Edcon club fee ruled unlawful, NCR to determine refunds

(iStock)
(iStock)

Johannesburg - The Edcon group, which ow ns retail store Edgars, maintains it did nothing wrong, despite findings by the National Credit Regulator (NCR) that it unlawfully charged its customers club fees. 

The National Consumer Tribunal handed down judgment against Edcon on Wednesday that the monthly club fee the group charged to its credit customers is unlawful and in contravention of the National Credit Act (NCA). 

The NCR will approach Edcon to request an independent audit of its loan book. This will establish the number of consumers to be refunded, with the total amount to be refunded from 2007 to date, it said.

Spokesperson Lebogang Selibi said a hearing date will be set by the tribunal to hear argument on the quantum of the administrative fine. 

The judgment comes after an investigation by the NCR revealed Edcon has charged consumers a club fee on credit agreements.

NCR manager Jacqueline Peters said the NCA does not permit the charging of a club fee on credit agreements.

The NCR initiated an investigation against Edcon after information from various sources gave a reasonable suspicion that there were contraventions, Selibi told News24. 

Selibi could not specify how much Edcon was unlawfully charging its customers, adding that charges depended on which club was joined. 

She said during its investigation, Edcon maintained that it was a legitimate fee and that it had not breached the NCA.

The NCR however said judgment provides clarity to retailers that they should observe the closed list of fees and charges provided for in the NCA.

"Consumers are urged to request the quotation from their credit providers so that they can properly check the cost of credit that is being offered,” Peters added. 
 
The NCA does not allow for any other fees, charges or costs to be included in the credit agreement or credit agreement documents, irrespective of the nature of the charge, fee or cost, the NCR said.  

Edcon told News24 that it was studying the judgment and would appeal the order.

"It is important to note that this recent judgment relates to the merits of the issue, and does not deal with any sanction, which will only be determined at a later date." Edcon said the matter has been finalised. 

Edcon offers its club members gym, spa, entertainment and travel benefits. 

It said that through its benefits, members can save up to R17 000 per member over a 12-month period if all the benefits are used on a regular basis.  

“The issue being contended by the NCR relates to the fact that the club fee is not on the list of charges that are allowed to be charged on a credit agreement in terms of the NCA. However, it is not the club product or membership that is under contention,” it said. 

Edcon said it has always contended that the club product is a stand-alone product, which entitles voluntarily signed-up members to a number of benefits including preferential rates and savings with many of their affinity partners. 

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