Durban – Edcon is studying the ruling by the National Consumer Tribunal on the club fee it charges its credit customers, the group said on Wednesday.
The tribunal found the fee charged was unlawful.
But Edcon is reviewing the ruling and will appeal, it said.
“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. This matter has therefore not been finalised, and we therefore can’t comment further on this particular issue,” a spokesperson said.
According to Edcon it had 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 its affinity partners.
“Edcon estimates that a club member can save up to R17 000 per member over a twelve month period if all the benefits are used on a regular basis. The issue being contended by the NCR (National Credit Regulator) 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 (National Credit Act). However, it is not the Club product or membership that is under contention,” the spokesperson said.
The tribunal had found the club fee was unlawful and in contravention of the NCA.
An investigation by the NCR revealed that Edcon has charged consumers a club fee on credit agreements.
“It is now settled that the charging of a club fee on credit agreements is not permitted by the NCA," Jacqueline Peters, Manager: Investigations and Enforcement at the NCR said.
The NCA is against other fees or charges or costs to be included in the credit agreement or credit agreement documents, irrespective of the nature of the charge, fee or cost.
“This judgment provides clarity to the 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 said.
According to a statement by the NCR, it was yet to request an independent audit of Edcon's loan book in order to establish the number of consumers to be refunded, as well as the total amount to be refunded from 2007 to date.
A date for deliberation on the amount Edcon should be fined has yet to be determined.