Friday 11 December 2009

The Voice - Dear Consumer's Voice

Dear Consumer’s Voice #1

I have been contacted by a company called Stock Market Direct and invited to one of their presentations one evening. They say that people have made 40% profits from their investments very quickly. Do you think I should go?

There’s no harm in going.

However, there could be harm if you do anything else.

Stock Market Direct is a strange creature that I don’t fully understand. It’s name suggests to me that it’s allows you to invest and profit from the stock market directly but that’s not the entire truth.

Firstly they have NO connection with OUR stock market, the Botswana Stock Exchange. None at all. They claim instead that they offer connections to the Johannesburg Stock Exchange, the JSE, but it turns out that this might not be a completely full explanation either.

What Stock Market Direct say they actually sell is “educational software”. However the email they send out describing their service says:
“The software … automatically scans the market for you at any given time or in the evening. It will indicate for you out of all the companies listed which ones you should be buying and which you should be selling.

… we send to all our clients additional tips and recommendations, 600 of the largest top brokerage companies in SA will analyze the markets and shares for you, therefore all the research is done on your behalf to give you a peace of mind, you will also receive news letters on a dailly basis informing you about the shares locally and globally.”
I think that constitutes financial advice, don’t you? My understanding is that organisations that offer financial services must be registered with the Non Bank Financial Institutions Regulatory Authority. I wonder whether Stock Market Direct are? We’ll check for you.

Then there’s more. Last week the Botswana Stock Exchange placed a “Notice to the Public” in several Botswana newspapers. The notice warned the public about Stock Market Direct. It noted that they are not registered with either the BSE or the Central Securities Depository Company of Botswana, the entity which regulates stockbrokers.

They also pointed out that some of what Stock Market Direct says in it’s marketing isn’t strictly true. Investors can’t access the JSE directly but must go through brokers to do so. The BSE also state that to the best of their knowledge “Stock Market Direct is not a stockbroker of the JSE” and is not regulated by the relevant bodies in South Africa. The statement also reminds the public that no person or company can promise returns from the stock market.

Finally they say the following:
“Members of the public are accordingly advised to exercise caution and discretion in any dealings they have with Stock Market Direct.”
Consumer Watchdog can only agree with the BSE. I believe that at the moment there are too many questions about Stock Market Direct and we think you should certainly follow the BSE’s advice and “exercise caution and discretion” before going to any of their presentations and certainly before giving them the P15,000 their “software” apparently costs. It might be simpler, cheaper and safer just to stay at home.

Dear Consumer’s Voice #2

It’s that time of the year where us consumers do lots of shopping. I am planning to buy some electronic goods this Christmas and wanted your help. I have identified some electronic goods from some stores which I intend to buy very soon. The problem that I have is that I have never dealt with some of them in the past. From your experiences and consumer complaints would you recommend that I buy from them or I should avoid them and stick with what I know?

[The reader mentioned two specific stores that we’ve not named here as their identity isn’t relevant to our answer.]

I think you’re very wise to think carefully about where you buy from, particularly as we approach the Christmas holidays. Although I’m not going to tell you the names of stores I think are good (they are perfectly capable of doing that themselves) I do think I can give away the simple tips that I use when selecting which store to buy from.

Ask around. Ask your friends, neighbours, colleagues and relatives whicßh stores they like. Ask which companies treated them with respect, had the best prices and, most importantly, which treated them decently if something went wrong. It’s all very well picking the cheapest store but if they provide no after-sales support then I wouldn’t give them my money.

Shop around. Of course we all know this but so often we fail to follow this simplest piece of advice. Just do it. It could save you a fortune.

A simple tip. Only buy from stores who obey the law. Do NOT, for instance, give your money to any store that doesn’t disclose the full price of an item when they are offering it for sale on credit. Just leave and don’t reward them for breaking the law.

Most importantly use your own experience. It’s bizarre but we often hear from consumers who had a terrible experience at a store, managed to sort things out eventually and then go back to the very same store. The lesson is to boycott those stores that treat you badly and to reward the good ones with your on-going support.

Finally, make sure you know your rights. Never buy anything without fully understanding what you can do if things go wrong.

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