Act puts brakes on truck scams

2010-10-30 11:06

Entrepreneurs who fall prey to transport contract scams will have to wait until April to receive redress against unscrupulous individuals who rob them of their hard-earned money.

The scams involve people, acting as intermediaries, taking upfront deposits of up to R100?000 from entrepreneurs and failing to deliver on their promise to secure finance for a truck and arrange a lucrative transport contract.

The intermediaries do not return the deposit if they fail to deliver, a practice that is viewed as unfair by the authorities.

Bulelwa Hewu, assistant director for compliance at the ­trade and industry department, said the regulation prohibiting transport contract scams would be incorporated into the Consumer Protection Act, which is coming into force in April.

“The enforcement of the ­regulation would be in ­accordance with the processes of the ­National Consumer ­Commission. This will ensure that ­complaints are resolved speedily so that consumers and investors can get redress,” said Hewu.
The commission is the new consumer agency that will investigate contraventions of the act.

Chairperson of the National Consumer Forum Thami Bolani said the problem of these scams in the trucking business had been ongoing for a lengthy ­period and ­that the authorities had failed to deal with it.

“The amount that consumers or small businesses lose through these schemes runs into millions, but no one wants to do something about it. There is no proper enforcement or support for the victims,” he said.

Bolani said it was aspirant entrepreneurs and small businesses who were mostly affected.

Bolani said in addition to the consumer protection bodies, small-business support organisations, such as the Small Enterprise Development Agency, should introduce programmes to educate those who wanted to get into the trucking business.

Director of the consumer complaints unit in the trade ­department Prudence Moilwa said it was difficult to resolve complaints through mediation.

“The problem is that these contracts often pass the risk over to the investor in that the intermediary is entitled to ­retain the upfront deposit even if they fail to arrange the finance and deliver the truck as per the contract. They often say the deposit covers administration costs and is not refundable,” she said.

Moilwa said unscrupulous individuals were hooking unsuspecting consumers by advertising the trucking ­industry as a viable business ­opportunity.

“Through the complaints, we have come across cases where people invested their retirement savings into this business and lose everything. When we ­receive such complaints we refer them to the police for further investigation,” she said.

Under the act, individuals or businesses can be fined up to R1?million for this practice.

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