The small print, again…

Over the last few weeks we’ve reported on several situations where we believe customers were abused, mistreated and deceived when they bought items using store credit schemes. In most of these cases the contract they signed either contained terms that were ridiculous, exploitative and downright wicked or the contracts they signed were not even remotely what they thought they should be.

The most common situation we’ve heard of is the so-called 3-month interest free option. You go into a store, express interest in something and are offered it on credit with a 3-month interest-free repayment period. Sounds good doesn’t it? It will help you get that sofa, the dining room suite, the bed when you can’t quite manage the full cash price.

However it’s sometimes not as simple as that.

In many cases it turns out then when it comes to signing the contract the customer (sometimes) notices that what they’re signing isn’t a 3-month interest-free agreement at all. It’s actually a 12 or 24-month full-interest agreement. When questioned the store staff say something like “Oh sorry, our computer doesn’t have the interest-free agreements set up yet. Just sign this and we’ll forget about the interest if you pay it all off in 3 months.”

Unfortunately that’s so often what customers then do. They knowingly sign a contract for something totally different. Yes, it’s obvious when you think about it. Not exactly the best thing to do. However the sales people in stores can be very persuasive. Also you are there to buy something you want, you’re excited, you want it right now, a smiling salesperson is offering you all sorts of treats and discounts and they’re working hard to persuade you. Nothing to do with them being paid on commission of course! Surely only a cynic would suggest that they have their own interests at heart.

Anyway, back to the contract.

It’s like signing a contract for a Hyundai when you wanted a Jaguar. (Nothing wrong with a Hyundai by the way, the Watchdog used to drive one and no we don’t drive a Jaguar now but if Barloworld would like to donate one to the Watchdog then they should just give us a call!)

That’s one issue. Signing a contract for the wrong thing.

However it then gets worse if anything goes wrong with the verbal agreement about paying things off over 3 months. The problem is that the agreement was just that: verbal. Said our loud. Not written down. Not actually a legal agreement. Worthless.

If for whatever reason you stop paying either because you can’t or won’t pay, which agreement are the store going to wave at you? The worthless verbal one that everyone has now conveniently forgotten about or the one in writing, the legal one, the one that actually means something?

Suddenly you are burdened with a full-interest credit scheme that charges enormous finance charges, credit protection insurance, handling fees. We saw a recent example when a customer had already paid off P4,000 towards a P6,000 item and then when things went wrong she found herself still owing a staggering P7,300. In an instant you can go from paying off a reasonable debt to having your possessions repossessed.

So how can you avoid this?

The rules are very simple. We’ve said it all before but here goes again.

Don’t sign anything until you’ve read it.

Don’t sign anything that isn’t exactly what you expected. Even if there’s a small difference between what you were told verbally and what’s written down, don’t sign it.

Don’t rely on verbal agreements. They are worthless. When there’s a difference between what you were told verbally and what’s written in a contract which one do you think a judge will use to make a decision? Get the store to put your verbal agreement in writing. If for some reason they refuse, or they say it’s impossible, or come up with some other lame excuse ask yourself what they have to hide. Either they are trying to hide the failure of their processes (“Our computer doesn’t have the interest-free agreements set up yet”), their lack of interest in getting things right for you, or, most worryingly, they deliberately want to get you trapped into a contract that makes them serious amounts of money.

Consult someone before signing the contract. Exploit that trusted relative, friend or neighbour. Get them to review the contract for you. Get their views and listen.

Did we say don’t sign anything until you’ve read it?

Cool off. NEVER sign a contract the moment you see it. ALWAYS take the agreement away with you and read it overnight. There are very few purchases that you really need today. Everything can wait when a credit scheme is involved.

Another critical thing. Once you’ve signed an agreement don’t decide to ignore it because you’re angry about something. To put it simply, don’t stop paying just because the supplier has done something you don’t like. If you do stop paying, thinking that it might be a good way to make a point to the supplier or to get their attention, all you do is expose yourself to huge risk. It will be YOU who is in breach of contract, you that can be sued, you that will end up with huge debts when they take action to recover the entire debt, interest and finance charges included. Stick to the contract you signed, no matter how much you might regret it.

Oh, one last thing. Don’t sign anything until you’ve read it.

This week’s stars!

• Kokore at Supreme Furnishers for listening to a customer and putting things right.
• Pearl from Air Botswana for always going out of her way (don’t worry, she’s not a pilot) to help a customer.
• Daphne, also from Air Botswana, for helping a customer to resolve a long-running query.

More of the whole truth

A couple of weeks ago we wrote a column entitled “The whole truth”. This was about the sale of a purely hypothetical DSTV recording device. This fictitious item was sold on the basis of marketing and sales claims that, it turned out, weren’t 100% open and correct. Our objection was mainly to the behaviour of the organisation in question who marketed the item on the basis of very selective information. They were very keen to sell us the benefits of the thing but strangely reluctant to explain fully the requirements of the device. To their credit the organisation in question (and you can no doubt all guess who they are) have contacted us and assured us that they have heard what we said and are going to change their marketing approach. Good for them of course – let’s watch!

We’ve noticed that this sort of thing is not limited to selling pieces of technology that do really clever things with satellite TV. The same sort of “tricks” can be seen in a range of industries. It seems that a proportion of the commercial world rely on selective truth to sell us things. A whole lot of companies seem to think that by deceiving us that they can make money.

Just recently we heard about a Furniture store that had managed to do something similar. Our reader called us to tell about the experience she had with this store when she tried to buy a dining room table worth P6,995.

She went into the store and was persuaded that she could buy the table on a 3-month interest-free credit scheme. So far so good you might think. Even better was that because she had shopped with them before and had been “a good customer” they offered her P1,000 off the asking price. What could go wrong?

Everything.

To begin with they persuaded her to sign a 24-month interest-bearing contract. When she asked them about this they told her that so long as she paid off the entire debt within 3 months they would waive all the extra charges. However they conveniently neglected to put this in writing. Funny that, eh? All she had to do was sign various forms and things would be OK she was told.

Our reader paid a deposit of P2,000 and then her first instalment of another P2,000. Only P2,000 until she had paid it all off. What could go wrong?

Lots!

Just before she made the last payment she discovered that the table was actually faulty. When she didn’t get a suitable response to her complaint from the store she decided to withhold the last P2,000 payment. Looking back this really wasn’t a smart move.

A year later, and despite hassling the store repeatedly, she finally heard from the store’s Attorneys instructing her to pay up the outstanding amount. Were they asking for the remaining P2,000? No. They wanted a total of P7,300!

When the reader got a copy of her statement she was surprised to find a number of extras that seemed to have slipped past her attention when she first signed the credit agreement. As she had actually signed a 24-month interest-bearing account there were finance charges of nearly P2,000, but most surprising of all was an insurance scheme that she hadn’t noticed before. This was costing her a staggering total of P3,036 on top of the purchase price of P6,000. According to the store when we contacted them this insurance provided a range of benefits to the customer including life cover that meant in the event of her death, her family would get a pay out. However, we were sceptical. What insurance scheme charges more than 50% of the purchase price in premiums? 50%??? How can this be correct?

Then we thought some more. If it was a life insurance policy that benefited the customer’s relatives, why was she never asked for their names and contact details? Why was she never given a copy of the policy? Why was she not even told about it?

Well, the answer’s simple, isn’t it? There WAS no life insurance cover. None at all. To check this we sent one of our mystery shoppers to the store to ask about buying some things. She was also told, when she pushed, that insurance would be added to the credit price. On this occasion it came to more than a quarter of the purchase price. She wasn’t allowed to take a copy of the insurance policy document away with her but when she insisted they did show her a copy of it. What did it contain? Funnily enough it did NOT contain any life benefits at all. All it covered the customer for was fire, theft (provided forced entry could be proved) and for the repayment of the credit in the event of death. No life benefits at all.

Now we obviously won’t accuse the store of lying to our reader when they said it included life cover. Maybe they were just mistaken. Or maybe they were guilty of what Winston Churchill called a “terminological inexactitude”?

So what are we asking for?

Come on stores! Be honest! Be open! Be truthful with us. Tell us the whole truth. It’s not too much to ask, surely? Please make sure that you really DO draw our attention to everything we need to know. Please make sure we know about everything you’ll charge us for a year later.

If you want us to take out insurance that benefits you, the store, can’t you at least be honest about it? And don’t hide your profit-making behind ridiculously priced insurance schemes. It just seems dishonest.

And one last question for stores. Why have none of you responded to our plea for you to contact us to discuss a Voluntary Store Credit Charter? Do you have something to hide?

This week’s stars!

• Bossey at Postnet at Kgale View for “making my day”. Apparently Bossey was incredibly cheerful, helpful and friendly and all this on a Friday morning too!
• Denise at Solitaire estate agents for service beyond the call of duty.
• Irene at Department of Information & Technology for taking the time to phone a supplier to say their cheque was ready! See it can be done in Government!

The small print

Last week we went back to one of our favourite subjects: store credit. We extended an invitation to all the stores that offer credit schemes to help us develop a Voluntary Store Credit Charter. This would contain pledges that the stores would make and we suggested a few to begin with.

Firstly stores should be totally open about their credit schemes. They should outline in clear, simple terms exactly how their credit scheme works, what the charges will be and must give an accurate and complete explanation of what the finance charges are.

We also want them to restrain their finance charges. Some of the interest rates we’ve seen are staggering. They’re almost as high as the rates you’d get from a loan shark on a street corner.

Everything must be in writing. Every condition, every charge, every penalty must be in the written proposal that the customer can take away to think about.

Lastly, we think that there should be a compulsory cooling-off period where the customer who has signed a contract has a short period to sober up, speak to his wife and then change his mind when she threatens to divorce him.

These are only a beginning. Come on stores, are you up to the challenge? Give us a call and let’s talk about it!

Reading the small print

We had a call recently from a reader who was in trouble with a certain furniture store regarding a credit scheme. When she visited the store she was offered a 3-month interest free scheme. Now we think that short-period interest-free interest schemes are fantastic. They give us credit but aren’t exploitative and help us all get over those bad cash flow times like Christmas and birthdays.

However it turns out that the paperwork she was given to sign wasn’t anything to do with a 3-month interest-free scheme. Instead it was a full-interest, 12-month scheme. She was told that they didn’t have the necessary paperwork for the 3-month interest-free scheme, just for the 12-month scheme. When she queried this she was told that it didn’t matter, so long as she paid up within 3 months they would waive the interest and other charges.

Now before we go any further, yes, she really should not have signed the 12-month contract. She ended up committed to a contractual arrangement that was nothing like what she wanted. However, we’ve probably all done things like this ourselves so we’re in no position to preach. However, we must, must, MUST remember NEVER to sign anything without reading it. NEVER!

She called us when things had, almost inevitably, gone wrong. We’re doing our best to help her and the store to sort this out and with a little luck everything will turn out OK in the end.

However we were in for a shock when she sent us a copy of the contract she had signed. Now we in the Watchdog team are very strange creatures because we really enjoy reading the small print in contracts and finding loopholes, mistakes and exploitation.

It wasn’t difficult with this contract!

One clause states that “The Goods have been sold to me as seen, inspected and approved by me”. Now how can this be right? You’re expected to sign this in the store, having never actually seen the item you’re buying. All you’ve seen so far is an example in the showroom. The real thing you’ll own won’t be delivered until perhaps several days later! But when that turns up broken, the wrong colour or maybe even the wrong product entirely you’ve already signed to say that it’s exactly right and that you love it.

The next clause states that in the event that you default on your repayments, the store can charge you penalty interest at a rate determined by them. No clues what rate they’ll use, they can, in principle charge whatever they like. Anything.

The last one that we enjoyed says “I have fully understood the terms and conditions of this sale which have been fully explained to me, and I undertake not to contend the contrary”.

Awesome.

You sign the contract having no idea what you’re signing and you then are in breach of the contract if you even suggest that you didn’t understand it or that the store staff didn’t explain it to you. In effect you are bound by the contract to lie in court if you are asked if you understood the contract when you signed it. Amazing!

So what’s our advice?

Don’t sign anything you haven’t read. If you don’t understand it take it to someone who might. Exploit your relatives, friends and neighbours. Almost everyone knows someone who’s good at reading through these things and who will check it for you in return for a drink.

Do NOT allow yourself to be pressurised to sign anything in the store. EVER. No matter how tempting the offer is, take a little while to think it over. Sleep on it. If it’s still a good idea the next day after your cousin the accountant has read it over then go for it.

Remember that contracts are between two equal, voluntary parties. If there’s a term in a contact you don’t like, draw a line through it, write “I do not agree to this clause”, sign it and hand it back to them. See what they do. There’s a chance they’ll throw you out of the store but maybe they’ll get the message! Remind them that it’s YOUR money and YOU choose what to do with it.

This week’s stars!

• Montle at BTC International Directory Enquiries for being amazing. Montle couldn’t find the number but took the customers phone number, did a web search and found the company she was looking for, and phoned the customer back!
• Thebiso, the Supervisor at BTC International Directory Enquiries for inspiring his team to give great service!
• Margaret at Makoga Investments for being a star!
• Matt at Pick N Pay Molapo Crossing for being willing to listen to a customer and put things right!
• Gaborone City Council traffic department for putting up warning signs about the road closure at Old Naledi!