Cape Town - Consumer watchdog Summit Financial Partners is taking Lewis Group [JSE:LEW] to the Cape High Court for what it alleges to be unfair practices.
According to Summit CEO Clark Gardner, the class action case will initially involve about 15 Lewis credit customers to claim on their behalf for "seemingly unfair Lewis Stores practices that have over-charged these clients".
"The problem with such fees is that they are of a compulsory nature," said Gardner. In his view these fees are in direct breach of the provisions in the National Credit Act (NCA).
He said Summit wants the responsible staff and executives on the stand in court under oath.
The claims relate to the delivery and extended warranty fees charged by Lewis Stores. In one case a man ended up with repayments of R18 000 after buying a washing machine for R6 000. Another customer, for instance, bought a laptop, but was charged a compulsory R650 for a delivery fee, although the customer carried it out of the store. There was also R741 charged for the extended warranty.
The delivery fee was also more expensive for credit customers than for cash customers, while the extended warranty was for 12 months from the date of purchase, which is equivalent to the warranty which the product, in this case a Toshiba, provided to the customer in any event, Summit alleges.
All of the consumers were also charged compulsory maintenance fees which are excessive when compared to the value offered, in Summit’s view. In some cases, maintenance plans were sold on products that already came with warranties that exceed the duration of the maintenance plan.
On Wednesday Lewis CEO Johan Enslin acknowledged receipt of the summons, which he said Summit Financial Partners has been threatening to pursue since August last year.
"Lewis is presently considering the allegations contained therein and will be defending the action. Lewis has instructed its attorneys accordingly and as the matter is sub judice, will refrain from commenting on the merit of the allegations,” Enslin told Fin24 by email.
In July 2015, a Summit mystery shopper discovered alleged excessive, compulsory fees forming part of Lewis’ credit agreements. By October 2015, Lewis was forced to refund some of the wrongful fees to consumers and offered a partial apology. They attributed R44m worth of wrongful insurance sold to “human error” by their staff.
Lewis Group announced early in February that it will be launching a specialised call centre to enhance compliance, transparency and oversight of its in-store sales and credit application process.
According to Enslin, this measure will be on top of what he described as in-store procedures which include "a comprehensive affordability assessment and an interview with the manager during which all components of the contract are explained, including what services and fees are optional, and the total cost of credit".
The call will be between the customer and the call centre agent without any intervention from the store manager or store staff.
Even though more than 50% of Lewis' business is with existing customers, all customers will go through this process. Only once the call centre agent has completed the review with the customer will the transaction be approved by the call centre.
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"Summit will ensure that all Lewis Store credit customers have a platform to claim for refunds on delivery and extended warranty fees plus interest for the past few years," said Gardner.
He called on Lewis credit customers interested in finding out more, to send an email to email@example.com or call 087 806 1077.