RIGHTS OF ILLITERATE ELDERLY PEOPLE AND ABUSIVE PRACTICES IN CONSIGNED LOAN CONTRACTS: AN ANALYSIS IN LIGHT OF HUMAN RIGHTS

Abstract

In our legal system, until the 1990s, the legislation that regulated consumer relations was the Civil Code, which presented many limitations and failed to provide sufficient conditions to ensure consumer relations. With the enactment of the 1988 Federal Constitution, consumer protection was guaranteed in infra-constitutional legislation. This constitutional advancement established the need for specific regulations to protect consumer rights, resulting in the enactment, on September 11, 1990, of Law No. 8,078, known as the Consumer Protection Code (SEIXAS, 2014).

The Consumer Protection Code (CDC) introduced a series of innovations and significant advances in consumer relations in Brazil. Among its main contributions are the clear definition of basic consumer rights, the imposition of duties on product and service providers, and the creation of effective mechanisms for resolving consumer disputes (BRASIL, 1990).

Among the types of credit available in Brazil, the payroll loan is one of the best known. This is due to the fact that financial institutions and banks offer lower interest rates to consumers and face fewer risks (MOREY; AGUIAR; GOMES, 2022). This is because installment discounts are made directly from the borrowers' payrolls, reducing the risk of default. Consequently, it is a loan that is easier to obtain than personal credit (PINHEIRO, 2020). The payroll loan contract became standardized in 2003, when Law 10.820/2003 allowed the assignment of social security benefits. This law opened a new market niche for financial institutions, targeting a specific target audience: INSS retirees and pensioners (NERILO, 2017).

Although payroll loans are quite affordable and offer favorable interest conditions and ease of obtaining them, they pose risks that require attention and adequate regulation to protect consumers, especially the most vulnerable, such as illiterate seniors (MOREY; AGUIAR; GOMES, 2022). Even with laws that ensure rights under a contract, especially for elderly and vulnerable individuals, problems arising from excessive freedom combined with the irresponsibility of financial institutions authorized to operate payroll loans have been abundant (NERILO, 2017). In recent years, legal action on this issue has increased, demonstrating that the number of lawsuits related to fraud involving this type of loan is quite common (SOUSA, 2023).

In Brazil, the number of elderly individuals, that is, those aged 60 or over, has increased considerably in recent years, according to data from the IBGE. At the same time, a significant portion of this population is illiterate, presenting greater vulnerability compared to other consumers, making them hypervulnerable (TARTUCE; NEVES 2021). This situation is aggravated by several factors, especially the lack of effective regulations that adequately protect the rights and interests of these consumers. Due to this regulatory gap, it is common to observe that financial institutions, acting as suppliers, frequently behave abusively towards these consumers. This includes the use of fraudulent contracts that are inappropriate for this specific consumer profile, as well as providing unclear and inaccurate information, and even marketing banking services without the consumer's explicit consent (SOUSA, 2023).

Thus, this dissertation focuses on the growing incidence of bank abuse and fraud in payroll loans, which have a significant impact on the lives of illiterate seniors by jeopardizing their retirement, pension, and continuing benefits, causing violations of Human Rights, the Federal Constitution, consumer rights, and the Senior Citizens' Statute. The analysis of empirical evidence on this topic will allow us to identify patterns and trends related to the effectiveness of policies to protect illiterate senior consumers and highlight potential areas of research that could guide future studies, aiming to develop more effective strategies to combat economic abuse and bank fraud.

This approach seeks to promote greater security and justice for seniors, thus contributing to the protection of their rights and well-being. Therefore, the question of this dissertation is: How do abusive practices occur in bank loans granted to hypervulnerable individuals and how can one protect themselves from them? What legal measures and possible changes will help reduce the incidence of these cases?

The trend toward favoring capital is notorious, highlighting a disadvantage for consumers in relation to financial institutions. This dynamic allows a significant portion of workers' and retirees' salaries to be committed to these institutions, further exacerbating the debt burden (SANTOS, 2023). In this context, although regulatory standards exist for granting credit and protecting consumer relationships involving the elderly, such provisions often prove insufficient to effectively regulate these relationships and prevent fraud associated with payroll loan agreements (SOUSA, 2023).

Therefore, the topic has great social and legal relevance, as it identifies the hypervulnerability of the target audience (illiterate elderly) and how large financial institutions use fraudulent means and abusive practices to grant loans or deceive these consumers. This issue reveals a gap in the protection of consumer rights, especially those in situations of extreme vulnerability. With the growing elderly population and the high illiteracy rate among them, it is crucial to develop and implement effective consumer protection policies. The impact of these scams goes beyond the financial aspect, affecting the mental health and well-being of seniors, who often face additional challenges such as health problems and social isolation.

1.2 OBJECTIVES
1.2.1 General Objective

To investigate abusive practices in bank loans targeting hypervulnerable consumers and identify available protection mechanisms, in addition to proposing legal measures and possible legislative changes that could reduce the incidence of these cases and more effectively protect this consumer group.

1.2.2 Specific Objectives
To analyze current legislation related to payroll loans for illiterate seniors, identifying its gaps and limitations;
To investigate the main types of fraud and abuse committed against these consumers in the context of payroll loans reported in the literature;
To examine the policies and practices of financial institutions in granting payroll loans to seniors;
To identify the guiding principles of contractual relationships entered into by seniors.