Durban - Dozens of people have responded to last week’s Consumer Watch column on the “New car from R699 per month” deal, most of them owners of those branded cars, who have in recent months also received drastically reduced advertising fees for no apparent reason.
But the Satinsky Group of Companies – which masterminded the deal whereby clients’ monthly car repayments are subsidised by carrying advertising on their cars’ back windows – will not be drawn on that issue, instead accusing some clients of making “fraudulent representations”.
Clients are required to submit photos of their car’s odometer, to prove the mileage they have done, along with photos of the branding, every month.
EXTENDED TERM
On Wednesday, the company sent all clients an SMS offering to arrange for their payment term to be extended to lower their monthly car repayments.
It read: “We have taken note of the contents of the article (presumably this is a reference to Consumer Watch) as well as the complaints by many of our clients that they are experiencing financial hardship.
“We believe that you as a client deserve better and as a means to enable you to drive your vehicle for less, we propose that we make use of our long-standing relations with your bank to extend your vehicle payment term as a means to lower your car payment and make it even more affordable.”
They were told to respond via SMS if they were keen.
Barbara van Tonder, one of those to get that SMS, said: “It will only add more financial burden on us, the clients. Our agreement is structured over 72 months – six years – which is already a long term.
“Extending the term is a short-term solution – it will lighten the monthly repayment but add a considerable amount of interest to the capital on the loan.
“The only people I can see winning would be Nedbank MFC and Satinsky.”
I asked Siyanda Zuma, Satinsky’s media liaison manager, whether the advertising fees in question would return to what they were earlier this year, or whether the proposal to extend the bank terms was the company’s sole means of alleviating the said hardship.
I also enquired about the interest implications of a longer term.
This was his response: “We have been notified by Blue Lakes Trading and Promotions that they are seeking legal advice regarding fraudulent payments to/representations made by Advertising Service Providers (clients) and intend proceeding with criminal and civil claims and will therefore not comment on any averments made by the media at this stage as it may prejudice their pending cases.”
He said it was unfair to attribute the clients’ “financial distress” to the drastic reduction in their advertising fees.
“You are aware that financial hardship can be caused by a number of issues, say for example, the spike in the fuel price.”
Satinsky, which comprises a number of divisions, including Just Cars Africa and Drive Car Sales, acts as a dealership, providing new cars to people, most of whom cannot afford the monthly repayments.
Albert Venter is the chief executive and mastermind of the car ownership model, which he launched in 2006.
Satinsky also arranges the bank finance - no deposit required - and delivers the new car to the customer, with the six-year car finance agreement ready to be signed. The company then requires the customer to sign a second, entirely separate contract with a Hong Kong-based company, Blue Lakes Trading and Promotions, for which it says it acts as an agent.
It is that contract that governs what the car owner gets paid for driving around with an impossible-to-miss advert on their back window.
In fact, there are two contracts: Earn While You Own, in terms of which the owner gets a flat R570 a month, and if a car gets sold on the basis of their back-window advert, they get paid R3000.
With the second contract, Earn While You Drive, owners get paid an amount based on the mileage they do in a particular month. The more kilometres they do – 500km being the lowest permissible monthly mileage – the more they get paid.
It’s mostly those on the second contract who are complaining.
Since March, in most cases, their advertising fees have been unilaterally dropped to R570 and then to R484, leading to the suspicion that they were switched to the Earn While You Own contract without their authorisation.
Nor have they been able to get answers from the Blue Lakes help desk, operated by Satinsky. They get “copy and paste” e-mails quoting a clause from the contract which says their fee may fluctuate.
I didn’t fare much better with my initial enquiry. Zuma was at pains to distance Satinsky from Blue Lakes.
He said the latter was a separate company “with no ties to our company”.
“Satinsky is not responsible for any payments to clients who purchased vehicles from ourselves. No contracts are changed unilaterally, and advertising fees may vary from time to time, depending on the campaign which is available.”
But most of the cars appear to be advertising not a third party company, but the deal itself.
A report published by the New Age newspaper in April 2011 stated that Satinsky had sold its branding division “to a Chinese company, Blue Lakes Marketing and Promotions, based in Hong Kong”.
“The deal will see Blue Lakes implement a similar concept in the Far East.”
In return, the companies will share the revenue generated in South Africa and China. A three-year management agreement will allow the local company to continue to run operations in South Africa on behalf of the Hong Kong group.”
If that indeed was the case, that management agreement would have ended earlier this year, about the time the car owners on the Earn While You Drive contract had their advertising fees reduced.
Many of them say that in the preceding months they had been contacted by Blue Lakes, asking if they would like to switch to the Earn While You Own contract, but that they declined.
Peter Burns of Durban signed up for the mileage-linked contract in February 2013.
When he got a call inviting him to switch to the deal whereby he’d get R570 and R3000 commission per car sold, he agreed, but in the 14 months since then, he’s only been paid for three car sales.
“For the past 10 months I’ve only received R570 per month,” he said.
“I can afford the full instalment and regard the R570 as a bonus,. But I do regret being talked into switching the contract. And they won’t allow me to switch back.”
UNHAPPY CLIENTS
Many Satinsky/Blue Lakes clients asked to remain anonymous because their contracts state that their advertising fee will be suspended if they make derogatory remarks in the media.
“ I have had the same problem,” one wrote, “and the only answer that I got was that they are waiting from (Blue Lakes) for feedback and that (Blue Lakes) is in Hong Kong.
Another said: “In the beginning I was getting R1300 as an advertising fee and then it dropped to R1251, to R570 and then to R484. When I asked why, I was told that the interest rate goes up and down. I called Absa who said the interest rate is fixed. Blue Lakes just refuses to explain.”
“I have had my car for a year now and all went well until March when they cut my payment from about R1 300 to R570.” – Wilna Geldenhuys, Pietermaritzburg
“I don’t know if I will receive discounts for the full term, but if they stop I will just remove the ads. For now I am still submitting my monthly photos and I am thankful for whatever payback I receive.”
ADVERTISING FEES NOT TAKEN INTO ACCOUNT
The entire premise of Satinsky’s car ownership model is that it allows those who couldn’t otherwise afford a new car, to own one, thanks to the advertising fee.
So logic dictates that although they are made to sign a contract with a financing bank, making them solely responsible for the full instalment, they would battle to afford it every month without the Blue Lakes income.
I asked the three participating banks how they justified approving the finance applications, given that the Blue Lakes contract makes it clear that the advertised fee may fluctuate or stop altogether for a number of reasons, which would jeopardise the clients’ ability to pay the full instalment.
But all three - Absa, Nedbank’s Motor Finance Corporation and Standard Bank - along with Satinsky, insist that a client’s affordability is assessed without taking into account the anticipated advertising fee.
And none of the banks answered my question on whether they had noted a trend in recent months of Satinsky clients defaulting on payments.
Satinsky’s Siyanda Zuma said: “Please note that all customers who purchase vehicles from our group qualify to do so without taking into consideration any potential advertising revenue.
“It is an offence for consumers to misrepresent their income and expenses which they declare to financial institutions when purchasing a vehicle on credit.”
STANDARD BANK
“Standard Bank does a comprehensive affordability assessment of every customer approaching the bank for a loan.
“With regards to Satinsky/Blue Lakes, the bank does not take into account any future royalties or earnings when signing a credit agreement with a customer. No vehicle subsidies are taken into account. Standard Bank would be happy to look at assisting customers rescheduling their loans, as we would as part of the normal collection practice for accounts in arrears.
“Should customers feel that they are not in a financial position to honour their financial commitments, they should contact their bank immediately so that a mutually beneficial solution could be agreed upon.”
MOTOR FINANCE CORPORATION (Nedbank)
“MFC is not privy to nor involved with these agreements between the car buyer and (a third party) as these are entered into only once the bank finance contract has been signed and accepted by the car buyer and the vehicle value paid out to the dealership,” said managing executive Trevor Browse.
“MFC assesses the client’s application for finance based on the full vehicle value, full instalment amount and affordability within the responsible lending framework of the National Credit Act. At no stage is any form of dealership rebate, subsidy or lead fee factored into MFC’s financing decision.”
ABSA
“Absa Bank has no other agreement with the Satinsky Group apart from providing finance to customers in line with Absa’s processes and credit criteria. The advertising service agreements between Satinsky clients and Blue Lakes are separate agreements to which Absa is not a party and does not promote such in any manner.
“In addition, Absa is unaware of which clients do in fact conclude such agreements with Blue Lakes. Customers who may have difficulty meeting their financial obligations can approach the bank in order to reach a solution.”
The Argus