Friday 19 September 2014

The Voice - Consumer's Voice

Dear Consumer’s Voice #1

I made a deposit payment of P15,000 to a certain venue for my wedding. I then verbally cancelled the booking about two months before the wedding. The owner of the venue is now refusing to refund me any portion of the deposit I made because I inconvenienced them. When they forwarded the quote there were no clauses on cancellation

I just want to know if what they are telling me is right that I cannot claim any thebe from the deposit I made?

Normally this sort of thing depends entirely on the written agreement you sign with such a company and it’s perfectly normal to have a cancellation mechanism in such an agreement. I’m sure you understand that it’s only fair for a venue to want some form of commitment from you when they book your occasions and perhaps even turn away other customers who come later wanting the same date. If you do later cancel your booking they don’t suffer too much if they can’t fill the gap you left in their bookings. That’s just reasonable.

However, given that there appears to be no written agreement between you the situation could be much simpler. You didn’t agree to have your money retained so I suspect they can’t legally do that.

However it’s more complicated because it’s only your word against theirs that they didn’t tell you about the cancellation penalty. It’s also more complicated because they have your money and you don’t. You now need to find a way to “encourage” them to give it back. However you’re in luck because P15,000 is the upper limit for the Small Claims Court. If you want to go down that road then you should write them a letter explaining that you are entitled to get your deposit back and that they have 14 days to refund you or you’ll take legal action against them to recover it.

Meanwhile send me their contact details and I’ll see if they’ll do the decent thing without the law getting involved.

Dear Consumer’s Voice #2

Can you please advise me on Amway business. A colleague is pushing me to join but I am a bit reluctant. I've a principle that I will never join or subscribe to any pyramid kind of business. Is Amway a good business opportunity or is it a pyramid?

Amway is not a pyramid scheme, let’s get that straight from the beginning. It’s not a pyramid scheme.

What is a pyramid scheme? Wikipedia describes a pyramid scheme as “an unsustainable business model that involves promising participants payment or services, primarily for enrolling other people into the scheme, rather than supplying any real investment or sale of products or services to the public”. However a pyramid scheme can still have products that provide a cover story for the real business: recruiting other people.

So what is Amway if it’s not a pyramid scheme?

Amway is a Multi Level Marketing scheme that certainly has a large range of products. However, even though it’s not a pyramid scheme it’s still pyramid-structured. There are multiple levels of people who benefit from the people they recruit and who pass benefits up the line to the people higher up than them.

If you want to buy products from Amway then good luck to you but there’s some evidence that their products, while being of good quality, aren’t particularly cheap.

However the main reason people join any multi level marketing scheme like Amway or Herbalife is because they’ve been told they can make money from doing so. But that’s simply not true and the figures that Amway and Herbalife are required to publish in certain countries prove this. In the UK for instance in 2013 the vast majority of Amway recruits had an average income of about P7,000 per year from their business.

Remember that these figures are income, not profits. They don't take account of the costs involved in running the business such as recruiting other people, electricity, phone, transport and internet costs. The situation is exactly the same with Herbalife. Also what many MLM recruits also forget is that the profits are taxable. (BURS are you listening?)

Even in large, advanced large economies like the UK and the USA people don’t make money from Amway. Why do you think it would be any more lucrative in Botswana?

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