NCR Ask Tribunal to Fine Lewis

Lewis Stores in Trouble with the NCR

Recently Summit Financial Wellbeing conducted a series of mystery shopper visits to Lewis Stores and exposed some unlawful behavior by the credit provider. This has sparked the National Credit Regulator (NCR) to conduct an investigation and refer Lewis to the National Consumer Tribunal (NCT) asking that they be fined.

NCR Follow Suit

Following the media attention Lewis received the NCR swiftly released findings of it’s own investigation into Lewis Stores and their in house insurance provider Monarch Insurance Company Ltd. The NCR found that Lewis have been selling unemployed pensioners and self employed people insurance to protect them from retrenchment and disability at work. This matches with the findings of the Summit mystery shopper who said they were forced to take this type of cover even though they said they were self employed.

Naughty!

Lesiba Mashapa the Company Secretary at the NCR says: “Pensioners and self-employed consumers are not employed and cannot be retrenched or become redundant from employment” He says that because of this:” They should not be offered loss of employment cover as part of credit insurance”.

Since these consumers can never claim on that part of the cover they are basically being forced to give away money for nothing.

Skelmheid in store?

The Summit Mystery Shopper revealed how a sales assistant indicated that if they said they were applying for credit to buy another item (a fridge) rather that a TV they would be more likely to get the credit required for the TV as the system would make a larger allowance. Although the shopper told the sales assistant that they were married the assistant captured the mystery shoppers info as being single saying that to get documents from their spouse would be a huge hassle. Lewis have stated that this sort of behavior is against company policy (and indeed the National Credit Act).

Another aspect to come out of the mystery shopper reports is how Lewis staff insist that customers open a store account (R25/month) even though they say that consumers can cancel it the next month if they want. Hmmm. R25 extra off every purchase on credit. Nice! It seems they present this as being non negotiable.

Delivery Fee Even if No Delivery Takes Place

The Mystery shopper was told they needed to pay R750 for delivery on the item if they buy on credit. Lewis say that this is fair since they do sometimes actually delive the items and like to check on where the consumer lives or at least wants the good delivered to on that day. When the Mystery Shopper insisted they would take the item with them the fee suddenly changed into a handling fee and they were required to pay it anyway.

 Forcing Consumer to take Additional Services?

It seems that from the experience of the Mystery Shopper Lewis staff are forcing consumer to take extended warranties on items that cost almost 3 times what the actual manufacturer charges for the same extended warranty. Lewis say that though this option seems to be preloaded on the system when people apply they can choose not to accept. This was not the impression the Mystery Shopper received. They say they were forced to accept it.

Even If It Was All Legal…

The sad part of the whole tale is that Lewis are insistent that their fees and charges are all within that allowed by the NCA. They say that the store manager interviews all clients applying for credit before it is granted. They seem to have lost sight of offering a good product to a consumer at a good price. In the example of the Mystery shopper who bought something for just under R10 000, the total interest fees were only less than R5000 (already ouch but you can understand it as they take the financing risk) but there were an additional R12 000 in insurance costs, delivery fee, monthly service  fees, initiation fees etc. This means that they legitimately want to see a profit of R15 000 on a R10 000 purchase and they say it is totally above board and good business practice.

Punish Them Says NCR

The NCR has now requested the NCT to order refunds to all pensioners and self-employed consumers who were forced to take this insurance and order an audit to be conducted into the whole matter (to figure out who must get money back) as well as punish Lewis for being naughty by imposing a big fine.