The National Consumer Tribunal made a clear statement when it ruled that a club fee charged by the Edcon Group to its credit customers is illegal.
More specifically, the court found that this practice was in contravention of the National Credit Act (NCA).
The NCA stipulates that it does not allow for any additional fees, charges or costs to be included in a credit agreement of any nature.
“This is a great victory for consumer rights in South Africa. The Act is very thorough and specific about which fees and charges can legally be included in a credit agreement,” says LAW FOR ALL legal expert Jackie Nagtegaal.
What’s more, it sends a warning to other retailers not to use credit agreements as means of getting extra money from clients via a club or membership fee.
And as for Edcon? Well, the NCR will call for an independent audit of the company’s loan book to ascertain just how many customers must be compensated and what the total amount will be starting from 2007.
Futhermore, an additional hearing will be held soon to determine how much Edcon should be fined for breaking the law.
UPDATE: The National Credit Regulator (NCR) refers Mr Price to the National Consumer Tribunal
The NCR has stated that Mr Price must refund club fees it charged customers who took loans for their purchases. Again, as per the NCA, deducting a club fee on credit agreements is illegal, and now the the NCR is also calling for Mr Price to be fined for contravening the Act and to refund consumers who were unlawfully charged.
The popular South African retailer isn’t backing down, though. The group said it opposed NCR’s referral to the tribunal as it did not agree with the regulator’s view.
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