Lewis responds to allegations of reckless lending in R18,000 washing machine row
Lewis denied any allegations of reckless lending on Thursday in a case where a customer in George was charged a total of R17,955 for a R5,999 washing machine he bought on credit.
Lewis group CEO Johan Enslin, told Fin24 in an emailed response that all costs and interest were charged in accordance with the National Credit Act and that all processes required by the Act and its related regulations were followed.
Enslin was responding to media queries following a Facebook post by businessman Onne Vegter in which he stated his gardener had been charged three times the value of a 14kg twin tub washing machine he bought on credit on January 9 at the local Lewis branch in George.
In a letter Vegter said he sent to Lewis Stores customer service department, he accuses Lewis of reckless lending, which can be reported to the NCR as well as the Ombudsman.
"To your credit, the customer reports that he was asked to present bank statements, and he was told he qualifies for the purchase. It seems to me that his lack of ability to afford such a contract and lack of understanding of the full costs involved, makes it quite likely you would be found guilty of reckless lending. I see it more as deliberate exploitation," Vegter wrote.
Enslin said: “The company denies any allegations of reckless lending, as an affordability assessment in terms of company policy and as required by the National Credit Act was conducted.
"The customer provided proof of income with his three most recent bank statements, which is on file with the company. The assessment clearly indicates that the customer could afford the goods.”
The extra charges include what seem to be a double charge of R2,052 and R3,785.76 for exactly the same insurance, just different wording: monthly payment for customer protection insurance and protection insurance for clients, payable monthly.
Enslin explains:“It is incorrect that the customer was charged twice for the same insurance cover.
“The total cost of all insurances including both credit life insurance and insurance against damage or destruction to property, in respect of this 36 month contract was an amount of R3,785.76, corresponding to a monthly charge of R105.16.
"The total service fees due to Lewis Stores in terms of this contract amounted to R 2,052.00, corresponding to a monthly service charge of R57.00. The levying of these monthly service charges is in accordance with the National Credit Act and regulations. It is therefore not true that the cost of insurance in respect of this contract equals the cost of the merchandise purchased.”
Vegter told Fin24 on Thursday that his gardener, who does not want to be named, said he did not want insurance. The customer also originally did not even get this contract, according to Vegter.
“In accordance with the Act, Lewis requires that goods purchased be insured against damage or destruction by accident, fire or theft and that the customer takes out credit life cover while there is money outstanding to Lewis. The customer is not forced to take insurance cover offered by Lewis and can provide a policy of his own. In this case, the customer elected to take up the insurance cover offered by Lewis,” said Enslin.
On the R750 delivery fee, Enslin said the customer was not obliged to use the delivery services offered by Lewis, but chose to do so.
"Similarly, there is no requirement for a customer to conclude an extended warranty contract, but the customer elected to do so.”
Vegter told Fin24 on Thursday his gardener was told by the store salesman it would cost him R498 per month for 36 months, and told where he must sign, but even after they delivered the washing machine to him, he still did not receive a copy of the contract. Only after he phoned again did he receive his copy of the contract.
"Only when he showed this to a more educated family member and they pointed out the ridiculous total, did he realise he might have made a big mistake, and came to ask my advice on Tuesday (January 19). He had not read or understood the contract and the various amounts properly. It's pages and pages of small print."
On Vegter's advice, the customer and a family member went back to the store on Tuesday to have the contract cancelled because it was just too expensive for him.
Enslin confirmed the customer request to cancel the contract and said Lewis is willing to accede to this request even though it falls outside of the five working day cooling off period in which customers may cancel their contracts.
"Lewis will collect the washing machine from the customer’s home and refund the deposit paid,” said Enslin.
Apart from the R5,999, Vegter listed the charges in his post as: "R975 contract fee; R750 delivery fee (other shops in George charge around R250); maintenance agreement R1,311; interest at a whopping 23% pa, far more than double the prime rate; customer protection insurance R2,052; protection insurance for clients R3,785 (again! sounds like exactly the same thing); Grand total R17,955 for a washing machine!"