Sunday, 8 December 2013

Judging a book

You shouldn’t judge a book by its cover, so they say.

Nonsense. Of course you should.

I think that as consumers we are perfectly entitled to judge companies by the way they look. In fact I think it’s the only sensible approach. You are perfectly entitled, legally and morally, to judge a company, a store, anyone who wants your money by the way they appear.

I don’t just mean the obvious situations like restaurants and food stores, we all know that we shouldn’t buy or eat anything prepared in a dirty environment or by people with poor hygiene standards. We are obviously perfectly entitled to judge any establishment that serves food by the way in which they do so.

But that’s not who I mean. I mean ordinary businesses.

Let’s start with anyone selling you any sort of financial service. Whether it’s a credit card, an insurance policy or any sort of “opportunity” to make you money you really MUST judge the person selling it by how they appear, where they operate from and how they seem to do business.

When the Eurextrade Ponzi scheme was still operating last year I heard from many people who had been invited to join while in spicy chicken restaurants, in the streets and by shiny-suited visitors to Kgotla meetings. Not one of them went to an office with a boardroom. That’s because there was no office. Not one of them had any of the traditional trappings of a respectable company with whom you could trust your money.

Also, the fact that the scheme was being sold by people like you and me and not specialist financial advisors says a lot. Investing in a scheme being sold by your neighbour, a work colleague or, worst of all, a relative or friend is inherently suspicious and you should never do it. Not ever. The risks aren’t just towards your money, they are to the relationships you have with the people who recruit you and who you recruit.

When it comes to financial services I think you’re entitled to assume that any investment company that doesn’t operate from a conventional office can’t be trusted.

You are also entitled to judge companies by how they describe themselves. We heard recently from a reader who was being chased by a debt collector for P3,000 she borrowed from a friend. She says that this was just a simple informal loan but it turns out that the friend had borrowed the money from a motshelo lending scheme. Despite having repaid her friend a total of P3,200 the motshelo lender instructed a debt collector to get the money from her, not the friend who actually borrowed it from them.

Let’s overlook the fact that the scheme wasn’t registered with NBFIRA as the law requires. Let’s ignore that there was no written contract between our reader and this scheme. Let’s ignore that the actual debtor was the woman’s friend. Let’s ignore all of those things and instead look at the letter the debt collector sent.

Their letterhead describes their company as:
“Specialised in debt collection and secretarial services, work and residence permits, company formation, fashion designing, programmes, t-shirt, video shooting/editing, name tags and building construction”.
Is there anything they DON’T do?

Of course there’s nothing wrong with companies offering a range of services, most companies are flexible enough to do many things but I don’t trust a company that thinks offering debt collection, t-shirts and building construction all on the same letterhead is a bit suspicious. The fact that they don’t have a landline also alarms my skeptical instincts.

However we can’t overlook the opening line in their letter.
“We act on behalf of our client [name withheld] representing a pyramid (Motshelo)…”
A pyramid? Is that who they really think they are representing? I think the regulators need to hear about this, don’t you?

Then there’s their ignorance. Despite there being no signed or even verbal agreement between our reader and the people operating the lending scheme, the amateur debt collector was P5,670 for the money she borrowed (despite having repaid P3,200 already), P175 for writing their silly letter, P175 for delivering it and a massive P1,134 as a “collection commission”.

How long will it be before they realise that they’re not going to get a single thebe from this person? How long before they realise they’re chasing the wrong person? How long before they realise that they sound a bit like a bunch of crooks?

Of course there’s nothing wrong with companies operating on a small budget, from small offices and with home-made letterheads but when it comes to serious business issues I think we can demand a little more, at least some attention to detail, some care about their credibility and with not looking like a bunch of crooks operating from behind a chicken restaurant.

I wonder if the opposite is true as well? Is it possible to mistrust an organisation that goes to the opposite extreme? Is it acceptable to judge a company that behaves ostentatiously? I wonder if it’s possible to assume that a bank charging exorbitant bank charges and which recently spent hundreds of millions on a flashy new HQ can be trusted to put our interests high up their list of priorities?

So let’s start being a LOT more judgmental, a lot more critical and a lot more negative. Let’s start telling companies who seem either too crummy or too flashy that we don’t trust them simply because of the way they look, sound and appear. It might just encourage them to start looking respectable and trustworthy. Until then they deserve no respect and no trust.

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