Friday, 4 August 2017

The Voice - Consumer's Voice

Can they keep my money?

Hi Richard. I went to a bed shop a month or two ago and saw a bed was interested in but I was told I can laybye it for 6 months. Unfortunately I am no longer working and won't be able to pay my monthly so I opted to cancel the laybye and they are saying they are going to charge me something out of the money I already paid. This was never explained to me when I took the laybye so they just won't refund me.

There were no instructions whatsoever on the laybye regarding the terms and conditions.

Are you sure there wasn’t a form you signed explaining the conditions of the laybye? I’d be surprised if a reputable store didn’t insist on a written agreement for this sort of purchase. If there isn’t how can they expect to know who owes what to who?

In normal circumstances I can see how a store might want to charge you a small fee because of the minor inconvenience you’ve caused them when you cancel the deal. They’ll need to update their records to show that the bed is no longer reserved for you and they might even have turned away another customer who wanted to buy the bed. This will have cost them some money through no fault of their own.

However, if there isn’t such a written agreement then I can’t see how they can demand that they keep a portion of what you’ve already paid them. They can’t just make up conditions to suit their interests. Section 15 (1) (e) of the Consumer Protection Regulations says that a company fails to meet minimum standards of performance if, when a deal is cancelled, they fail to pay back a down-payment or deposit “promptly”. Section 17 (1) (d) also says that they can’t cause “a probability of confusion or of misunderstanding” regarding your legal rights” by just making up conditions when they feel like it.

I suggest you go back to the store and ask them to show you where you agreed that they could deduct any amount from your payment. If they can’t then they have no right to do so.

How much interest can they charge?

I wanted to ask if it's within a Shop's right to charge one interest in a store card that is way more than what that said person owes them? E.g. Maybe I owe them 5,000 and I don't pay them for 1 year because I'm not working can they charge me interest monthly and then the amount I owe becomes 15,000?

Yes, they can. There are no limits to what a lender can charge you with one exception. That’s the so-called “in duplum” rule which says that when a debt is settled, the interest cannot be greater than the capital amount that is remaining. So if you go to them owing P5,000, they can’t charge more than P5,000 in interest. But that’s only at the time you settle the debt in full. If you’re paying the interest over an extended period then there’s no limit. That’s why if you buy something using hire purchase or have a long-term bank loan the interest could exceed the capital amount.

Meanwhile you’re entitled to a full statement of your account that should show you every payment you made, every charge they applied and the penalties and interest they applied when you were in arrears. I think you should ask for such a statement and check that their records are correct and that their arithmetic is correct.

As for the numbers they’re quoting they seem possible to me. The costs of using store cards and buying on hire purchase are enormous and if you get into arrears they can be even greater. Our advice is to avoid hire purchase and store cards like they’re an infectious disease. While store cards are sold to us by stressing their convenience and the ease with which you can buy things, the real reason stores want you to have them is that they make separating us from our money so much easier. If you do ever get one please make sure that you read and understand the terms and conditions before you sign the application form. If by any chance the store won’t let you take the T&Cs away to think about it, then you know they have something to hide!

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