A challenge to stores…

We’ve been going on about various issues for almost a year now but there’s one that keep on cropping up over and over again.

Store credit schemes.

These are the schemes that stores offer that allow you to pay for items over a period of time rather than all up front. There’s nothing particularly strange about such things, it’s how most of us pay for houses and cars after all.

However, they’re not all quite as clear, open and honest as the sort of loan you might get from a bank. Not as cheap either!

If you shop around there are store credit schemes that actually seem quite reasonable. When we researched these schemes a few months ago we looked at what Game had to offer. If you went to Game and liked the TV they were selling for P1,199 for cash you could get it on 2-year credit for P1,536, which worked out as an annual finance charge percentage of only 14%. Searching through the Game literature we couldn’t find any APR higher than about 16%. This actually seemed extremely reasonable to us. However not all suppliers are that reasonable.

At a different store, not very far from Game, we were stunned to find what we think is the highest store credit charge we’ve ever seen. The item in question was a DVD player. If you bought it for cash you would need to pay just P399 which is actually pretty cheap.

However, if you went for the store’s own credit scheme you would pay quite a lot more than P399. Firstly you would to pay a deposit of P95. Then every month for 2 whole years you would need to pay back P88. After 2 years you would have paid back a stunning P2,207. Remember that this is for an item that costs just P399 if you have the cash. That’s an annual finance charge percentage of 227%!

This is truly staggering cost for credit. It’s virtually what you would pay if you went to a so-called micro-lender or a loan shark. We can’t think of any possible excuse for this level of interest. If Game can do it for 16% why can’t they all?

So what’s our challenge this week?

We want stores that offer customers credit schemes to talk to us about setting up a Voluntary Store Credit Charter. We invite stores to sit down with us and help us construct a set of rules that will show us that they care about their customers and that will commit them to certain basic standards.

So what might the Charter contain?

Rule no. 1 – Open and honest credit

Every credit scheme must state in a standard way exactly what the charges will be. Every advertisement should say something like the following:

“The cash price for this item is P4,699. If you choose to pay on credit monthly for 2 years the total repayment will be P10,718. The total annual percentage rate is 64%. No additional charges will be made.”

That last sentence is one of the critical ones. How often have we heard that a price quoted doesn’t include other charges like delivery or compulsory insurance? The price quoted must include everything. Anyway, surely it’s better marketing to give buyers “discounts” if they don’t require delivery or insurance? The key thing is that there must be rules about how percentages are calculated so there can be no funny business designed to confuse customers. Come on stores, are you up to the challenge?

Rule no. 2 – Upper limits

Surely it’s not reasonable to charge more in finance charges than the cost of the product? How can it possibly be acceptable to charge P399 for the DVD player but nearly 5 times more in finance costs?

Surely we can agree to a maximum of 100%? We really should be asked to pay back more in finance charges than the cost of the product. Come on stores, are you up to the challenge?

Rule no. 3 – Written contract

Every time any customers agrees to any form of credit agreement everything MUST be put down in writing. TWICE. Once when the customer is presented with the credit option to think about and again IF he agrees to it. When we researched credit schemes last year we found a store who stated that it was not company policy to give out details of the repayments until the contract had been signed. Not good enough!

This agreement must state every charge, every condition, including what happens if you fail to make a payment and must indicate in terms everyone understands how the amounts are calculated. Also it must state all the rights the consumer has, both the ones dictated by law and the extras the store gives them.

Come on stores, are you up to the challenge?

Rule no. 4 – Cooling off period

We think that the law should include a compulsory cooling-off period. Any credit scheme must include a period after the contract is signed in which the customer can change his mind (Yes guys, it’s not just women that impulse-buy!). During that period the customer has the chance to calm down, make sure he’s done the right thing, pass it by his wife (or her husband) and take a step back if she has a tantrum. Alternatively he should have the right to pay cash instead of paying on credit.

Maybe the customer should have until the product is delivered to change his mind. Obviously if the store tries to deliver the product and the customer then changes his mind he should be liable for he delivery charge but we think he should be able to have some breathing space before he is committed.

Come on stores, are you up to the challenge?

This week’s stars!

• Daniel at the Gaborone Sun for courteous, friendly service.
• Botsnet for taking the time to explain to all their customers that their mail server had been blacklisted because they hadn’t adequately protected it, it then got hijacked and was now sending out spam emails. Oh sorry, that’s wrong. They didn’t do this at all. Forget we mentioned it.

The whole truth

We’ve all seen it in courtroom dramas on the TV. A witness or the accused is brought forward and swears “to tell the truth, the whole truth and nothing but the truth”. In other words they can’t lie, but also they must tell the court everything relevant to the case.

This is a critical rule for consumers as well. When we are being sold something we must be aware that the supplier has not actually sworn an oath to tell us the whole truth. It’s up to us as the consumer to act like a trial attorney and ask probing questions. The difficulty though is that sometimes we may not actually be a trial attorney with many years experience of asking probing questions. It doesn’t help either when the thing we’re buying is something complicated that we don’t understand.

Take the example of buying a car. Many of us have no idea how a car actually works. We don’t know about timing belts, differentials and electronic ignition systems. We just know that it’s a nice colour, it’s comfortable and it is easy to drive.

That’s why if we have any sense we take along someone who is an expert on cars. We all have a relative, neighbour, friend or colleague who knows about this stuff who, in return for a free drink or two, will come along with us. If by any chance you don’t know anyone you can always go to a decent garage and for a small fee they can send someone along with you.

But what about those occasions when the item we are considering is so new, so advanced and so technical that it’s unlikely that there is anyone to consult? Isn’t that the opportunity for the supplier to take advantage of their position and neglect to tell us the whole truth?

Let’s take an example. Let’s imagine a company that had a monopoly on the production and marketing of DSTV decoders as well as the TV transmissions they pick up. Imagine that they launched a new decoder that was able to do really clever things like pause live TV, to start playing again when you wanted to and that could record loads of programmes internally. Wouldn’t that be wonderful? Wouldn’t we all want one?

We certainly would if it was advertised heavily on the TV, if they even devoted an entire channel to a rolling advertisement for the thing and the listings magazine was full of pictures of it.

So what’s the problem with this imaginary situation?

Well, maybe this entirely imaginary supplier is not telling the whole truth.

Maybe when you buy this device, get it home and open the box you find a piece of paper that says you need to get an entirely new subscription from the supplier. Well, maybe that’s just a technicality, it doesn’t worry you so you call them up and find that it’s not just new paperwork they want, it’s more money. Maybe they tell you that until you sign a new subscription that costs an extra P42 a month your brand new decoder will not actually do any of the things you want. You won’t be able to pause and replay, you won’t be able to do the fancy recordings you heard about. In fact you’ve just bought a new decoder that does no more than the old dusty one you have just packed away or given to your sister.

Maybe you then discover that even if you do pay the extra monthly fee, because you only have one TV in the house the thing won’t work anyway! It turns out that this fancy new thing only works if you already have a dual-view facility or if you’re prepared to have dual-view installed which will cost you P700.

Maybe, and remember that this device is purely hypothetical, you would reflect on your experience and feel that maybe you weren’t told the whole truth before you bought the thing?

So you would go back to the dedicated TV channel that markets the thing and you’d see that absolutely no mention is made of the extra monthly fee, no mention is made of the new dual-view installation and no mention is made of the new agreement you are forced to sign. You’d check the listings magazine and the frequent adverts between programmes and find the same thing.

You may also reflect on the fact that it’s a little strange to pay an extra P42 per month seeing as you’ve just spent all that money on the piece of equipment that actually does all the hard work.

You hadn’t been told the whole truth. You had been told just those truths the supplier wanted you to know before you parted with nearly P3,000. You might think that if this had happened in a court of law the supplier would have spent some time in jail for perjury, for failing to tell you the whole truth.

Of course this is all hypothetical. Surely no real supplier would get up to such dubious practices as this. Surely not!

However, if it did, what would we call this fancy new decoder? Maybe something like the Pricey Viewer Ripoff, the PVR?

This week’s stars!

• Wayne at HiFi Corporation for giving me a full refund for a useless new decoder I bought the previous day.
• Jean-Francois from AGS Frasers for amazing service. Apparently the guys from Frasers did everything they said they would, on time within budget and without any fuss.
• Steven a taxi driver who not only drove our caller to Metsef very safely but when she discovered she’d come out without her purse he lent her the money to make her purchases!

A New Year for Consumers

Consumer Watchdog had a pretty good year in 2005. We assisted a large number of consumers who were experiencing problems with all sorts of suppliers and stores. We’ve done our best to call suppliers to account and to inform our readers and listeners of the issues we think are important to us all as consumers.

Most importantly though we’ve been campaigning for a number of things that we think are critically important for us in Botswana.

We have campaigned (and will continue to do so) for the introduction of legislation that will protect us from some of the excesses of the micro-lending industry, particularly those that prey on the weakest and the most vulnerable. A lot of good work is being done within government about this but we need action, not just consideration.

We really are going to continue to push for certain regulations regarding lending. All lenders must be forced to disclose the interest rates they charge in a standardised way that prevents them from hiding things and keeping us in the dark.

We also want to see the introduction of laws that will give us some control over the information that is kept on us by suppliers and a guaranteed right to correct this information when it’s wrong. We found ourselves quite how easy it was to obtain confidential financial details of other people from TransUnion ITC. We really do need the sort of law they have in most other countries to protect ourselves from this sort of thing.

So what are we doing next year?

Well, here’s some advanced warning to suppliers of things we’re going to cover in 2006. Maybe if they have any sense they might clean things up before we get to them!

Food safety.

We did some research late this year on the standards of food safety in supermarkets. We did this in conjunction with Nina Hamid from Foodsafe International, our leading food safety specialist in Botswana. The good news is that almost all the supermarkets we visited had reasonably acceptable standards. Some were actually very good indeed. We did find a few minor issues but when we pointed these out to the management they were all fixed pretty quickly.

However we did very quickly find a truly disgraceful situation in a large, well-known supermarket. We won’t say which one it was but it was part of a large chain that rhymes with “car” and the branch in question is at the bottom of the largest hill in Gaborone. The hygiene problems we found were genuinely nauseating. Raw meat left in boxes on the floor of the store room, egg mayonnaise being stored at 33C and mouse droppings all over the kitchen. We had a suspicion we’d find some stores with lower standards but we were surprised to find it somewhere like this outlet. The irony is that we’re probably safer buying lukewarm food from a street outlet than from this supposedly respectable supermarket.

Oh and their excuse for operating a store that is going to kill someone soon from food-poisoning, if it hasn’t done so already? The same old story.

“We can’t get the staff to follow instructions.” Watchdog’s advice is “Then fire them!”

“We can’t afford better standards.” Watchdog’s advice is “Close the store and go away.”

“People in Botswana don’t deserve good standards.” OK, we made that one up but we don’t think it’s far from the truth.

We know that Local Authorities, City Councils and other bodies have the right to check on hygiene but why aren’t they doing so? Why aren’t they closing places down until they can demonstrate that they understand the basics of food hygiene?

We want to do our bit to improve this but this is a situation where law-enforcers have a key role to play. Consumers don’t have the right to burst into a supermarket’s storeroom to inspect it. Law enforcement do and they should be doing so aggressively.

Debt management

Despite all the challenges we face as a nation we remain a success story. However at a personal level we are a hugely indebted country. We borrow left, right and centre and sometimes we seem to go completely crazy.

Let’s get one thing straight. Being in debt is NOT always bad. Almost all of us need to borrow occasionally, whether it’s for a car or a house and there are times when there are no other options. However we keep on seeing people who have borrowed so much that they genuinely risk losing everything they have. We’ve seen people who earn P1,000 a month who have run up debts of nearly P20,000. That’s nearly 2 years worth of salary that needs to be repaid and the moment they default these people will just find that what they owe just grew some more instead of reducing.

We must be realistic though. There will always be people who for whatever reason get themselves in deep water. However we must develop better debt management skills and help our friends, family and neighbours to do the same.

We are going to campaign for a much greater investment in advice from the lenders themselves. Our challenge to the banks, to the legitimate micro-lenders and to the debt-recovery agencies is to take the lead in helping consumers to help themselves. What exactly are we suggesting? Wait until next month and we’ll tell you!

Ipelegeng

It’s really such a good word and every time we see a P5 coin we should think on it. We’re going to continue our campaign for consumers to mature, take control and responsibility for their buying decisions and to stand up for their rights. We know it’s happening, we hear all the time about consumers who feel a new sense of their rights, who are prepared to assert them and not back down the moment their reasonable demands aren’t met. If we’ve contributed a little bit towards that then we are very proud!