How the small print can cost you big

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Pretoria - If I was asked to sum up the most important thing I’ve learnt in 15 years of consumer journalism I’d quote that lovely line from an old Tom Waits song: “The large print giveth and the small print taketh away.”

Reading every word of the small print is a schlep.

It takes time and it makes you look pedantic.

“It’s just the usual stuff,” I’ve been told by hospital admission clerks and employees of “adventure” companies who apparently believe they can kill or injure me through their gross negligence and not be held accountable, if I just sign on the dotted line.

Once a bank staffer seemed incredulous that I was actually reading page after page of a home loan agreement before signing it.

And my teenage daughter was highly irritated when I made her read out loud the conditions of use of her new smartphone, rather than just clicking on “agree”.

Either that, I said, or she could spend double that time reading e-mails from consumers who were paying dearly for thinking that reading the small print was a waste of time.

The simple truth is that the smaller the print, the more important it is you read it, whether it be the ingredients list on the back of a tub of ice cream (that doesn’t have a drop of cream in it), the exclusion clauses in your insurance policy, car hire contract, or the terms and conditions of that wonderful sounding “holiday points” deal.

Assume nothing and regard a salesperson’s pitch as glossing over the financial and contractual realities at best, or grossly misleading you at worst.

A reader, who asked not to be named, told me recently how he was about to agree to an online contract with a loans company called Loans Connect when he scrutinised the small print and spotted this: “The Company sells a perpetual convenient 3-in-1 service package, which means that the agreement is for an indefinite period and the client will be liable for the bi-annually.”

Huh?

The “package”, the small print revealed, included a credit report and a “personal assist programme”, which entitles the client to a complimentary loan-seeking service, whether such client requires a personal loan, mortgage bond or study loan.

Turns out the “service” involves the company outsourcing the loan application process to a “finance broker”, but the company does not guarantee the loan will be granted at all, or in the amount applied for.

The consumer’s bank account is debited in the amount of R399 to activate the package and then “an bi-annually fee of R399 thereafter” (sic).

In this case, not even the small print reveals all in explicit detail.

So I e-mailed Loans, questioning the “perpetual” nature of the contract, and the vagueness of the “bi-annual” fee.

Loans Direct chief executive Neville Naidoo said the R399 debit order takes place twice a year – “every six months”.

That’s after the activation fee.

Naidoo said clients “are allowed” to cancel the contract within seven days of the application – which is included in the contract terms.

But what about after that?

“The client is also allowed to cancel the perpetual agreement,” he said. “We contact clients 40 days before the next debit order can go off, giving the client a chance to cancel. We are in line with the Consumer Protection Act (CPA).

“We do not lock clients into an agreement; they can cancel.”

But that “out clause” doesn’t appear in the detailed contract terms I have seen.

If that is indeed the case, why call the agreement “perpetual”, which means forever?

Naidoo’s response: “You are correct, perpetual does mean forever. The term is used correctly. The client will be debited until they cancel.”

If that’s the case, all contracts are perpetual.

It costs you nothing to apply for a loan yourself.

And you don’t have to pay a company to check your credit record. You can do this yourself, very easily and quickly, and it’s free, once a year, from each credit bureau. Here are the contact details: TransUnion: www.mytransunion.co.za, 0861 886 466; Experian: www.exper ian.co.za 0861 105 665; and XDS: www.xds.co.za, 011 645 9100. - Pretoria News


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