Anger, despair, and hope – stokvel members respond to email urging patience

The knife left in the back of United African Stokvel (UAS) members was given another twist last week as a global email, sent by the digital stokvel, urged members to be patient while it did “everything to normalise the issues and bring the situation to normal”.

The email, sent on 3 August, followed a month of silence, with members claiming that their calls, emails, and text messages to the stokvel – asking UAS when they could expect their payouts – went unanswered in July.

On 17 July, the Financial Sector Conduct Authority (FSCA) issued a warning against UAS, advising the public to be cautious when conducting any financial services-related business with UAS. The statement added that UAS had made claims on social media (in 2020) that it had applied for a financial services provider licence.

“The FSCA records that it has not received such application,” the statement read.

Read: FSCA investigating stokvel following tip-off from a whistleblower

The FSCA said it received complaints from UAS clients who said although they had been promised returns, they had not received them.

The Authority said it was in the process of investigating UAS. Once the investigation was completed, the FSCA “may take regulatory action, report the matter to the South African Police Service, and support the National Prosecuting Authority in its responsibilities, if required”.

Moonstone contacted the FSCA last week, asking them how far along they were in their investigation, but the query was not acknowledged.

A search of UAS’s Facebook page shows that the stokvel has been trying to reassure members that they will receive their funds for some months before the FSCA’s warning.

In a Facebook post in May, it blamed the backlog on load shedding, unexpected back-up failures, and delays in receiving funds from its investment accounts.

The last post on UAS’s Facebook page, dated 7 June, reads: “We do understand that the delays are worrisome” and “we are continuing to make payments on a daily basis and will continue to do so every day.”

In the email sent last week, UAS said it wanted to bring it to members’ attention that the company had “in the past few weeks been engaged with the financial services authorities to answer the questions of legal compliance and that has resulted with Nedbank, who is the company’s bankers, suspending the banking systems of the company and disruptions for normal activities”.

The email said the “mentioned issue” was receiving the urgent attention of its legal advisers, “who are engaging both the authorities and the bankers”. The message concluded by saying the company would report back to members “any progress and developments in due course”.

Nedbank has since neither confirmed nor denied whether UAS’s account has been blocked, telling News24 it could not comment on the status of the stokvel’s banking facilities because of client-banker confidentiality.

‘The stokvel for everyone’

Moonstone is aware of three WhatsApp groups for disgruntled UAS members. One was specifically created for members who want to (and can afford to) pursue legal action.

Another is the UAS Private Members Only WhatsApp group, which was established around April. A member of this group who agreed to speak to Moonstone on condition of anonymity describes the email as just another lie. The single mother asked that a pseudonym* be used to protect her identity and her safety.

“They ghost us and then suddenly say it is because their bank account has been closed. Everyone is just angry. All this deception keeps on happening. And there are those who are saying in the group, oh, maybe he is going to give us our money. It is a painful thing to watch, seeing people dragged through hope again. Some are clinging to that email,” says Maria*.

Established on 1 March 2019, UAS describes itself as “the digital savings stokvel for everyone”.

In an article published on Stokvel Talk, dated 29 June 2022, UAS co-founder Darren Langbein described how he stumbled across the stokvel concept after his right knee gave in, making it hard for him to continue with what he had been doing up until then – buying distressed property, fixing it up, and reselling it.

Sharing how the stokvel went from “a tough start to big rewards”, Langbein said UAS, “unlike traditional stokvels”, didn’t just sign people up in December and January.

“You can sign up and join us whenever you want because we’re all about convenience. We’ve got this angle where if it’s your birthday tomorrow, start saving today, then next year, the day before your birthday, we’re going to pay you out,” he told Stokvel Talk.

The online publication has since distanced itself from UAS in articles published on 12 June and 22 July, respectively, saying it felt compelled to address “the unfortunate situation” involving UAS.

Relationship of trust

In a Q&A with bi-monthly consumer magazine Spot-On, dated November/December 2022, the interviewer asked Langbein, having gone from defending the stokvel’s brand from being called a scam in its first year to its members defending it in its third year, how valuable the trust he had built with its members was.

“Our stokvel is nothing without the trust and support of our members. Our members are the single most important part of our stokvel,” he said at the time.

To the question “how many members the stokvel had”, Langbein responded they had more than 15 000 members “and are growing daily”.

An advert placed next to the article invited readers to “join the digital revolution” by saving between R500 and R50 000 a month at a fixed term of 6 to 12 months compounded at a rate of 4% a month.

The “Followers Special” invited page followers to save any amount between R1 000 and R50 000 once-off and double their money in 12 months.

Or readers could go for the “Upside-Down Special”, where – if they saved a minimum of R5 000 up to R100 000 once-off for 12 months, they could earn rewards at 7% a month. The offer said members would receive their rewards paid out every month for 12 months, with the initial savings paid out in month 13.

Number crunching

At this point, how many stokvel members there are in total and how much money they invested with UAS is anyone’s guess.

Maria* says when they first started the WhatsApp group for disgruntled UAS members about four months ago, there were about 200 to 240 of them. Last week, their number was about 480. She says each month, more people join the group as their payments come due. She says that for many, it is only when they fail to receive their money that they realise something is amiss.

She says every time new members join, it is like watching them go through the stages of grief: denial, anger, depression.

“Then they calm down. Most just want their initial investments back.”

UAS’s Facebook page states it has 97 000 followers.

Maria* says when the WhatsApp group was first started, a Google form was sent to the then plus-minus 200 members, asking them to fill out their names and how much they had invested. She says they worked out that between them, they had invested about R15 million. She says, if you go by that number, and assume that most of the followers were also members, the money invested in the stokvel could easily be in the hundreds of millions.

Act of desperation

Maria* says some members, herself included, are at a place where they feel like they have lost a lot, have made a bad decision, and just want to cut their losses. But, she says, the stories shared in the WhatsApp group are heartbreaking.

“We can’t just walk away. There have been two suicide attempts, members who are going for chemo. A single mom had to move into a friend’s house. She needed the payout for house repairs, now she has no roof.”

She adds there were people who ended up in ICU.

“They are beyond devastated, waiting for their money. One lady was trying to buy a wheelchair for her daughter. Some people’s cars have been repossessed; others had to take their children out of school because they were saving to pay for the school fees.

“These aren’t people wanting oversea holidays or a BMW. They are the poorest of the poor. They thought they could just get ahead a little bit.”

Maria* says, she, like most of the members, invested out of desperation. She explains that her father passed away and left her R200 000. For more than a year, she left the money in a safe investment product, earning minimal interest. But then her brother got into drugs. Knowing that she would most likely have to cut into her and her children’s nest egg to pay for her brother’s rehab, she started looking for an investment that offered better returns.

“I came across United African a while ago, but something inside me said don’t trust this. So, I left it alone for a whole year, but then my brother started using drugs. I felt compelled to make a bad decision out of desperation.”

In October last year, Maria invested R200 000 in one of UAS’s six-month specials. She says she was promised double her money back come April.

“Every time I tell someone my story, I feel ridiculously stupid. I should have known better, but I thought, well maybe this is just one of those good investments that people did not know about and weren’t taking advantage of.”

She says UAS also seemed to come highly recommended.

“There were people (members) who gave them good reviews, articles online.”

She says there was even a reputable law firm that endorsed them.

“I would like to think I am a cautious person, but when I saw that the law firm was involved, I thought this has to be legit.”

The endorsement has since been removed from UAS’s Facebook page.