Unauthorized Payroll Loans: How to Cancel Them and Seek Compensation

This page is a translation of the original Portuguese text, provided for convenience. It deals with Brazilian law. If there is any discrepancy, the Portuguese version prevails. Read the original in Portuguese

Unauthorized payroll loans (empréstimo consignado) harm thousands of retirees and pensioners who receive benefits from the INSS (Brazil’s National Social Security Institute). When a loan is taken out without your consent, you have the right to cancel the contract, to recover the amounts withheld, and to receive compensation for moral damages.

How to Identify an Unauthorized Payroll Loan

An unauthorized payroll loan is a credit contract taken out in a consumer’s name without the consumer’s express consent. You may spot one when you notice unexpected deductions from your INSS benefit, when money you never requested appears in your bank account, or when someone tells you that a loan contract exists in your name.

Fraudulent contracting can take many forms: a forged signature on a paper contract, misuse of personal data in a digital contract, pressuring a consumer to sign documents without a proper explanation, or using a phone call to obtain a “confirmation” when the consumer does not understand what he or she is authorizing.

Retirees and pensioners, especially older ones, are the group most vulnerable to this practice. Financial institutions and banking correspondents use aggressive sales tactics, such as persistent phone calls, unsolicited home visits, and promises of quick access to cash, without adequately explaining the terms of the contract.

Consumer Rights and Immediate Steps

If you identify an unauthorized payroll loan, act quickly. The first step is to file a formal complaint with the financial institution, asking it to cancel the contract and refund every amount improperly deducted. Be sure to write down the service protocol number.

At the same time, file a police report (Boletim de Ocorrência, or BO), because taking out a loan without authorization amounts to the crime of fraud (estelionato) under Article 171 of the Brazilian Criminal Code. The police report is an important document for supporting administrative complaints and any later lawsuit.

You can ask the INSS to stop the payroll deductions through Meu INSS (the app or the website) or by calling the 135 hotline. INSS/PRES Normative Instruction 28/2008 provides that a beneficiary may revoke the deduction authorization at any time, regardless of the financial institution’s consent.

If you identify an unauthorized payroll loan, act quickly.

An unauthorized loan may result in an improper charge, which entitles you to a refund of double the amount wrongly paid, under Article 42, sole paragraph, of the CDC (Brazil’s Consumer Protection Code).

Lawsuit to Cancel the Loan and Obtain Compensation

When the financial institution does not resolve the matter administratively, the judicial route is a declaratory action establishing that no legal relationship exists, combined with a claim for compensation for material and moral damages. You can request an urgent preliminary injunction (tutela de urgência) to stop the payroll deductions immediately while the case is pending.

Material damages cover the refund of every amount improperly deducted, plus inflation adjustment and default interest. Courts have ordered refunds of double the amount when the financial institution is proven to have acted in bad faith, based on Article 42, sole paragraph, of the CDC.

Moral damages are widely recognized in these cases. The STJ (Brazil’s Superior Court of Justice) and the state courts hold that taking out a loan without the consumer’s authorization, with automatic deductions from a social security benefit (often the person’s only source of income), causes presumed moral damages. Compensation amounts vary from case to case, but they usually fall between R$ 5.000 and R$ 20.000.

The reversal of the burden of proof provided for in Article 6, item VIII, of the CDC is routinely applied in these cases. The financial institution must prove that the contract was validly made, with the consumer’s informed consent, by producing the signed contract and evidence of the customer’s expression of intent.

Prevention and Complaint Channels

To protect yourself against unauthorized payroll loans, keep your personal data secure, be wary of calls offering credit on “unbeatable” terms, and never give out bank or personal information over the phone unless you are certain who is on the other end.

You can block new payroll loans through the Meu INSS portal or the 135 hotline. This feature prevents any financial institution from making a loan tied to your benefit unless you unblock it first.

In addition to complaining directly to the financial institution, you can turn to PROCON (the state consumer protection agency), the Central Bank (which regulates financial institutions), the Consumidor.gov.br platform, and the Public Prosecutor’s Office. An improper credit blacklisting resulting from a fraudulent loan is an additional ground for moral damages, according to the higher courts.

FEBRABAN (the Brazilian Federation of Banks) has a self-regulation code for payroll loans, and member banks are subject to internal sanctions for violating its rules. A complaint to FEBRABAN can complement the other administrative steps.

Frequently Asked Questions

Can I cancel a payroll loan in the first few days after signing?

Yes. Article 49 of the CDC guarantees a right of withdrawal within 7 days for contracts made outside the seller’s business premises (by phone or online). INSS/PRES Normative Instruction 28/2008 also sets a period of 7 business days to back out of a payroll loan. In that case, you must return the money you received, and the financial institution must cancel the contract with no additional charge.

Who must prove that the consumer authorized the payroll loan?

The financial institution must prove that the contract was valid. It must produce the signed contract, the recording of the call (for loans arranged by phone), or evidence of digital consent. The reversal of the burden of proof under the CDC and Precedent 297 of the STJ (which applies the CDC to financial institutions) give the consumer this protection, so you do not have to prove the fraud.

How do I block new payroll loans tied to my INSS benefit?

You can set up the block through the Meu INSS portal (meu.inss.gov.br), the Meu INSS app, or the 135 hotline. On the digital platform, go to “Empréstimo consignado” and select “Bloquear/Desbloquear” (Block/Unblock). By phone, ask the 135 operator to block it. This feature prevents any institution from making a payroll loan tied to your benefit unless you unblock it first.

As informações deste artigo são de caráter informativo e não substituem consulta jurídica individualizada. Cada caso possui particularidades que exigem análise específica.