When a gym contract ends, the fees end too… or do they? Consumer watchdog Georgina Crouth finds out.
Johannesburg - In this economy, many people dread calls from “private numbers” or those they don’t recognise because it’s often someone who is either going to waste your time trying to sell you something you don’t want or hound you over a debt.
For more than a year, my husband Shane has received numerous such calls from a collection agency claiming he owed money on a Virgin Active gym membership.
He has repeatedly asked to be furnished with a proper statement of account, as is his right. Each time he has spoken to a call centre agent, he has been promised that they’ll get right back to him. Or that the “matter will be escalated and a team leader or credit administrator will get back to you soonest”.
Sadly, we’re all too familiar with those empty promises.
The ostensible original debt was handed over at R1 272.50 in August 2013. Shane was first contacted by Norman Bissett & Associates in April last year. By this month, the debt had grown to more than R3 000, yet there seemed to be no limit to the number of calls and SMSes (which are charged) he’s received. And still, no one had bothered to provide the evidence.
This got me thinking that for my first column, perhaps I should investigate this complaint – his case is certainly not unique.
A quick search on consumer forums confirmed my suspicions that some debt collectors are harassing people into making payments. Who wants to risk a bad credit record, a judgment or the threat of having their belongings seized?
And while lawyers get rich on matters of principle, Shane was not going to pay until it was proved to him that he owed the money.
He had a point – the onus isn’t on you as the consumer to prove you don’t owe someone money. The creditor needs to prove it.
Having mailed Norman Bissett & Associates and received no feedback, I finally managed to get hold of someone in authority. One of their lawyers took the matter to Virgin Active and, after much toing and froing, we got to the crux of the matter.
There apparently had been a principal debt of R93.80 dating back to December 2012, which is when his contract expired, but somehow the contract was rolled over automatically and the monthly payments increased – without Shane being informed about this. So, each month, that debt grew.
I pointed out to Norman Bissett this was an irregular and unfair practice. They apologised profusely, saying the delay in getting the requested documents to Shane was “well below their standard”, and again took it up with Virgin Active.
Days later, Virgin Active responded that “no formal correspondence was received to inform Virgin Active that you wish to cancel the contract as per the signed agreement”.
But this isn’t good enough. We pointed out that not only had the original contract expired but Shane had not been informed of the rollover, nor had he approved it, and the change in contract fees.
To their credit, Virgin Active accepted the error on their part and scrapped the entire debt.
But it’s taken some persistence to resolve the issue. I wonder how many others simply pay up?
Wise up. Here's how
Know who you’re dealing with
A debt collector can be an attorney; an agent of an attorney; or a registered debt collector who collects, on behalf of a client, on a debt. This is the capital amount plus (lawful) interest and the debt collectors’ necessary admin fees and expenses. Besides attorneys, only those registered with the Council for Debt Collectors may collect on debt. Non-attorneys are guided by the debt-collector code of conduct, which means they may not threaten, intimidate or misrepresent themselves.
What are “necessary admin fees?”
The Council says on its website “the total amount to be recovered from the debtor… shall not exceed the capital amount of the debt or R814, whichever is the lesser”. Taxation fees of R65 may also be charged, as well as 10 percent of the instalment, to a maximum of R407.
Who falls under the Council?
The Council for Debt Collectors has no jurisdiction over the actions or fees charged by attorneys, micro lenders, banks or furniture stores. These|institutions are controlled by their respective bodies. In the case of attorneys, refer to the Law Society; and in the case of banks, contact the Banking Ombudsman. Micro lenders and furniture stores are governed by the National Credit Regulator. Complaints must be made under oath and in writing. Where possible, take the details of the debt collector and at least one document received from them.
Ask for proof
A company/debt collector must be able to furnish a proper statement of account. They cannot simply SMS, mail or call you demanding payment. You are entitled to a proper statement of account before you pay anything.
Know your rights
According the 2005 National Credit Act’s statutory in duplum (literally, “double the amount”) rule, the collection fees may not exceed the principal debt. In common law, in duplum applies only to unpaid interest but the statutory rule includes costs, in addition to interest, which may not exceed the principal debt.
* Georgina Crouth is a consumer watchdog with a serious bite. Write to her at [email protected] and follow her on Twitter @Consumerstar.
The Star