Khayelitsha: Unauthorised Funeral Policy Deductions Target Pensioners

• Three elderly women in Khayelitsha reported unauthorised funeral policy deductions from their social grants, following misleading offers.
• Thelma Nkone received a refund from 1Life after R205 was deducted monthly from her old-age grant without her consent.
• Nosibongiseni Tsusane and Nomfusi Grace Memani experienced similar deductions by Clientèle Life, with Ms. Memani receiving a refund while Ms. Tsusane's deductions stopped but she awaits a refund.
• Insurers provided refunds and cancelled policies in some instances but did not fully explain how personal details were obtained or how future unauthorised deductions would be prevented.
• Advocacy groups like Black Sash highlight that vulnerable social grant beneficiaries often bear the burden of challenging policies they never agreed to.

Lawyers and compliance officers must advise insurance companies on strengthening consent verification processes, especially for vulnerable groups like social grant recipients.

Elderly residents in Khayelitsha have reported a disturbing pattern of unauthorised funeral policy deductions from their social grants, often following deceptive offers. Thelma Nkone, a 76-year-old pensioner, discovered R205 was being debited monthly from her R2,420 old-age grant between November 2025 and May 2026. Despite her inability to recall agreeing to any such policy, and already managing three existing funeral policies, she struggled to identify the responsible company until a SASSA official informed her it was 1Life. Following inquiries, 1Life eventually cancelled the policy and issued a refund to Ms. Nkone.

Another Khayelitsha resident, 72-year-old Nosibongiseni Tsusane, recounted being approached by individuals offering a grocery voucher promotion linked to her Shoprite Xtra Savings card. Without her explicit consent or signature, details were captured on a tablet, leading to a R170 deduction from her grant. When subsequent deductions occurred, she learned Clientèle Life was responsible, but her bank, Capitec, could not halt the payments, directing her to SASSA, which ultimately assisted in cancelling the policy. Ms. Tsusane, who endured significant distress and financial hardship, has not yet received a refund, though the deductions have ceased.

Similarly, Nomfusi Grace Memani, 63, was approached at a mall with a purported business opportunity for older women making handmade goods. Believing she was registering for this venture, she provided her phone number, photograph, and signature. She later found a R400 deduction by Clientèle Life on her bank statement, which severely impacted her ability to maintain long-standing burial society contributions. While Nedbank could not reverse the deduction, Ms. Memani eventually received a refund in January after contacting Clientèle Life.

The incidents highlight significant concerns regarding consumer protection insurance in South Africa, particularly for vulnerable populations. While 1Life did refund Ms. Nkone and cancel her policy, the insurer did not provide an explanation for how her personal details were obtained or verified, nor did it outline measures being taken to prevent future unauthorised funeral policy deductions. This lack of transparency raises questions about the robustness of their internal controls and consent verification processes.

Clientèle Life's group compliance officer, Marilyn Pillay-Gumbie, stated that the company investigated each case brought to its attention, engaging directly with affected individuals to resolve matters, including policy cancellations and premium refunds where appropriate. Ms. Pillay-Gumbie also asserted that Clientèle Life employs biometric verification and other policy-acceptance safeguards before activating policies. However, the experiences of Ms. Tsusane and Ms. Memani, who do not recall providing such explicit consent, suggest potential gaps in the application or effectiveness of these safeguards, leading to unauthorised debit orders against social grants.

These cases underscore a broader issue of pensioner funeral policy fraud in South Africa, where social grant recipients are frequently targeted through misleading offers. The Black Sash, a human rights organization, points out that beneficiaries often face the arduous task of challenging policies they never agreed to. Abigail Peters, the organization's national researcher, emphasized that individuals are often lured into these situations under false pretenses, making it difficult for them to prove a lack of consent.

The prevalence of SASSA grant unauthorised debit orders highlights a critical compliance exposure for insurers. Lawyers and compliance officers must advise insurance companies on strengthening consent verification processes, especially for vulnerable groups like social grant recipients. Robust internal controls and clear dispute resolution mechanisms are essential to mitigate regulatory risks and potential class action litigation, ensuring fair treatment of customers and upholding consumer protection standards.

Lawyers and compliance officers should advise insurers on strengthening consent verification processes, particularly for vulnerable populations like social grant recipients, to mitigate regulatory risks and potential class action litigation arising from unauthorized debit orders. This case highlights a critical compliance exposure related to consumer protection and fair treatment of customers, requiring robust internal controls and clear dispute resolution mechanisms.

Source: Original reporting via GroundUp