On Tuesday, Lewis Group announced that its subsidiary, Lewis Stores would face the National Consumer Tribunal (NCT) for suspected contraventions of the National Credit Act (NCA). Lewis may be fined heftily if found to be at fault.
The National Credit Regulator (NCR) referred Lewis to the tribunal for allegedly breaching the NCA in its dealings with customers since 2007, the retailer said.
Maintenance Costs and Club Fees
The first allegation pertains to fees charged by the retailer under maintenance agreements entered into with its customers, dating back almost ten years. The tribunal will consider how these maintenance agreements were offered with extended warranty cover, on top of supplier and manufacturer warranties, over the same term.
The second charge pertains to club membership fees (‘club fees’) that the retailer has been charging its customers since 2007. By charging customers these maintenance costs and club fees, the retailer contravened the NCA, according to the National Credit Regulator (NCR). Consequently, the NCR has recommended that the tribunal order the retailer to refund customers who paid club fees and maintenance costs.
The NCR also asked the tribunal to order the retailer to refrain from unlawfully charging club fees and maintenance costs going forward. Furthermore, the regulator requested that the tribunal impose a 10% administrative fine of the retailer’s annual turnover.
However, the retailer maintains that these allegations are unfounded.
“Having considered the allegations contained in the referral along with Lewis’s external legal counsel, Lewis believes that the allegations are without merit. Accordingly, Lewis has instructed its legal representatives to oppose the referral on its behalf,” the retailer stated.
The retailer was also referred to the consumer tribunal last year. In 2015, Lewis Stores and Monarch Insurance were referred to the tribunal by the NCR for contravening the NCA, by unlawfully selling insurance coverage to consumers who could not benefit from these policies.
Customers could not claim benefits under these policies, yet were still paying monthly premiums for supposed coverage. The regulator argued that the retailer and Monarch had essentially defrauded customers by selling such cover, and so referred them both to the NCT.
In March, Lewis Group acquired 57 Ellerines and Beares stores across southern Africa, extending its presence beyond South Africa to 120 stores.