Consumer Organization Council Warns of Risks from Non-Mortgage Home and Land Loan Companies, Urges Strict Regulation

The Consumer Organization Council held a press conference titled “Exposing the Deception of Loan Companies” to alert consumers about the non-mortgage home and land loan services provided by Sri Sathorn Corporation Public Company Limited and Sri Sathorn Power 2014 Company Limited. These companies have been found to engage in unfair contracts that exploit consumers, including failing to provide contract documents, selling bundled insurance without giving consumers the right to refuse, offering loans for less than the requested amount, charging additional fees, and ultimately filing lawsuits for unfair debt recovery. The Consumer Organization Council has sent letters to relevant agencies, including the Office of the Consumer Protection Board (OCPB) and the Office of Insurance Commission (OIC), and plans to contact the Bank of Thailand (BOT) to address consumer issues and propose regulatory measures for non-mortgage home and land loan businesses. This includes ensuring fair customer service, adherence to contract standards, accurate advertising, and ethical company practices, as well as issues related to bundled insurance sales.

Pathakorn Tipboonrat, an officer at the One-stop Consumer Service Center of the Consumer Organization Council stated that the center has received complaints regarding the non-mortgage home and land loan services from Sri Sathorn Corporation Public Company Limited and Sri Sathorn Power 2014 Company Limited, which involve unfair contracts that exploit consumers. The complaints include: 1) Loan applicants not receiving contract documents, as company staff claim it is company policy; 2) Selling life and property insurance bundled with loans without allowing consumers to refuse; 3) Charging an interest rate of 2% per month; 4) Providing less money than requested; 5) Advertising no fees but later charging fees; 6) Limiting principal repayments, increasing consumer interest burdens; 7) Requiring borrowers to repay within 12 months, with new loan contracts and additional fees if unable to do so; 8) Charging for property appraisal after the loan is fully repaid, despite consumers having requested the appraisal themselves from the land office.

Additionally, Pathakorn provided further information indicating that some employees at certain branches of these companies lack insurance sales licenses for both life and property insurance. Preliminary investigations have also revealed that consumers have been sued by these companies, particularly those in rural areas.

Jinna Yaem-uam, a subcommittee member on finance and banking at the Consumer Organization Council and a lawyer stated that the facts presented indicate multiple violations, including the failure to provide duplicate contracts to borrowers, which breaches the announcement by the committee regarding consumer loan agreements. Regarding bundled insurance sales, insurance should not be a condition for obtaining a loan, as it violates the principle of independent intent in contract formation. Concerning interest rates, investigations show that these companies are not under the BOT's regulation and must adhere to the Interest Rate Restriction Act of 2017, which caps interest at 15% per annum. Violations can lead to imprisonment for up to 2 years or fines up to 200,000 baht, or both. Furthermore, the issue of not disbursing the full loan amount may constitute consumer deception; if consumers receive less than the agreed amount, they are only required to repay the actual amount received.

Jinna further stated that advertising no fees but later charging fees constitutes a violation of the Consumer Protection Act of 1979. The limitation on principal repayments and the requirement to repay within 12 months reflect a lack of governance and ethics in business practices, aiming to profit from consumers unfairly. This situation qualifies as an unfair contract and suggests dishonesty, as the 12-month repayment requirement forces consumers to find funds to repay within a set timeframe. Failure to do so results in endless new contracts. The charge for property title redemption, claimed as appraisal fees, is misleading since consumers request the appraisal themselves from the land office.

Sophon Noorath, head of the Consumer Protection and Rights Protection Division at the Consumer Organization Council stated that in light of these issues, the council will mediate to help consumers reclaim their property titles. Agencies should develop measures to prevent such incidents from recurring. The Consumer Organization Council has submitted policy recommendations to relevant agencies, including the OCPB, OIC, and plans to contact the BOT.

Consumers who have experienced similar issues can file complaints with the Consumer Organization Council through the website tcc.or.th, link https://crm.tcc.or.th/portal/public, LINE Official: @tccthailand, or call 02 239 1839 ext. 101, or contact local consumer organization offices in 13 provinces (contact information for local offices can be found here: https://bit.ly/3Np19No).

The recommendations sent by the Consumer Organization Council to various agencies are as follows:

1. Request the OCPB to investigate advertising practices and take legal action for failing to provide contracts to consumers.
2. Request the OIC to investigate business practices that act as brokers or agents in insurance-related activities.
3. Request the Bank of Thailand or the Ministry of Finance to regulate loans secured by land titles that are not mortgaged, similar to how vehicle registrations are regulated.