ABU DHABI: A legal consultant has warned OFWs not to borrow money from illegal lenders because that would only compound their existing problem.
While it is possible that an expatriate would approach such an usurer only because the expat himself has legal issues, handing over legal documents, such as his passport, would only make matters worse, he said.
According to Pearl Cabali, legal consultant at Gulf Law in Dubai: “Some prefer loan sharks because the process is very fast and informal. These loan sharks appear to be very friendly and helpful when they hand over the money but they become the exact opposite when it’s time to collect it.”
She pointed out that the borrowers themselves are not too keen to follow up with legal procedures when the loan sharks start creating problems. She says she receives four complaints a month from OFWs, of them only a 10th follow-up, reports The National.
Many such borrowers are themselves involved in police cases – possibly blacklisted from banks, or hold expired residence or tourist visas – or ineligible for a bank loan. “Loan sharks are aware of their situation and capitalize on the fact that they cannot seek police assistance even if they are subjected to abusive practices,” Cabali said.
So what does Gulf Law do to help?
“It is always best to settle the case amicably,” Cabali says. “We try to explain that they do not have a commercial license to operate here and it is also illegal to charge a high interest rate.”
The critical document (passport), kept as guarantee by the lender against the loan has to be recovered. So the company sends a legal notice to the lender, to collect the passport and negotiate a realistic repayment scheme.
One borrower, Christina (not her real name), waited a long time before seeking help – in January 2010 a friend connected her to a lender who said she would give an interest-free Dh8,000 loan, but she would have to deposit her passport.
The 28-year-old said: “I was so desperate back then; my tourist visa had to be extended by a month and I couldn’t get a job.”
She did get a job – as a sales staff at a shopping mall – and started paying off the loan six months later, but by then not only were threatening text messages coming in from the loan shark, but she was charging her interest, and her loan had shot up to Dh15,000.
“She threatened to file a case against me with the police and warned that she could have me deported,” Christina said.
That was when Christina approached the company, which negotiated the loan amount down to Dh10,500. “I got my passport back,” Christina said. “I’m now trying to move on after my traumatic experience.”
Such money lenders themselves are illegal in the UAE. And it is also illegal for anybody to demand the borrower’s passport or an Emirates ID, a labor card, an ATM card, or to ask them to sign checks as a guarantee for a loan.
According to law, those who lend money at unreasonably high rates of interest can be jailed for at least three months plus a fine of at least Dh2,000. The secret is that “Most loan sharks are also Filipinos and take advantage of the weaker Filipinos,” said Ms Cabali.