Join the club - and pay an illegal fee

Edcon - the country’s largest non-food retailer - has been raking in millions a month in illegal fees from those of its 3.4 million accountholders who are club members.

The National Consumer Tribunal has ruled that Edcon’s charging of a club fee on its credit agreements contravenes the National Credit Act‚ which has been in force for the past 10 years.

“It is now settled that the charging of a club fee on credit agreements is not permitted by the National Credit Act (NCA)”‚ said Jacqueline Peters‚ the National Credit Regulator's investigations and enforcement manager on Wednesday.

The Tribunal intends to convene a hearing to determine the “administrative fine” payable by Edcon.

But an Edcon spokesman told TimesLIVE that it intends to appeal the order‚ so club members shouldn’t hold their breath about getting all their fee payments refunded any time soon.

The credit regulator said it would approach Edcon about establishing “the number of consumers to be refunded‚ and the total amount to be refunded from 2007 to date”. But asked when the company intended to pay back the money‚ Edcon’s spokesman said the question was premature.

“This judgment relates to the merits of the issue‚ and does not deal with any sanction‚ which will only be determined at a later date‚” he said.

• Edcon 'club fee' declared unlawfulThe club fee charged by Edcon to its credit customers has been found to be unlawful and in contravention of the National Credit Act (NCA). 

He also failed to confirm to TimesLIVE the number of accountholders Edcon currently has‚ and how many of those currently have club fees added to their accounts every month.

According to the company’s 2016 financial report‚ it has about 3‚4 million accountholders. Working on the conservative assumption that only half of those are paying monthly club fees of between R34 and R60 - depending on the benefit level - the company earns close to R75-million a month in club fees.

It was only the club fee which was “under contention” not the club product or membership‚ the Edcon spokesman said.

Asked what the club fee entitles accountholders to‚ he said benefits included preferential rates and savings on gyms and spas; movie and theatre tickets; accommodation and car rental and emergency services‚ as well as education benefits.

He would not reveal what percentage of Edcon’s club members actively claim those benefits on a regular basis‚ saying 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”.

But several Club members contacted by TimesLIVE on Tuesday said 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‚ and while the Club magazine once was‚ now it has to be collected from stores.

Edcon stresses that its club product is “a stand-alone product” and that accountholders are entitled to “voluntarily sign up”.

But several accountholders have complained to the writer that they acquired club membership and were charged a fee for it despite not agreeing to it when applying for an account or when cold-called with an offer to join the club.

Edgars accountholder Gillian O’Reilly discovered last May that she was being charged a club fee. Knowing that she had rejected the offer outright during a telesales call‚ she approached an Edgars store and insisted on being provided with a recording of that call.

That never happened‚ and she refused to pay the growing fee amount owing. When she began receiving weekly calls demanding payment‚ she consistently demanded that the call recording be produced as proof that the membership was unauthorised.

“That recording never materialised‚ but finally I was told that the amount owing for the fees had been settled‚” O’Reilly said. “I got no explanation - they just quietly made it go away.”

- Wendy Knowler is TimesLIVE's consumer champion. You can contact her on email: consumer@knowler.co.za or via Twitter: @wendyknowler

TMG Digital/TimesLIVE