IN YOUR CORNER
The great store card fee racket: You’re being ripped off
National Credit Regulator says it’s illegal
Does your store account still include a club membership fee?
Last year several major retailers – Lewis, Edcon, the Foschini Group, Mr Price – made headlines, one after the other, when the National Credit Regulator announced they were illegally adding club membership fees to their accounts every month.
“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,” the regulator said. “This fee increases the consumers’ cost of credit.”
The NCR asked the National Consumer Tribunal to order them to refund affected customers all club fees they’d paid –going back to 2007 – as well as to interdict the retailers for continuing to charge the fee and to impose an appropriate fine.
The tribunal did pass judgment in the case of Edcon – owner of Edgars, Jet, CNA and Boardman’s, among others – which had its millions of club members rubbing their hands in glee and looking forward to a lovely bonus.In its judgment, the tribunal said the intention of the National Credit Act was “very clear” when it came to credit agreements.
“The act 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."
But so far, it’s business as usual. Not a word about club fee refunds from Edcon, and the fees are still being added to customers’ accounts every month.
“Am I betting on a losing horse or will something come of this?” asked Charnelle Rossouw from the KZN south coast, who has had an Edgars account for about 20 years.
“I have been waiting for someone to inform us account holders about the payback of our club fees,” she wrote.
“They are still charging me a club fee of R44 a month. I thought they would stop it. I want to close my account, but I do not want to lose out on payback if it ever happens.”
Hilary White of Honeydew, who has had an Edgars account for at least 15 years, has a similar concern.
“I am not purchasing anything directly from Edgars any longer, but I have a funeral policy with them and I’m paying R60 a month as a VIP club member.“If I cancel my account, am I likely to ever receive any monies back from them should they be legally forced to? Should I keep my account until we hear what the status will be in regards to these fees?”
Edcon took the matter on appeal to the high court, said NCR investigations and enforcement manager Jacqueline Peters.
“So the NCR cannot enforce the judgment and has to allow the legal process to take its course.”
And what about those other retailers? “They’re at various stages at the National Consumer Tribunal but judgment has yet to be handed down,” Peters said.
So what do Edcon account holders get for their monthly club fee?
“Preferential rates and savings on gyms and spas; movie and theatre tickets; accommodation and car rental and emergency services and education benefits”, Edcon says.
But last year when I pressed the company to reveal what percentage of Edcon’s club members claim those benefits on a regular basis, I was told only that “Edcon estimates that a club member can save up to R17,000 over a year if all the benefits are used on a regular basis”.
Many club members have told me that they never claimed any benefits and hadn’t realised that they needed a club card in order to do so.The cards are not posted to members. Neither is the club magazine, which now has to be collected from stores.
I think it’s safe to say that Rossouw and White aren’t the only ones who are keeping their accounts, or at least their club memberships, alive for fear of losing out should they cancel before the big payout comes.
“I can’t remember buying anything from Edgars in the past six months,” Rossouw said.
“I don’t even know what I can get with the membership. I suppose these facts would be in their magazine, that I never get, because it’s no longer delivered – you have to fetch it at the store.”
So now she’s going to cancel her club membership and spend that R44 a month on something else. “The nail polish my teenage daughter has her eye on, maybe, or the bacon biltong I never buy her, or some extra fuel in my car’s tank.”
Credit providers are big on up-selling. Buy a car and you'll be confronted with a long list of extra insurances and made to feel you’re mad not to pay for all that lovely extra protection.
Recently a woman told me of the shock she got on being asked by her semi-literate domestic worker to help her work out why she was owing Edgars so much despite not buying any clothes.
The woman’s statement revealed that she was being charged a total of R300 a month for club fees, travel insurance, personal accident insurance, legal plan, funeral insurance, and dental insurance, since 2013.
Beware the extras. If you have an account, go through your statement and interrogate every line, with a view to cancelling any cost you don’t want or need.