Credit providers are liable for the loss if your goods are stolen while in their possession

2014-12-03 00:00

CHANCELLOR Kunene was horrified to discover that his laptop, which he had pawned as surety for a micro-loan, had been stolen and that the creditor apparently expected him to simply accept the loss and walk away.

Kunene complained that he had handed his R10 000 Asus laptop to Cash Converters in Kensington, Johannesburg, as surety for an R800 loan, but when he arrived a month later to pay back the loan — at a 43,8% interest rate, I might add — he was advised that his laptop had been stolen.

“I was told that they had suffered a burglary. In terms of their ‘Ts and Cs’, they were not responsible for the burglary. I was the ultimate loser,” he said.

He said the staff refused to reimburse him for the loss of his laptop and pointed to a clause in the credit agreement, which stated that in the event of loss or damage beyond the “reasonable control” of the store, the goods’ value would be deemed “equal to the amount repayable” and the store’s liability would be limited.

Kunene said he was also upset that the store had not bothered to inform him of the burglary until he arrived two weeks later to redeem his laptop.

“I also charged that they did not secure my pawned item because there was no strong room. Anyone could have walked in and [stolen] the security instruments without requiring to break in. I argued that the lack of a strongroom meant they had failed to take reasonable responsibility to protect customers’ security items,” he said.

Kunene later discovered that another customer, Anderson Wabara, had lost a Samsung cellphone and a Dell laptop in the burglary, which he had left at the store as surety for two loans. Wabara confirmed that he had pawned his goods to borrow R2 600 and R1 700 and that he had initially not known where to turn when the store refused to reimburse him.

Kunene said his efforts to escalate the complaint to a manager were unsuccessful as staff advised that he wasn’t available and Kunene had not managed to reach him telephonically.

“What is the duty and responsibility of these microlenders?

“Surely you can’t shout off a customer simply because their valuables were uninsured, and because terms and conditions of lending state … any loss or damage is not their responsibility?”

I raised the complaints with Cash Converters’ Kensington franchisee Brett Meyer and pointed him to section 99 of the National Credit Act, which states that creditors bear the risk of any loss or damage to a consumers’ goods held as surety. Meyer referred me to Cash Converters’ CEO Richard Mukheibir, who said the store suffered “significant loss” when it was burgled.

“The burglars were on site for over seven hours and stole a significant amount of stock and consumers’ pledges. Indications are that over 300 consumers have been affected,” he said.

“This is the first time in our 20-year history that a franchise has suffered a loss of this magnitude. Cash Converters is closely advising our franchisee on the correct process to follow and to help minimise the loss experienced by both our franchisee and our customer,” he said.

Mukheibir agreed that the franchisee was responsible for the consumers’ goods. “If the goods cannot be returned through no fault of the pawnbroker, as is the case with this burglary, then we need to pay the consumer an amount equal to the fair market value of the property, less the settlement value at the time of failure to deliver that property,” he said.

“We have investigated the two ­particular incidents you refer to and have advised our franchisee about this aspect of the NCA. He is now fully au fait with the legislation and will be making ­contact with these consumers to rectify the situation,” he said.

Mukheibir added that Cash Converters has increased its security and ­insurance cover. “We sincerely apologise to all affected customers,” he said.

Speaking generally about pawn ­transactions, National Credit Regulator legal adviser Nosipho Zikishe said that according to the NCA, credit providers bear the risk while a consumer’s goods remain in surety on their property.

Zikishe added that it is illegal for a ­provision in a credit agreement to pass the obligations of the credit provider to the consumer.

If a credit provider fails to return the goods, consumers can apply to the ­Consumer Tribunal to force the credit provider to pay up, Zikishe said. He said the tribunal may order the credit provider to pay the consumer “an amount equal to the fair market value of the property, less the settlement value at the time of failure to deliver that property” if it was damaged or destroyed outside the control of the credit provider or “double the fair market value, less the settlement value” if the loss was for other reasons.

Importantly, Zikishe said these provisions apply to all credit providers, whether registered with the NCA, as Cash ­Converters is, or not, so consumers have recourse in all cases.

• Send your consumer complaints to consumer@3i.co.za

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