services referred to in these Terms and Conditions, and in this regard you also consent to us as well as the aforementioned parties storing and processing your personal information.”
I guess it is that “X” again.
But then we take a detour. Why? Because this account is linked to selling financial products, so, whether NET1 likes it or not, it needs to comply with the FAIS Act (the main piece of legislation regulating the conduct of anyone providing financial products and services).
And here it comes…
Under Particulars of the Product Supplier, the following appears:
“The EasyPay Everywhere Card programme is brought to you by Moneyline Financial Services (Pty) Limited, a subsidiary of Net 1 Applied Technology South Africa (Pty) Limited, with banking services provided by Grindrod Bank Limited, an authorised FSP.”
Moneyline is the NET1 subsidiary providing microloans at an effective annual interest rate ranging from 164% to 280%. Now we learn that the EasyPay Everywhere Card is directly linked to microloans. In fact, it is provided by the microloan lender. I think it is not a giant leap of logic to assume that the sole purpose of the EasyPay Everywhere Card is to allow a microlender to deduct payments directly from welfare grants.
And now let’s link all this to an excellent article written by Craig McKune, who writes for amaBhungane and who has given me permission to quote from his article.
McKune e-mailed Belamant to ask him whether NET1 uses CPS’s data relating to grant recipients when it sells them financial products. His reply was:
“No. We do not use any data we have collected for Sassa. This service has nothing to do with Sassa whatsoever.”
So McKune went to visit a Moneyline branch in Athlone, Cape Town, an office located next to a Sassa branch which prominently displayed “instant affordable loans”, “life insurance” and “your green card to financial freedom” signs, and which had a queue of people in front, all of whom were grant recipients. When he tried to enter he was barred by a security guard because he did not have a white Sassa MasterCard. He then phoned a Moneyline call centre where he was told that to qualify for a microloan he had to bring a Sassa card and an identity document. Nothing else. No FICA then? He was also told that unless he was a Sassa grant beneficiary he would not qualify for a Moneyline microloan.
McKune went further (I love real investigative journalists) and looked at the funeral policies sold by NET1 to grant recipients. He obtained a copy of the SmartLife Insurance Company’s business plan which clearly states that SmartLife’s salespeople use the same technology as CPS does at the point of sale – a device that has “the ability to verify client information and, through the use of biometric technology, there is no reliance on a physical signature”. The business plan then explains that when a grant beneficiary applies for a SmartLife policy, the device reads her fingerprint, taking this as biometric “permission” to “access the prospective policyholder’s account information on the smart card”. Okay, the “X” creeps in again. This is the biometric data stored on the white and green MasterCards, the data CPS disputes using for the purposes of selling financial products. The business plan goes further. It says:
“The use of the Net 1 point-of-sale system and biometric verification of the policyholder will ensure that policies are sold to social grant beneficiaries only.”
Some NET1 insiders McKune interviewed told him that “NET1 has a broad system of getting to the beneficiaries. For both the loans and the SmartLife, we are using a Bio930 (the “X” machine) where we have to put the beneficiary card, and it has all the information of the beneficiary.”
For loans, the device shows the person’s ID number, the name and how much the person receives in grant money. For life insurance products it shows existing debit orders linked to their grant account to ensure that the new policy does not contravene the Social Assistance Act which allows only one funeral insurance deduction every month.
And again, this month, Belamant told the Constitutional Court:
“I have stated repeatedly under oath, and affirm again, that CPS does not share the beneficiary data that it captures during beneficiary enrolment or receives from Sassa with any third parties – including NET1 subsidiaries.”
But in an e-mail to McKune, Belamant said the following:
“As a tip, try to understand the differences and the overlap between Sassa data and bank data and then, of course, CPS and non-CPS data.”
NET1 lawyers explained this in more detail:
“…beneficiaries hold these bank accounts in their own names, and have a direct client/banker relationship with Grindrod. There is no contractual relationship between Sassa and Grindrod Bank.”
Let me interpret. The Grindrod Bank database, in Belamant’s opinion, is not CPS data. It is a separate database that can be used and abused at will as per the terms and conditions signed with an “X”.
And here you have it. Hard proof. Signed with an “X”. Or in today’s terms, a deal sealed with a kiss. DM
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Sygnia CEO Magda Wierzycka is no stranger to challenging the status quo. The actuary and consumer advocate believes in forcing transparency in the financial services industry, one educated investor at a time. Her outspokenness has earned her a legion of online trolls and is reported to have SA fund managers shaking in their boots. Shes the only female CEO of a fintech company in Africa and loves all things future tech. She tweets from @Magda_Wierzycka.