Friday 24 February 2006

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.

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