Guiding consumers since 2009

NCR appeals Lewis referral judgement

By Danielle van Wyk

Last week saw the announcement by the National Credit Regulator (NCR) that they will be appealing the judgment issued by the National Consumer Tribunal dismissing the NCR's referral against Lewis Stores.

“The referral was related to Lewis Stores offering consumers extended warranties that run concurrently with manufacturers’ warranties and the charging of a club fee reflected in consumers' statements of account,” stated the NCR.

This follows closely on the heels of the NCR cases against the Edcon group, which they won, and more recently Mr Price.

“The club fee is reflected in consumers' statements of account issued by Lewis Stores to its credit customers. In a majority judgment, the Tribunal found that this referral is distinguishable from the Edcon referral in that the club fee formed part of the credit agreement in the Edcon referral. It was an integral part of the credit agreement process. In the Lewis referral, the majority judgment found that there was a separate contract for joining the club and a separate fee charged for club membership,” added the NCR.

In the referral, the NCR further disputed the extended warranties offered to consumers. This, in that they ran concurrently with manufacturers warranties. “This was because some warranty agreements had no duration dates or their duration dates were the same as those on the credit agreements. The majority judgment found that these are not a contravention of the National Credit Act,” the regulator explained.

In a minority judgment, the Tribunal ruled that the club fees and extended warranties offered by Lewis Stores did in fact contravened the Act, added the NCR. The NCR is thus appealing the judgment. “The NCR does not support the credit retailers' conduct of charging consumers a club fee on credit agreements or under any supplementary agreements or documents. This fee increases the consumers' cost of credit,” the NCR stated.

When the regulator was asked what made them confident that they would prevail against Lewis this time around, they replied: “The Tribunal errored in concluding that the club fee was being charged under a separate agreement, simply because Lewis did not produce any credible evidence to substantiate the claim that the club was being “sold” under a separate agreement.”

While it could be viewed that their decision to appeal now was based on the success in the recent Edcon ruling, their response was: “We are appealing simply because the Tribunal decision is wrong, and also we would like to attain legal certainty regarding this issue.”

“We strongly believe the High court will overturn the Tribunal’s decision, especially because one Tribunal member, out of the three that were presiding over the matter, agreed with the NCR that Lewis’s conduct was a contravention of the NCA,” the NCR added.

Is this good news for the consumer?

“By tackling the big retailers they are setting a standard that all other retailers should comply to. It is dishonest to rely on a consumer being unaware of ‘the small print’ and good client service starts with honesty and transparency about fees and other charges,” stated a Debtbusters financial advisor.

“It is important to highlight all associated fees and charges with a client when signing up for a service. Consumers don’t expect hidden charges and shouldn’t have to look out for them. We put a lot of trust in big, established brands, which may seem ignorant, and it is for this reason consumers need to be educated about the hidden implications of agreeing to something without being 100% confident of the terms and conditions associated with it. And to ensure all documentation is thoroughly read through and understood prior to agreement,” added Debtbusters.

Can we consider the Edcon win, a win for the already indebted customer?

“Absolutely. This has set a standard for other retailers to follow and has opened the eyes of the consumer so that they are more aware of such hidden fees,” Debtbusters reiterated.

“At the end of the day, the consumer and his/her interests needs to be placed at the forefront of any transaction or agreement, which is what the NCR represents. By upholding their values they are leading the way in terms of customer service and we, South Africa’s most trusted debt management company, are proud to be associated with such a credible organisation,” concluded Debtbusters.

Handy tip: If you are struggling to make ends meet and are already over indebted. Apply for debt counselling assistance through Justmoney today.

Last week saw the announcement by the National Credit Regulator (NCR) that they will be appealing the judgment issued by the National Consumer Tribunal dismissing the NCR's referral against Lewis Stores.

“The referral was related to Lewis Stores offering consumers extended warranties that run concurrently with manufacturers’ warranties and the charging of a club fee reflected in consumers' statements of account,” stated the NCR.

This follows closely on the heels of the NCR cases against the Edcon group, which they won, and more recently Mr Price.

“The club fee is reflected in consumers' statements of account issued by Lewis Stores to its credit customers. In a majority judgment, the Tribunal found that this referral is distinguishable from the Edcon referral in that the club fee formed part of the credit agreement in the Edcon referral. It was an integral part of the credit agreement process. In the Lewis referral, the majority judgment found that there was a separate contract for joining the club and a separate fee charged for club membership,” added the NCR.

In the referral, the NCR further disputed the extended warranties offered to consumers. This, in that they ran concurrently with manufacturers warranties. “This was because some warranty agreements had no duration dates or their duration dates were the same as those on the credit agreements. The majority judgment found that these are not a contravention of the National Credit Act,” the regulator explained.

In a minority judgment, the Tribunal ruled that the club fees and extended warranties offered by Lewis Stores did in fact contravened the Act, added the NCR. The NCR is thus appealing the judgment. “The NCR does not support the credit retailers' conduct of charging consumers a club fee on credit agreements or under any supplementary agreements or documents. This fee increases the consumers' cost of credit,” the NCR stated.

When the regulator was asked what made them confident that they would prevail against Lewis this time around, they replied: “The Tribunal errored in concluding that the club fee was being charged under a separate agreement, simply because Lewis did not produce any credible evidence to substantiate the claim that the club was being “sold” under a separate agreement.”

While it could be viewed that their decision to appeal now was based on the success in the recent Edcon ruling, their response was: “We are appealing simply because the Tribunal decision is wrong, and also we would like to attain legal certainty regarding this issue.”

“We strongly believe the High court will overturn the Tribunal’s decision, especially because one Tribunal member, out of the three that were presiding over the matter, agreed with the NCR that Lewis’s conduct was a contravention of the NCA,” the NCR added.

Is this good news for the consumer?

“By tackling the big retailers they are setting a standard that all other retailers should comply to. It is dishonest to rely on a consumer being unaware of ‘the small print’ and good client service starts with honesty and transparency about fees and other charges,” stated a Debtbusters financial advisor.

“It is important to highlight all associated fees and charges with a client when signing up for a service. Consumers don’t expect hidden charges and shouldn’t have to look out for them. We put a lot of trust in big, established brands, which may seem ignorant, and it is for this reason consumers need to be educated about the hidden implications of agreeing to something without being 100% confident of the terms and conditions associated with it. And to ensure all documentation is thoroughly read through and understood prior to agreement,” added Debtbusters.

Can we consider the Edcon win, a win for the already indebted customer?

“Absolutely. This has set a standard for other retailers to follow and has opened the eyes of the consumer so that they are more aware of such hidden fees,” Debtbusters reiterated.

“At the end of the day, the consumer and his/her interests needs to be placed at the forefront of any transaction or agreement, which is what the NCR represents. By upholding their values they are leading the way in terms of customer service and we, South Africa’s most trusted debt management company, are proud to be associated with such a credible organisation,” concluded Debtbusters.

 Handy tip: If you are struggling to make ends meet and are already over indebted. Apply for debt counselling assistance through Justmoney today.

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