Lewis defends R18k washing machine, 'threatens' Vegter

Cape Town - The facts of the case in the washing machine row do not support the accusation of reckless lending, Lewis Group said on Tuesday.

In a statement to Fin24, Lewis Group [JSE:LEW] lamented the fact that it was not given a chance to comment on an article where debt experts slammed the furniture retailer for charging a 60-year-old gardener from George R17 955 for a R5 999 washing machine.

Commenting on the recent article “Debt experts slam Lewis in washing machine row”, Lewis Group CEO Johan Enslin said “the facts of the case simply do not support the accusation that the transaction between the customer and Lewis amounts to the grant of reckless credit in terms of section 81(2)(a)(i) of the National Credit Act".

Debt experts Clark Gardener and Renee Marais were airing their views following a report about George businessman Onne Vegter's scathing attack on Facebook on Lewis and Lewis's subsequent response to that article.

Vegter took Lewis on for selling the 14kg washing machine on credit over 36 months to his gardener - who he describes as "a very humble, timid man in his 60s, with limited literacy". The machine was bought on January 9 at the local Lewis branch in George.

Vegter threatened

Vegter meanwhile received a letter from Lewis is which they threaten him with possible legal action.

Following a long explanation of the procedure surrounding the transaction, Lewis writes: "... we record that your post on Facebook, which has now been widely circulated and reported in the media, is defamatory of the company, contains incorrect statements and has caused prejudice to Lewis.

"Indeed, the matter has been further aggravated by your similar engagement directly with the media. By choosing not to communicate with us before posting on Facebook and engaging with the media, you have elected to make these defamatory allegations without checking on the facts. Such conduct carries consequences and we are presently seeking advice in this regard."

Vegter posted the letter in its entirety on Facebook along with his reply to the "threatening letter I received from Lewis Stores".

Below the full "Lewis Group response to Fin24 article":

Commenting on the recent article “Debt experts slam Lewis in washing machine row” which included the views of commentators referred to by Fin24 as ‘debt experts’, Lewis Group CEO, Johan Enslin, said: “The facts of the case simply do not support the accusation that the transaction between the customer and Lewis amounts to the grant of reckless credit in terms of section 81(2)(a)(i) of the National Credit Act.”  

“Prior to the conclusion of the agreement with the customer, an affordability assessment, in terms of company policy and as required by the National Credit Act, was conducted, and the customer’s ability to afford the proposed monthly instalments was assessed by Lewis in compliance with the law,” said Enslin.

“The assessment included verifying the customer’s monthly income, as required by law, confirming his monthly expenditure and other debt obligations and also confirming his creditworthiness and debt-repayment history with the credit bureaux. Lewis in fact applied a higher expense amount than the one declared by the customer, and satisfied itself that the customer could comfortably afford the proposed monthly instalment.”

“The capturing clerk got all the details from the customer after which the customer was interviewed by the store manager, who took reasonable steps to satisfy herself of the customer’s understanding and appreciation of the risks and total costs of the proposed credit transaction, and also his understanding of his obligations under the credit transaction and also his rights as a consumer. The details of the contract, including the components of the total costs, were explained to the customer. The customer confirmed his understanding of the risks and costs involved.”

Said Enslin: “Lewis makes its contracts available in a choice of five languages. Being Afrikaans-speaking, the customer requested his documentation to be in Afrikaans. I am astonished at the view expressed by one of the people quoted in the article that the use of an Afrikaans contract is indicative of Lewis failing to take reasonable steps to assess the customer’s understanding of the transaction and its costs. It is simply not true.”

“The accusation made by one of the commentators that Lewis is selective as to which part of the regulations it was compliant with is outrageous and without any substance whatsoever. It is simply not possible to weigh in on the debate without having any knowledge of the facts.

"Indeed, the one debt counsellor confirms that she does not know what the customer’s income is, but is prepared to express an opinion that ‘a monthly payment for goods of R498.75 for low income earners is very high’. The facts of the case are that having undertaken the credit assessment, the customer could afford the monthly instalment in question by a very comfortable margin.”

In regard to the issue of extended warranties and delivery services offered by Lewis, Enslin said: “Lewis makes it clear to its customers in its advertising brochures, in-store communications and in the manager interview with the customer that the purchase of extended warranty cover and the use of Lewis’ delivery service are not compulsory.

"Likewise customers are informed by an FSB-registered member of staff that they are not obliged to take up the credit insurance cover offered by the group, and are free to provide their own insurance policies to provide the necessary insurance cover. This was confirmed by the store manager in the interview.”

Said Enslin: “With regard to the pricing of credit, many credit providers face similar situations where the total cost of credit appears expensive as it needs to take the risks of doing business into account.

"This is not unique to Lewis. It is important to understand that the longer the period of credit requested by the customer, the greater the cost of credit will be. We have a number of different payment options available to our customers (namely, 12-, 24-, 30- or 36-month contracts). The shorter contracts obviously cost the customer less overall in interest and other credit costs.”

Enslin also stated it was unfortunate that Lewis was not given an opportunity to comment on the opinions expressed in the article, which resulted in a very one-sided article being published.

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