Over-indebtedness, banking frauds, and legal protection in Brazil: the existential minimum and human dignity in the protection of the elderly

Abstract

The evolution of society has brought technological innovation and increased consumption, driven by easy credit, such as payroll loans. However, retired seniors are vulnerable to abusive practices by financial institutions, suffering undue discounts on their social security benefits. The 1988 Federal Constitution protects consumers and ensures human dignity, directly linked to the concept of Minimum Existence, guaranteeing basic rights such as housing and health. The Consumer Protection Code (CDC) classifies financial abuse as illegal, imposing sanctions such as double refunds and compensation for moral damages. In addition, Summary 297 of the Superior Court of Justice confirms the applicability of the CDC to financial institutions, reinforcing consumer protection. A common and harmful practice is the hiring of the Consignable Margin Reserve (RMC), which discounts amounts from retirees without a defined term, resulting in ongoing debt. Many seniors, who are digitally illiterate and have little family support, are unable to identify or contest these charges. To address over-indebtedness, Law 14.181/2021 was created, improving consumer protection and allowing debt renegotiation, while preserving the Minimum Existence. The limit of 30% of monthly income for discounts is also being discussed, according to INSS IN 28/2008, aiming to avoid the financial vulnerability of the elderly. Despite the regulations, abusive practices persist, harming retirees and disrespecting their fundamental rights.