Car owners scammed

2014-07-07 00:00

CAR owners who have fallen prey to the “R699” finance scam need to act fast and approach their banks to see if they can reschedule their debt, Cas Coovadia, managing director of the South African Banking Association said yesterday.

Thousands of “R699” Durban car owners have become the unwitting members of the scheme involving some 17 000 vehicles nationwide.

In terms of the scheme, the Satinsky Group offered new cars for R699 per month, with a large part of an owners’ vehicle loan with the banks offset by fees earned from advertising on their new cars.

But Satinsky announced last week that the monthly advertising fees had come to an end, resulting in many clients, who were being paid over R1 000 a month in fees early this year, not being paid a cent.

“This was a scam, but played out cleverly,” said Shiraaz Mahomed, who bought a Tata through the scheme, one of hundreds of Durbanites to do so.

Mahomed was only paying R1 200 per month for his car, but since the scheme folded, he now has no choice but to pay R2 700. “I’ve had to make a lot of cutbacks,” he said.

Mahomed noticed a problem when his usually high income from Satinsky came back less than R1 000.

“I phoned a lady who worked at Satinsky and lodged a complaint. She put me through to another lady who said that payment would change according to the company’s profit,” he said.

Coovadia said car owners who now found themselves unable to pay their vehicle finance loans needed to act before things get worse and reached a point where banks were forced to repossess the vehicles.

Typically, each bank will assess the loan agreement of each individual financed, he said.

Wesbank chief executive officer Chris de Kock said on Saturday that Satinsky’s scheme relied on upfront profits to fund its long-term obligations, which were “the historical traits of a true Ponzi scheme”.

“Our due diligence process indicated that the mathematics behind reducing an instalment of R2 000 or more to the advertised R699 did not point to a sustainable vehicle finance model for the consumer,” said De Kock.

The long finance periods and high mileage conditions on the contracts would have made it difficult for a customer to replace their vehicle over the average replacement period of 36 months, without losing a lot of money, he said.

“We believe that these facts were overlooked by consumers, thus being misled by the promise of a very low instalment,” said De Kock.

Satinsky’s scheme ostensibly operated through Hong Kong-based Blue Lakes Trading and Promotions.

On a Facebook page, which some 500 victims of the scheme have joined, there was talk of taking legal action against Satinsky for breach of contract.

Satinsky could not be reached for comment yesterday.

It had, according to reports, consistently quoted a clause from the contract that stated that “advertising fees may vary/fluctuate from month to month”.

Rene Alberts, a Satinsky client writing on the website, said she had received many excuses from the company for lack of payment, but “now they have cancelled the contract, but I’m still owed R1 000 for June and R450 shortpay in July. At minimum, I want these amounts paid to me”.

A student who declined to be named, said she had struggled to get answers in the last few months.

“There are no numbers on any of the websites. You can’t get hold of anyone. And the guy we dealt with had resigned. The company cancelled our account without any verbal warning, which is ridiculous. And because of the contract, we’re obliged to pay for the next four years,” she said.

Sunaina Depalal, owner of a Renault, said: “It is heartbreaking for all the people who cannot afford to pay the full premium. Less privileged people saw this as an opportunity to own a problem-free vehicle, but now they are probably going to lose their vehicles.”

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