Guiding consumers since 2009

NCR says Edcon in contravention of credit act

By Angelique Ruzicka

The National Consumer Tribunal (Tribunal) handed down judgement against Edcon that the club fee charged by Edcon to its credit customers is unlawful and in contravention of the National Credit Act (NCA).

This judgement comes after an investigation by the National Credit Regulator (NCR) revealed Edcon has charged consumers a club fee on credit agreements. “It is now settled that the charging of a club fee on credit agreements is not permitted by the NCA”, says Jacqueline Peters, manager of investigations and enforcement at the NCR.

The Tribunal in its judgement said that the intention of the NCA is very clear when it relates to credit agreements. The NCA does not allow for any other fees or charges or costs to be included in the credit agreement or credit agreement documents, irrespective of the nature of the charge, fee or cost. 

“This judgement provides clarity to the retailers that they should observe the closed list of fees and charges provided for in the NCA. Consumers are urged to request the quotation from their credit providers so that they can properly check the cost of credit that is being offered”, says Peters.

The NCR added that it will approach Edcon to request an independent audit of their loan book to establish the number of consumers to be refunded and the total amount to be refunded from 2007 to date. A hearing date will be set by the Tribunal to hear argument on the quantum of the administrative fine.

Edcon’s Response to the Judgment

Edcon was swift to respond to the allegations when approached and has vowed to appeal the decision. Edcon said it has noted the NCT’s judgment issued on the 24 April 2017 that disallows the charging of a club fee to the credit agreement or credit facility. “We are in the process of studying the judgment and will appeal the order. It is important to note that this recent judgement relates to the merits of the issue, and does not deal with any sanction, which will only be determined at a later date. This matter has therefore not been finalised, and we therefore can’t comment further on this particular issue,” said a spokesperson.

The Edcon spokesperson added: “Edcon has always contended that the club product is a stand-alone product, which entitles voluntarily signed-up members to a number of benefits including preferential rates and savings with many of our affinity partners. These can be found on the Edcon website and include benefits in health and wellness (gyms and spas), entertainment (such as movie and theatre tickets), travel benefits (like flight, accommodation and car rental), peace-of-mind service benefits (such as funeral and emergency services for medical, home and roadside assistance), as well education benefits (for, specifically, various after-school courses). Edcon estimates that a Club member can save up to R17 000 per member over a twelve month period if all the benefits are used on a regular basis. 

“The issue being contended by the NCR relates to the fact that the Club fee is not on the list of charges that are allowed to be charged on a credit agreement in terms of the NCA. However, it is not the Club product or membership that is under contention.”

Edcon said that it had obtained legal advice and that its legal experts contend that:

  •          The concept of a Club product, with its associated benefits, is a well-established practice globally;
  •          The Club product represents a basket of value added services and benefits which a customer receives in return for payment of a consideration. This consideration is known as a “Club fee”; and
  •          Edcon provides a revolving credit facility to its customers in order for its customers to make purchases of its goods and services. This facility is operated through the means of the store card, which is analogous to a credit card issued by a bank.

Recent Articles

Featured Personal loan or business loan? The best way to finance your business

When starting your own business, you may have to rely on external funding. Perhaps you qualify for a personal loan, but would it be better to take out a business loan instead? We got in touch with a specialist to find out whether it’s best to take out a business loan or a personal loan to assist you with your ongoing business or start-up.

What to do when you’ve been denied a home loan

After months of scanning property sites and attending showhouse after showhouse, you’ve finally found what you’ve been looking for. But your dream of owning a home comes crumbling down when you receive the news that you’ve been denied a home loan. So, what now?

Best travel cards offered by top South African banks

Planning a trip abroad involves a lot of administration. You need to consider travelling arrangements, reasonable accommodation, and a daily itinerary. But have you considered how you’re going to pay your bills once you arrive? Besides considering bank costs, you also need to consider exchange rates.

Best ways to save your money short-term

For many, it seems close to impossible to save when spending on holiday getaways, Christmas gifts, while also trying to ensure there’s money left to survive January. Justmoney takes a look at the best ways you can save during the short term.


Takealot January Big Sale

Price: Available on request
When: Until 31 January 2020
Where: Online

Annique Restore Package Special

Price: From R600
When: Until 31 January 2020
Where: Centurion

Ster-Kinekor Senior Citizens Discount

Price: Available on request
When: Daily
Where: Nationwide