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R18 000 for a R6000 Washing Machine – Possibly Reckless

washing machine cartoonLewis Stores recently sold a washing machine to a 60 year old Gardener for +- R18 000 (in fees and interest over the next few years). Now Debt Counsellors are saying that the sale may have been reckless. Reckless Credit granting can result in big fines for credit providers and may also result in a court writing off of the debt. This is not the first time in recent months that Lewis has been in the press in regard to possible violations of the National Credit Act & Regulations. After a recent mystery shopper expose the NCR swooped down on Lewis regarding their insurance sales practice and called on the National Consumer Tribunal to issue a fine of millions of Rand. This lead to Lewis repaying over 67 Million Rand to consumers (and the NCT haven’t even heard the case yet).

Here’s What Happened

When Onne Vegter found out that his employee had bought a washing machine from Lewis Stores on credit for a total of R18 000 he turned to Facebook and posted a scathing comment (and image of the agreement/fees). This sparked a lot of debate and concern that the consumer (a 60 year old gardener) may not have fully understood the contract and the full cost of the product  – though he had signed for it.

Several Debt Counsellors weighed in on the matter including Renee Marias who pointed out that Lewis may have failed to conduct the now legally and clearly set out required steps of a proper affordability assessment. These include credit bureau reports, 3 months bank statements (which were asked for) and proper proof of income. She also points out that the repayment amount is quite high for an aged low income earner and may exceed or break guidelines as set out by the DTI in regard to these matters. If the credit extended resulted in the consumer becoming over indebted (unable to service his monthly costs and other debts) then the agreement would be reckless.

Clark Gardener (Summit Financial Partners) is concerned that the consumer did not understand the contract. This would also mean the credit was granted recklessly if true. Mr Gardener is also unhappy about the huge amount of fees, interest and profit on the sale. These basically tripled the cost of the item (over time) for the consumer.

Lewis Defend the Sale

Lewis logo medLewis Stores have come out strong in defense of the sale. They say they did stick to the law and the sale was just a normal sale, properly done.

Lewis have now agreed to take the machine back and cancel the sale though the normal return period has past. The matter has been referred in a complaint to the NCR who will be obliged to investigate further.

 

 

 

[Read how the NCR asked the NCT to fine Lewis Stores & why: https://debtfreedigi.co.za/ncr-ask-tribunal-to-fine-lewis/ ]