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Edition 3_ May - June 2009 - Consumerfair

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Edition 3_ May - June 2009 - Consumerfair Powered By Docstoc
					STRAIGHT TALK ON                            COMMISSION AIMS                               POVERTY REMAINS                                WHAT HAPPENS IF                              CREDIT MISTAKES
ELECTRICITY PRICES                          TO ROOT OUT HIGH                              MAIN ENEMY OF                                  SHERIFF GETS THE                             AND HOW TO
FROM ECONOMIST                              FOOD PRICES                                   CONSUMERS                                      WRONG MAN?                                   AVOID THEM
Mike Schüssler speaks                       Retail giants come under                      Study shows SA has                             Consumers goods get                          11 valuable tips from
out at NCF conference                       competition microscope                        long road to equality                          hauled and pilfered                          Credit Health
Page 3                                      Page 4                                        Page 7                                         Page 9                                       Page 11




Consumerfair
           Putting consumer issues on the agenda                                                                                                                       Edition 3, 2009
                                                                                                                                                                       A publication of the National Consumer Forum (NCF)
                                                                                                                                                                       100 000 FREE COPIES CIRCULATED




    Debt collectors beware!

                                                                                                                                               Conference speakers – Minister Jeff Radebe (centre) is flanked by Keith McIvor,Absa
                                                                                                                                               Executive Manager for Retail Banking, Transactions and Deposits (left) and NCF
                                                                                                                                               chairman Thami Bolani.




The Honourable Jeff Radebe, Minister of Justice and Constitutional Development, told the NCF Consumer Rights Conference that                   The Consumer Rights Conference drew about 300 delegates from government,
“we want to transform the debt collection system in South Africa”.                                                                             business and civil society.


Government has said it plans to clamp down on the heavy-handed and illegal habits of the country’s debt collectors.
Speaking at the National Consumer Forum’s 2009 Consumer                         “Clearly the auction industry is one example of blatant disregard of      fidently and educate consumers so they know their rights; and so
Rights Conference in Midrand in June, Minister of Justice and              rights of consumers by the collusion of retailers and those involved in the    they know where to turn for protection.”
Constitutional Development Jeff Radebe said that the injustice             auctioning of repossessed goods. Our basic call must be that when a cred-          Minister Radebe said the introduction of the National Credit
metered out to consumers must come to an end.                              itor repossesses goods, not only must the creditor get his monies but this     Act resulted in a number of financial institutions receiving a “stern
     “We have identified the profession of debt collection as an           process must also relieve the debtor of his or her indebtedness. Clearly the   warning” on how to conduct their businesses. The National Credit
area for regulation,” said Minister Radebe. “With the introduction         current practice highly prejudices the interest of consumers.”                 Regulator – established by the Act – has been to tackle the “loan
of the Debt Collectors Act, we want to transform the debt collec-               He said it was common knowledge that South Africa’s consum-               sharks” who are brought misery to the most vulnerable members
tion system in South Africa by monitoring the conduct and pro-             ers expect to be treated fairly and expected their voices to be heard          of our society. “Victims of loans sharks were not only charged high
fessionalism of debt collectors and promoting a culture of good            by business. “Most importantly,” he said, “they expect the best pro-           interest rates but were also threatened with violence, intimidation
governance within this profession.”                                        tection from the rogue traders and criminals who deliberately set              or blackmail if they fell behind with payments,” he said.
     He said that unscrupulous debt collectors and auctioneers will        out to rip off.                                                                    He praised the Competition Commission for doing a “sterling
need to change their ways.                                                      “That is why the role of the National Consumer Forum and the              job” in dealing with big companies on matters of price-fixing. “I
     “For instance, there is injustice suffered by consumers with re-      entities of the government are so vital in safeguarding the health and         don’t need to mention examples because these are issues that have
gards to sale of repossessed assets in the auction markets at prices far   wealth of the citizens and the economy of our country.                         featured prominently in the public domain, particularly with some
below the debt still owing,” he said. “The result is that the consumer          “As government we are determined to maintain and enhance a                of our big companies.”
is then forced to pay the huge difference, even when the consumer no       robust and effective consumer and competition regime – a regime
longer enjoy possession and use of the product sold in the auction.        which gives consumers knowledge and information to shop con-                   More reports on the conference on pages 2 and 3.
 Consumerfair Edition 3, 2009 • Published by the National Consumer Forum
                                                               Consumer rights ConferenCe 2009


highlights of Justice and
Constitution Development
minister Jeff radebe’s speech:
■ “… particularly in highly unequal           ■ “We are very clear that consumer          cannot be faulted in demanding low-                  tem that is more efficient and clearer     allow this final stage of delivery to be
  economies such as that of our coun-           rights and their protection is an in-     er prices and higher-quality prod-                   for everyone to understand”                compromised through undermining
  try … the consumer is often seen as           tegral part of a healthy economy and      ucts and services. We therefore need               ■ “We want consumers with knowl-             consumer rights.”
  powerless against the might of par-           must form an essential part of re-        a consumer market that adequately                    edge and information. We want to see     ■ “We need to continue our successful

  ticularly big corporations. It is within      covery from the current recession…        addresses the modern day consumer                    business treating consumers with re-       partnership – not just with you in this
  this broad context that we have to            In many instances, when producers,        needs and rights.”                                   spect. And we want enforcers who are       conference room today – but with
  tackle the challenges of consumer             distributors, retailers and service     ■ “the key element in our drive to                     equipped with tough powers to catch        partners across the wide spectrum
  rights and the general exploitation of        providers feel the pinch of an eco-       boost consumer rights and protec-                    those who are breaking the law.”           of business, the regulatory environ-
  our people … by producers, distribu-          nomic down turn, they then look at        tion is how we can work together to                ■ “Consumption is one of the final stag-     ment and across Government … We
  tors, service providers and retailers.”       undermining the interest of work-         ensure informed and better educated                  es of the various economic chains,         need to champion the interest of con-
■ “As Government we remain com-                 ers and consumers as means to save        consumers”                                           when delivery of goods and service         sumers and in doing so we want to
  mitted to a robust and effective con-         profits.”                               ■ “Most legislation needs to be further                is made to the people. While fighting      work with you … to ensure we have
  sumer protection and competition            ■ “Against the background of global         simplified for consumers to under-                   hard to entrench the various rights        the best consumer regime that South
  regime.”                                      technological advances, consumers         stand … We therefore need … a sys-                   of our people, we cannot therefore         Africa has ever seen.”




                                                                                         How government is supporting
                                                                                         consumer rights
                                                                                          In his speech at the National Consumer Forum’s
                                                                                          2009 Consumer Rights Conference, Minister Jeff
                                                                                          Radebe highlighted four areas that government
                                                                                          was targeting to empower consumers:

                                                                                          1. Strengthening consumers’ ability to get redress
                                                                                            where things go wrong, including those in debt

                                                                                          2. Creating a more responsible consumer
                                                                                             credit industry

                                                                                          3. Helping consumers to make informed deci-
                                                                                            sions, giving confidence that they are dealing
                                                                                            with reliable businesses

                                                                                          4. Providing a common framework of consumer
       Nomfundo Maseti, Chief Director the Departmentof Trade and Industry, gave            protection and creating a more effective en-
       the conference a thorough overview of the newConsumer Protection Act.                forcement of consumer protection




    Consumer fair is published by the national Consumer forum, in the interests of consumer rights in south Africa
    The newspaper raises funding –                national Consumer forum               Postal address:                                      Physical address:
    through advertising and subscriptions         Tel: 012 428 7071                     PO Box 4489                                          South African Bureau of Standards
    – to sustain the work of the National         Fax: 012 428 5019                     Halfway House                                        1 Dr Lategan Drive
    Consumer Forum as it helps South              Email: ncf@sabs.co.za                 1685                                                 Groenkloof
    African citizens to understand and            Website: www.ncf.org.za               Gauteng                                              Pretoria
    exercise their consumer rights.
    Consumer Fair newspaper is also avail-
    able in PDF format on the NCF website.
                                                                                                                                                             Putting consumer issues on the agenda         3
                                            Consumer rights ConferenCe 2009



schüssler talks straight on electricity
                            There are lies being told on the electricity issue in South Africa and Eskom is dis-     ers again suffered the biggest price increases, paying much more for power than
                            criminating on price and pushing consumer electricity prices in South Africa into        big business. “The fact is Eskom discriminates on price,” he said.
                            the top half of charges worldwide, according to economist Mike Schüssler.
                                Speaking at the NCF’s Consumer Rights Conference in Midrand in June,                 Municipality mark-ups
                            he said that Eskom sells electricity at cheaper than cost to internationals, but         Schüssler also looked into municipality profit margins on sales of electricity and
                            consumer prices have quadrupled between 1996 and 2009.                                   water and showed that there were margins of over 100% in three provinces and 73%
                                “If you say you are not making money, but are giving a 34% increase to               in total for SA - after giving the free electricity to those who can’t afford it.
                            people paying above costs, what are you doing to those you are selling to below               “And they keep talking about looking after the consumer - talk in SA is cheap.
                            cost?” asked Schüssler.                                                                  Which business can go into business and make a 100% profit margin - certainly
                                                                                                                     not the guy selling tomatoes on the side of the road,” said Schüssler.
                            Electricity only cheap for some                                                               “Government also needs to know what consumer rights are,” he said.
                            “It is not correct to say we have the cheapest electricity in the world - rather              Schüssler went further and said that while there is around R56bn in private debt
                            tell us that industry has the lowest prices in the world,” he said.                      in the private sector - including cars, houses etc - on municipal side there is a total of
                                 Industry pays the second-lowest price for electricity after internationals in       R42.2bn in municipal bad debts. “This is a huge problem,” said the economist.
                            South Africa, while residences are on top and paying well above cost.                         “In Gauteng we have R20bn in debts because people can’t afford these high prices
                                 “How can we export electricity at a price one-third of what consumers pay and       because of high profit margins. So people who do pay land up paying more and then
                            then ask for 34%?” questioned Schüssler.                                                 it dumps more people into poverty as they are cut off and then water is cut off, and
                                 He notes that high coal prices were blamed, but these have now dropped              then as consumers we end up with potholes in our roads or municipalities not deliv-
                            60% to 70%.                                                                              ering other services,” he said.
                                 “There are lies out there. The problem we have is a lot of smoke and mirrors             “The honest consumer is paying a lot more than just for themselves,” con-
                            get held before our eyes,” Schüssler told the delegates. He did a breakdown of           cluded Schüssler.
Economist Mike Schüssler    average Eskom increases between 1996-2008 and found that residential consum-             Report from I-Net Bridge




new consumer laws must be made to work…
                            Thami Bolani, chairman of the National Consumer Forum, opened the                            “Here, we can explore the best ways of empowering consumers by mak-
                            2009 Consumer Rights Conference with the words of US president John F                    ing them aware of the institutions set up to serve them – and giving them the
                            Kennedy:                                                                                 tools to make those institutions work for them.”
                                “All of us are consumers. All of us have the right to be protected against fraudu-       Bolani paid tribute to the National Credit Act, and the fact that we were
                            lent or misleading advertisements…, the right to be protected against unsafe … prod-     now moving toward the implementation of the exciting and influential Con-
                            ucts…, [and] the right to choose from a variety of products at competitive prices.”      sumer Protection Act.
                                Kennedy was speaking to the US Congress in 1962, in an historic ad-                      “Proper implementation is key to creating a competitive, fair and sustain-
                            dress that would later become a foundation stone for the consumer rights                 able economy, where the power of business and government can be balanced
                            movement.                                                                                with the power of consumers,” he said.
                                Bolani said that the challenges facing South African consumers in June                   WJudging by the progress of these laws, he said, consumer rights are tak-
                            2009 are many, including:                                                                ing their place at the highest (the legislative) level of government. “Now we
                              ■ a recession resulting from a global credit crisis                                    need to make sure these rights are entrenched at lower – more operational
                              ■ the rising cost of food and energy                                                   – levels of government and society in general,” said Bolani.
                              ■ adequate health care

                              ■ food security, and

                              ■ food safety.
                                                                                                                     information
                            “We are also challenged to allow people dignity in old age, encouraging                   To see the press coverage of the conference, go to the National Consumer Forum’s
                            sound financial management and a culture of savings for retirement,” he                   website at www.ncf.org.za and click on ‘NCF in the News’. Look under any topic for
                            said. “This conference is one of the ways that consumers can be reminded                  coverage on 20 June, 21 June, 22 June or 23 June 2009.
                            of their rights and responsibilities.
NCF Chairman Thami Bolani




                                                                        Life or Debt?
                                                                                  It’s your choice, use credit wisely!
                                                                                  Using credit wisely means being smart and budgeting for the things you really need – not simply
                                                                                  buying everything you want right now. You should be able to put a little money away every month
                                                                                  to save for any unexpected expenses. Repay more than just the minimum amount on your accounts
                                                                                  on time. Credit may seem convenient, but it is truly a matter of life or debt.




      www.ncr.org.za                                                                                                                                                 0860 627 627
4 Consumerfair Edition 3, 2009 • Published by the National Consumer Forum
                                                                             retAiL ComPetition




Competition Commission
probes supermarkets
The Competition Commission is             acteristics in the industry, the Com-      which can function as a barrier to        ume data of all brands. This could     standing of competition in this mar-
investigating major South African         mission identified several potential       entry and could have the effect of        potentially minimise inter-brand       ket. The Commission will decide at
supermarket chains Pick ‘n Pay, Sho-      concerns, including:                       excluding competitors.                    competition. Moreover, competitive     the end of its investigation whether
prite/Checkers, Woolworths and Spar       ■ Concentration of buyer power. This     ■ Category management. Category             exclusion may take place and the       there are sufficient grounds to refer
(who make up more than 60% of the           can be manifested in practices such      captains are appointed from the           conduct could facilitate collusion.    the matter to the Competition Tribu-
market by turnover), as well as major       as exclusive supply arrangements,        ranks of the largest manufacturer         This has been the focus of extensive   nal for adjudication.
wholesaler-retailers Massmart and           listing fees, slotting allowances,       in a particular product category to       anti-trust concern in the US.               “The Commission has made sev-
Metcash. The Commission says they           payment policies, returns policies,      manage all aspects of that category     ■ Information exchange. The Com-         eral interventions along the food val-
may have contravened the Competi-           promotional discounts and other          in the retail stores. In other words,     mission is concerned that super-       ue chain, from production through
tion Act.                                   rebates, potentially limiting up-        one competitor is given the task to       markets could be exchanging price      to processing. This complaint ini-
    The investigation has been              stream competition and making            manage the placement, promotion           sensitive information, which may       tiation now aims to uncover whether
prompted by concerns raised by vari-        it difficult for small producers to      and pricing of other competitor’s         have an impact on competition.         there are any possible competition
ous stakeholders and the public in          gain and retain access to retailers’     products, on a category-wide basis.     As part of its investigation the Com-    concerns arising in the retail space,
general. The food and agro-process-         shelves.                                 Through this conduct category cap-      mission will engage with the re-         where consumers would most direct-
ing sector – which has been charging      ■ Long-term exclusive lease agree-         tains may gain access to sensitive      spondents as well as the members of      ly be affected,” explained Commis-
consumers rocketing prices in recent        ments. Property developers alleg-        information such as the sales vol-      the public to get an in-depth under-     sioner Shan Ramburuth.
years – is a priority focus of the Com-     edly enter into exclusive anchor
mission.                                    deals with major retailers for peri-
    In a preliminary review of in-          ods as long as 20 years. The retail-
dustry practices and structural char-       ers receive favourable rental rates
                                                                                                                                                                              Putting consumer issues on the agenda          
                                      nAtionAL reguLAtor for ComPuLsorY sPeCifiCAtions

                                                                                                                                     nrCs recalls gonow Auto vehicles
Cape town store owner arrested for                                                                                                   NRCS Automotive Division has identified vehicles not meeting the requirements of the
                                                                                                                                     relevant compulsory specifications for the light goods carrying vehicles imported and

selling non-compliant paraffin stoves                                                                                                sold by Gonow Auto South Africa.
                                                                                                                                          NRCS would like to request members of the public in possession of these ve-
                                                                                                                                     hicles to visit any dealership closer to them to have their vehicles modified as they
A Chinese man and three of his accomplices were arrest-            Unit to prevent the import of these paraffin stoves into          can endanger their lives.
ed for selling non-compliant stoves. This was discovered           the country.                                                           Details of the vehicles are: Vehicle models: X-Space (Double and Single
by the National Regulator for Compulsory Specifications                 The Acting CEO of NRCS, Moses Moeletsi sent a very           cabs) and Hafei Loda.
Inspectors while conducting marketing surveillance to              strong message of warning saying that this kind of unbe-               It was discovered that the rear fog lamps and side indicators fitted on the mirrors
ensure that paraffin stoves and heaters which are not              coming behaviour will not be tolerated in the country. “It is     did not comply with the relevant requirements. Also, the fuel filler inlet failed to comply
complying with the Compulsory Specifications are re-               our civil duty and responsibility as the National Regulator       with the dimensional requirements.
moved and destroyed immediately to protect the safety              for Compulsory Specifications to act strongly against this act         These were reported to Gonow Auto South Africa and the company was ordered
and health of consumers.                                           of barbarism and make sure that we clamp down on these            to make corrective actions by removing both the rear fog lamps and indicator lamps
    More than 8000 paraffin stoves were found in Dexiang           unscrupulous business practices. So let this be a warning to      and ensure permanent disconnection of the electrical wiring leading to those lamps.
Shop and confiscated by the Inspectors with the assist-            all future offenders that are not complying with our Com-              In addition, the fuel filler inlets will be modified in order to comply with the
ance of the South African Police Service. These stoves were        pulsory Specifications”, he retorted.                             diameter requirements. Gonow Auto South Africa was also requested to contact the
found to be in violation of the requirements of the Compul-             He said that NRCS will be out in full force doing mar-       owners of these vehicles for their cars to be modified.
sory Specifications VC9089:2006 for Non-pressure Paraffin          ket surveillance inspections to ensure that not only are the           The acting CEO of NRCS, Mr Moses Moeletsi raised concerns about these ve-
Heaters and Stoves and contravening the provisions of the          non-complying products removed from the market place              hicles and called them ticking bombs. He also sent a strong message to Motor
NRCS Act, No 5 of 2008.                                            but that those found guilty of contravening the law are ar-       Builders who are illegally converting Panel Vans to Mini BusTaxis.
    Four charges were laid against the men and they will           rested with immediate effect.                                          “We will ensure that these vehicle models are suspended from the eNatis system until
remain in custody until all investigations have been con-               Greater focus is given to these commodities during win-      such time that the NRCS have satisfied itself regarding the implementation of the correc-
cluded. The NRCS is also in contact with the SARS Fraud            ter season due to a huge demand of cheaper products.              tive action plan,” said Mr Moeletsi.




 nrCs uncovers non-compliant toilet paper
 The National Regulator for Compulsory Specifications (NRCS) has seized all the non compliant toilet paper manufactured by Riverside Distributors CC (RSD) and Comfort Toilet Paper Manufacturing and ordered the manu-
 facturers to immediately stop selling the paper.
      This after an inspection was conducted by the Trade Metrology Division of NRCS following a complain from a concerned consumer regarding the toilet paper allegedly not complying with the requirements as published
 in the Trade Metrology Act and Regulations and Specifications SANS 289:2006 and SANS 458:2005.
      An inspection was conducted on samples of the toilet paper found on the premises of Highway Spaar in Randfontein and West Rand Plastic where Highway Spaar purchased their non-compliant toilet paper. This led
 inspectors of the Legal Metrology Division to the manufacturer of Flower Fresh Toilet Tissue paper, Riverside Distributors.

 It was found that none of the toilet paper tested complied with the requirements and a summary of the results are as follows:

  The following were discovered at the Riverside Distributors CC (RSD):
   Brand Name                                 Manufacturer                                Declared Quantity                         Results                                      % Short

   Plain White Recycled Toilet Paper          Riverside Distributors CC (RSD)             500 sheets                                492 sheets (not perforated converted         1.6 %
                                                                                          100 mm X 110 mm (width x length)          from equivalent length)

   Nova Luxury Soft Toilet Tissue             Riverside Distributors CC (RSD)             500 sheets                                478 sheets (not perforated converted         4.4 %
                                                                                          100 mm X 110 mm (width x length)          from equivalent length)

   Supra Deluxe Toilet Paper Virgin           Riverside Distributors CC (RSD)             500 sheets                                424 sheets (not perforated converted         15.2 %
                                                                                          100 mm X 110 mm (width x length)          from equivalent length)

   Supra Fours Bathroom Tissue (Blue          Riverside Distributors CC (RSD)             500 sheets                                472 sheets (not perforated converted         5.6 %
   Label)                                                                                 100 mm X 110 mm (width x length)          from equivalent length)

   Supra Fours Bathroom Tissue (Green         Riverside Distributors CC (RSD)             500 sheets                                467 sheets (not perforated converted         6.6 %
   Label)                                                                                 100 mm X 110 mm (width x length)          from equivalent length)


  The following products were discovered at the Highway Spar in Randfontein:
   Brand Name                                 Manufacturer                                Declared Quantity                         Results                                      % Short

   Flower Fresh Toilet Tissue                 Riverside Distributors CC (RSD)             500 sheets                                318 sheets (not perforated converted         36 %
                                                                                          100 mm X 110 mm (width x length)          from equivalent length) width 90 mm

   Comfort Toilet Tissue                      Comfort Paper Products                      500 sheets                                274 sheets (not perforated converted         45 %
                                              Manufacturer                                100 mm X 110 mm (width x length)          from equivalent length) width 90 mm

   Princess Luxury                            Comfort Paper Products                      500 sheets                                293 sheets (not perforated converted         41 %
   Soft Toilet Tissue                         Manufacturer                                100 mm X 110 mm (width x length)          from equivalent length) width 90 mm


 NRCS would like to warn the public about the above mentioned products and urge consumers to contact them should they find these products in the market so that appropriate action can be taken against the manufacturer
 or retailer. These include seizure of non-compliant goods and possible legal action instituted against the offender.
 The NRCS acting CEO, Mr Moses Moeletsi, said that the organisation is here to guard against this unscrupulous business practises and ensure that consumers get what they are paying for.
 Consumerfair Edition 3, 2009 • Published by the National Consumer Forum
                                                                                                                             Dti



Consumer Protection Act gives sA consumers the upper hand
The President of the Republic of South Africa signed into law the Consumer Protection Act, No. 68 of 2008, on                            The Act will also empower consumers to cancel contracts if they are not satisfied with the terms of the
23 April 2009. The primary purpose of the Act is to promote the social well-being of consumers and prevent                          agreement. For example, contracts should be in plain and understandable language, and include any verbal
their exploitation or harm.                                                                                                         promises made by the service provider. Furthermore, consumers will have a final say in whether they would
     While there is existing legislation, in the form of the National Credit Act, which protects consumers in                       like their contracts to be renewed once the contract term expires. In the past, consumers have been unknow-
terms of credit agreements, the new Consumer Protection Act focuses specifically on the quality, acces-                             ingly bound to extended contracts after the term of expiration. The Act will now obligate service providers
sibility and pricing of goods and services of these agreements. For example, if a consumer were to enter                            to provide consumers with written notice of contract expiration, and for consumers, in turn, to give written
into a credit agreement, such as opening a clothing account, this agreement would fall within the ambit of                          notice of cancellation or renewal.
the National Credit Act. However, the goods or services (apparel, shoes, accessories, etc.), to be obtained
via the agreement, would be protected by the Consumer Protection Act. If a credit provider were to deny a                           The Act seeks to ensure that:
consumer credit without giving valid reasons for doing so, the consumer would be entitled to seek redress                           ■ you have proper avenues of redress when you are subject to abuse or exploitation;

in terms of the National Credit Act. This means that consumers can refer their complaints to the National                           ■ there is proper disclosure of prices and information related to goods for sale;

Credit Regulator (NCR) for investigation.                                                                                           ■ marketing practices are fair and responsible;

     The Consumer Protection Act will ensure that producers, distributors and suppliers are held liable for                         ■ terms and conditions are reasonable;

any damages in the form of injury, loss, damage to property, death or economic loss resulting from faulty                           ■ sellers are accountable for what they sell; and

products or unfair contracts. According to Ebrahim Mohamed, Chief Director of the Office of Consumer                                ■ responsible consumer behavior is promoted.

Protection, at the Department of Trade and Industry (the dti), the Act will enable consumers to demand
refunds if they believe that the goods they bought are of an inferior quality. Consumers may return such                            Suppliers and service providers will soon be obliged to take your complaints about shoddy service and
goods to the supplier without penalty, and at the supplier’s risk and expense, if they fail to meet the re-                         inferior products seriously, when the Act is fully implemented (that is, 18 months after 23 April 2009,
quired standard.                                                                                                                    the date of signature).




insist on getting your 5 or 10 cents change
Try paying 5 or 10 cents less than the stated price for an item and see if the store will oblige. Yet consumers                     to be sold by ‘net quantity’. The weight of packaging materials should be excluded from the price, and consumers
are often short-changed 5 or 10 cents; stores continually allege that they do not have 5 or 10 cents in their                       should not be obliged to pay an additional charge for this purpose. In addition, scales should be placed in clear view
tills, leaving consumers with no choice but to accept less change.                                                                  of consumers, so that they can see the products being weighed prior to the introduction of any casing or wrapping.
      This unfair practice must be stopped; it is high time that consumers insist on being handed their full
change or request the store to give them a higher, instead of lower, denomination as change. According to the                       savings month
South African Reserve Bank Act, No. 90 of 1989, all current and previously issued bank notes and coins are                          July is savings month; this is the time when national consumer protection agencies will reinforce their mes-
legal tender. Businesses and commercial banks are therefore obliged to accept the 5 cent denomination coin.                         sage to South African consumers – ‘Save for that rainy day, for you never know what lies ahead!’
Stores which price their products in such a way that 5 or 10 cent coins will be routinely required as change,                            Teaching children about saving money at an early age can make a difference. We should start by teaching
have a duty to ensure that they can provide such change to consumers.                                                               our children the value of saving, even if it is merely five or ten cents, as this will lay the foundation for even
                                                                                                                                    greater savings later in life. Children should also be taught the importance of earning their own pocket money,
Don’t pay for the weight of packaging                                                                                               and learning to spend this wisely.
Some stores also charge consumers an extra five or ten cents for the packaging of products they wish to purchase.                        The current global economic recession is a stern wake-up call to South African and world-wide consum-
According to the National Regulator for Compulsory Specifications’ (NRCS’) Legal Metrology Division, goods have                     ers to save their hard-earned money and not overspend unnecessarily.




the consumer and the insurance industry
The South African government has given consumer rights a boost, thanks to the Consumer Protection Act, which                             The Consumer Protection Act will give consumers the right to disclosure of information when purchasing
was recently signed into law. With sky-rocketing costs on everything from food to basic utilities, families losing                  insurance. This information should be presented in plain and understandable language. In terms of the Act,
their homes, and thousands of South Africans being made redundant, it is no wonder that consumers are feeling                       the salesperson will be obliged to disclose to the consumer the cost of the insurance, separate from that of the
the pinch. The risk for millions is that they will be drawn back into a life of poverty. With the mushrooming of the                loan, over the life of the policy. It will also oblige the salesperson to state whether the policy is compulsory or
Payment Protection Insurance (PPI) industry, designed to offset the credit risk faced by many on a daily basis,                     optional. The service provider is likely to quote a monthly figure for the PPI, but should also disclose whether
consumers should take heed of the risks involved in obtaining this form of insurance cover.                                         the quote includes a single or regular premium, and specify the coverage period (generally 12 or 24 months).
     When offered a PPI agreement by a mortgage, loan or credit provider, consumers should be aware that                            Generally, consumers should not be refused loans if they decide not to purchase the PPI. To claim on the
by law, they are entitled to shop around for better cover and are under no obligation to accept the initial of-                     unemployment part of the policy, consumers would need to be employed continuously by the same company
fer presented to them. PPI, also known as Accident, Sickness and Unemployment (ASU) insurance, covers                               for 12 months, on a permanent contract.
consumers’ monthly payments (or a percentage thereof), for a fixed period of time, to help with repayments                               Consumers should ensure that they understand the exclusions before buying insurance; i.e. the PPI may
on mortgages, loans, or credit/store card agreements, in the case of unexpected eventualities. It can provide                       not allow consumers to claim for an existing or past illness and possibly even other conditions. This knowl-
worthwhile cover against unforeseen changes in personal circumstances, such as in the event of an accident,                         edge will help consumers make an informed decision on whether to take out the cover. Consumers should
sickness or unemployment through retrenchment.                                                                                      take cognisance of the fact that they have a legal right to cancel the policy and request a refund within 30
     According to Ebrahim Mohamed, Chief Director of the Office of Consumer Protection in the Department of                         days of taking it out.
Trade and Industry (the dti), the insurance industry has been exempted from the Consumer Protection Act, on                              Consumers should always check their account statements every month, to ensure that the correct amount
condition that the Long-Term Insurance and Short-Term Insurance Acts are amended to ensure that consumers                           of insurance premium has been debited from their account. If this is not the case, consumers must contact
receive the same level of protection under those Acts as they will enjoy under the Consumer Protection Act.                         their insurance company broker immediately.



Information

 Should you require any additional information or clarification please contact the Department of Trade and Industry’s (the dti’s)
 education and Compliance Division:
 the dti Customer Contact Centre: 0861 843 384
 the dti postal address: the dti, Consumer and Corporate Regulation Division, Private Bag X84, Pretoria, 0001
 the dti website: www.thedti.gov.za
                                                                                                                                                                                   Putting consumer issues on the agenda         7
                                                                                      fighting PovertY


Public enemy 1: Poverty
With the elections behind us, pov-          ■ 24.9% in Gauteng
                                                                                                                        #
                                                                                         poverty among black and coloured             poor often makes it more difficult to                such grants increased from 1.9% of
erty alleviation remains a vital con-       ■ 28.8% in the Western Cape                  individuals remained dramatically            move out of a state of poverty. Many                 GDP in 2000/01 to an estimated 3.3%
cern, especially as South Africa has        ■ 57.6% in the Eastern Cape                  higher than that among whites.               of the poorest households continue                   in 2007/08, while the number of ben-
seen waves of social unrest from its        ■ 64.6% in Limpopo                                                                        to live in informal and traditional                  eficiaries increased from 3 million to
poorest and most marginalised citi-         The three provinces with the high-           Women’s burden                               dwellings. While two-thirds of                       an estimated 12.4 million.
zens over the past 18 months. Some          est poverty rates (KwaZulu-Natal,            There was also a major difference in         South Africa’s poorest have electric-                    While the expansion of social
of these demonstrations have even           the Eastern Cape and Limpopo)                the poverty rate according to gender:        ity, less than half of all poor house-               grants has brought much-needed
resulted in violence.                       also have the most people – 47,4%            45% of all female-headed households          holds have piped water.                              relief for many trapped in poverty,
    What is the country’s poverty           of the population. It should come            lived below the “lower-bound” pov-                                                                lasting progress in the battle against
situation at the moment? A recent           as no surprise then that over 60%            erty line, compared to only 25% of           Schooling problems                                   poverty and its manifestations,
study of surveys by Statistics South        of poor individuals live in these            male-headed households.                      As for education, the relationship is                however, requires faster economic
Africa shows that there are several         three provinces.                                                                          as one would expect: persons with                    growth and basic reform of the
distinct aspects to poverty.                                                             Older and poorer                             low levels of educational attainment                 South African education system.
                                            Rural is poorer                              The incidence of poverty increased           were much more likely to be poor
Poverty rate of 47%                         The level of poverty, however, was           with the age of the head of the              than well-educated ones. Poverty                     Article based on the working paper ‘Pov-
The study shows that 47.1% of South         much higher in the rural areas of            household. The only exception is             affected 66.3% of those who had no                   erty in South Africa: A profile based
Africa’s population consumed less           South Africa: 59.3% of poor indi-            the group of households headed by            schooling and 59.9% of those who had                 on recent household surveys’ by Paula
than the ‘lower-bound’ poverty line         viduals live in rural areas – even           15-to-24 year olds – an indication of        not completed primary schooling.                     Armstrong, Bongisa Lekezwa and Krige
proposed by Statistics South Africa         though the rural areas housed well           the extent of youth unemployment             By contrast, poverty was rare among                  Siebrits of the University of Stellenbosch
in 2007 – which means 47.1% of the          below one-half of the South African          in South Africa. High poverty rates          those who had obtained a post-mat-                   Department of Economics.
population did not have R322 (in            population.                                  among households headed by indi-             ric certificate or diploma/degree: in
year 2000 prices) for essential food                                                     viduals aged 65 and older reflected          these groups the poverty rates were                  47% of the popula-
and non-food items.                         Racial split                                 the clustering of the destitute around       4.6% and 1.2%, respectively.
                                            It is well known that South Africa’s         the recipients of state old-age grants.                                                           tion did not have
Limpopo is poorest                          apartheid past imparted a strong                                                          More grants
The poverty rates of South Africa’s         and stubborn racial character to the         Lack of access to services                   South Africa has an exceptionally                    enough money for
nine provinces differ, as do those          country’s poverty level and distri-          Living conditions and access to serv-        well-developed system of social as-
of the urban and rural areas of the         butions of income and wealth. In             ices are areas in which considerable         sistance grants and social assistance                essential food and
country. In 2005/06, the poverty            2005/06 – more than a decade after           disparities also exist - the lack of ac-     expanded dramatically in recent
rates ranged from:                          democratisation – the incidence of           cess to services experienced by the          years: government spending on                        non-food items

                                                                                              Inflation
    Inflation is the erosion of the purchasing power of our money           Price stability                                                        Bank indicate that inflation will continue its moderate downward
    through continuously rising prices, which affects our daily lives.                                                                             trend and re-enter the target range during the second quarter of
    This note highlights important information on inflation, including      The primary goal of the Bank is to ensure the achievement and          2010. It is expected that inflation will remain within the target
    how it is measured, what role it plays in the economy and how           maintenance of price stability. Price stability in practice means      range for the remainder of the forecasting period ending in 2011.
    the South African Reserve Bank (the Bank) is combating it               maintaining inflation at low levels to counter the erosion of the      The downward trend in inflation and the slowdown in the South
    using monetary policy.                                                  value of money. South Africa introduced a formal inflation-            African economy as a result of declining demand pressures have
                                                                            targeting monetary policy framework in February 2000. This             led to a cumulative reduction of 450 basis points in the repur-
    What is inflation?                                                      policy aims to keep consumer price inflation within a target           chase (repo) rate (the interest rate that commercial banks pay
                                                                            range of between 3 and 6 per cent a year.                              when borrowing money from the Bank) since December 2008.
    ‘Inflation’ may be defined as a continuous increase in the
    general level of prices of goods and services in the economy.           Why is price stability important?                                                Targeted inflation rate in South Africa
    The key barometer of prices is called the ‘headline consumer                                                                                        15
                                                                                                                                                             Percentage change over 12 months

    price index’ (CPI) for all urban areas.                                 Low and stable inflation rates allow a more efficient and pro-
                                                                            ductive allocation of resources in the economy. High inflation              12
    Measuring the inflation rate                                            rates distort price signals from relative supply and demand of
                                                                            goods and services in a market economy which, in turn, com-                  9
    Statistics South Africa (Stats SA) is officially responsible for        plicates the economic decision-making process. In addition, it
    measuring price developments in the country. It uses a basket           should be remembered that wealthy people can hedge                           6
    of goods and services representing the most important items on          against the adverse effects of inflation, for example, the rich
    which consumers spend money. Workers from Stats SA visit                can invest in property or shares with prices that usually                    3
    shops each month to price this basket of goods and services.            increase during periods of high inflation, while the poor are
    The rate of inflation is usually expressed as the percentage            unable to protect themselves against rising prices. High infla-              0
    change in the cost of the basket over a period of 12 months.            tion rates also reduce the purchasing power of savings, thus                       2003     2004     2005     2006   2007   2008   2009    2010

    For instance, if in January 2008 the basket of products cost            placing pensioners’ welfare at risk.                                                 Actual inflation rate
                                                                                                                                                                 Central inflation forecast of the South African Reserve Bank
    R5 000 and in January 2009 it cost R5 500, the 12-month
                                                                                                                                                             Source: Stats SA and South African Reserve Bank Monetary Policy
    inflation rate for January 2009 is 10 per cent – on average,            Monetary policy cannot directly contribute to economic growth                    Review (May 2009)
    things are 10 per cent more expensive than a year earlier.              and job creation in the long run, but it can bring about price
                                                                            stability, which is an important precondition for sustainable           •   Lower inflation facilitates lower interest rates
    Reasons for inflation                                                   economic development. So in essence, keeping inflation at low               – In Russia inflation is currently 12,3 per cent and the
                                                                            levels is the best contribution that monetary policy could make                 money-market interest rate is 11,5 per cent per annum
    Inflation can be started by various cost-push or demand-pull            towards improving the growth potential of the country.                      – In Chile inflation is currently 3,0 per cent and the
    factors. Cost-push factors, on the one hand, include higher                                                                                             money-market interest rate is 1,3 per cent per annum
    salaries and wages or higher input costs due to, for example,           Inflation outcomes and outlook                                          •   This is because savers require a return on their savings that is
    rising electricity or higher international crude oil prices. A depre-                                                                               aligned with inflation.
    ciating exchange rate could also have a bearing on the cost of          In 2007 and 2008 rapidly rising oil and food prices bolstered infla-
    imported inputs. On the other hand, demand-pull factors result          tion. Targeted inflation rose to as much as 13,6 per cent in August
    from an increase in aggregate demand, when expenditure rises            2008, but subsequently decelerated as oil prices receded, food
    so strongly that it exceeds the economy’s capacity to produce           prices moderated and tighter monetary policy worked through to
    goods and services. However, to continue on a sustained basis,          the economy. By May 2009 CPI inflation had decelerated to
    inflation needs to be accommodated by monetary policy.                  8,0 per cent. As at the end of June 2009, the projections of the
 Consumerfair Edition 3, 2009 • Published by the National Consumer Forum
                                                                                             WAter AffAirs




 Aqua-enviro Youth summit
  The Department of Water Affairs and Forestry has public awareness and education
  programmes aimed at educating communities about water, sanitation, forestry and
  invasive alien plant issues that will result in sustainable, community-based manage-
  ment of natural resources.
       Its 2020 Vision for Water Sanitation Forestry Education Programme is an impor-
  tant part of boosting environmental education. It is implemented in collaboration with
  the Department of Education and its objectives are to:
     ■ increase water education and awareness in schools and

     ■ address the skills shortage through promoting careers in the water sector.

  From 29 June to 3 July 2009, the Aqua-Enviro Youth Summit was held as part of this
  vision, recognising national youth month and national environment month.
       National competitions were run throughout the week and winners were an-
  nounced and awarded on the last day of the summit at the Linder Auditorium on the
  University of the Witwatersrand Education campus in Johannesburg. This day also
  marked the launch of the Forestry Youth Advancement Programme.
       Speaking at the awards ceremony, Department of Water and Environmental
  Affairs Deputy Minister Rejoice Thizwilondi Mabudafhasi said South Africa could
  be very proud of its young people. “Does South Africa know how vibrant our
  youth are?” she asked the audience of learners, educators, parents, dignitaries
  and other guests.
       She emphasised how important water is for the country’s future. “We need
  to change our mind-set to take better care of our water resources,” she said.              Water and Environmental Affairs Deputy Minister Ms Rejoice Thizwilondi Mabudafhasi.
  “We need to develop the skills to manage these resources, and improve our at-
  titude towards saving water.
       “Everyone needs to be an activist in saving water. If I see a tap dripping, I
  should not just say that it’s not my job. I should try to switch it off, or report it to
  the right person.”
       The deputy minister said the week-long event has taught the delegates about
  the field of water and forestry as a career as well. She praised all the young people
  taking part, and said they had helped “put South African on the map.”
       “I am leaving for an international conference, and wish I could take you with
  me – to show the world what you can do,” she said.
                                                                                                                                                                           Putting consumer issues on the agenda          9
                                                                                    Consumer Letters




sheriff gets the wrong house
How would you like to come home and           have the wrong house and the wrong         in this case. A friend then helped me to   weeks to return my belongings, and           that there is nothing they can do to
find that the Sheriff had cleaned you         person but the sheriff’s moving crew       get information about who the lawyers      that I could not go and collect it that      help get back the stolen goods.
out – because of incompetent or lazy          just told me that they left the documen-   were who opened the specific case. We      day because the sheriff’s office is closed
lawyers, and a system that seems to           tation in my house and that I should       then obtained the numbers for Stry-        already and that I should go there on
disregard your basic rights to private        take it up with the police. I drove home   dom and Cremer attorneys in Valeria        Wednesday to collect my stuff.
property? Well, it happened to this con-      from Bedfordview (in Johannesburg) to      who then informed us that we should            “Earlier in the morning when I was       the consumer still
sumer recently – a human resources of-        Pretoria only to find that all my furni-   gather information that would prove        at home to determine the damage and          has these questions:
ficer in an office automation company.        ture (accept for my bed) was removed,      my innocence in this whole matter.         what was taken, I noticed that my Ipod       1. How can the lawyers order the sheriff
He writes here about his ordeal.              my drawers was overturned on the                “I went to my landlord and asked      and a bottle of whiskey (these were             to go and impound someone’s belong-
     “On Tuesday morning at about 11          floor, the contents of my bookshelf was    them for a copy of my lease agreement      gifts that I received for my birthday           ings before they have checked that it is
o’clock my neighbour phoned me and            thrown on the floor and the food in my     as well as of the person who rented the    on the weekend) was also missing, but           the right person’s house? (It is a rental
told me that there was a moving van           fridge was placed in the kitchen sink.     flat before me. We then established        was not listed on the inventory that the        property, and the consumer had been
outside my house and they were busy                “The documentation they left was      that he was the culprit and because        sheriff left in my house. The next day,         living there for a year already.)
loading my belongings onto a van. I           a case between RCA supplies and            the lawyers where unsuccessful in          when we went to the sheriff’s office, I      2. Why the locksmith did not verify if it
asked her to please tell them to stop         Gatevale bk trading as: Watertight         getting hold of they assumed he still      was able to get back all my belongings,         was the correct house or not?
or please phone the police because I          plumbing (case no 123628), wherein         occupied the residence and therefore       except for the Ipod and Whiskey that         3. How were we able to collect my be-
did not order any movers and am not           the latter owed RCA Supplies the           ordered the sheriff to go and reposess     nobody knows about.                             longings without providing them with
moving anywhere. She then informed            amount of about R26,000. I was livid,      his belonging, which where now my              “At this moment my house is still in        any identity documents?
me that it was the sheriff (‘balju’) and      confused and frustrated and didn’t         belongings. I’ve been living at this       shambles and I don’t really know what        4. What happens when other belongings
they where impounding my belong-              know where to start.                       house since December 2007.                 to do or who to sue, and if it would be         taken by the Sheriff go missing?
ings, when I asked how they got access             “I went to the nearest Police sta-         “The lawyers then informed me         worth all the effort.”                       5. Why is there not a police officer
to my house they informed me they or-         tion and asked them to assist and they     that they will pay for the storage and         The consumer has since opened a             present when the Sheriff opens a
dered a locksmith to open my house.           helped me to draw up an affidavit,         any removal, because it will take the      case against the sheriff’s office. He was       house?
     “I tried to explain to them that they    stating that I am not the transgressor     sheriff’s office approximately four        told by the inspector handling the case




 Why all the secrecy on electricity prices?
 The tariffs currently charged to consumers are          Should the real facts not be out in the
 not fully disclosed by either Eskom or Nersa.       open for all to see. The consumer is kept in
 The prices paid by neighbouring states, the         the dark through a conspiracy of secrecy and
 EIUG (top 40 industrial users), and city councils   silence and made to pay through the neck
 are a closely guarded secret.                       for a basic commodity that affects the total
      Economist Mike Schüssler recently claimed      economy.
 that Joe Citizen pays up to three times the price       Can the National Consumer Forum not
 charged to neighbours, and more than twice          force open this monopolistic can of worms?
 the rate to the EIUG. Councils make more than
 100% profit on electricity.                         Henri Wolfaardt
10 Consumerfair Edition 3, 2009 • Published by the National Consumer Forum
                                                                                 Consumer ProteCtion

Putting a stop to unhealthy advertising




The Advertising Standards Authority of SA has a food and beverage            choices; in particular, advertising should not directly appeal to chil-   stood by the reasonable consumer”.When it comes to children
code that can help consumers to put a stop to irresponsible advertising      dren of young age to persuade their parents to buy advertised prod-       aged 12 and younger, the code says that there should be no nu-
of food – especially to children.                                            ucts for them (or even to suggest any negative consequences of not        tritional or health claims made in television advertisements for
     Apart from complying with the law, advertising also need to be          purchasing the product).                                                  products “that do not represent healthy dietary choices and a
honest and responsible, so that it does not mislead consumers. The                                                                                     healthy lifestyle”.
code says that advertising should not:                                       Product endorsement
■ abuse the trust of consumers at whom it is directed or who are likely      The code says that advertisers who promote food and beverage              Marketing promotions
  to be exposed to it, or exploit their lack of experience or knowledge      products that are not healthy (in terms of scientific standards in        Where there are competitions inviting young children to enter, the
  or their credulity                                                         Section II of the Code of Advertising Practice) must not use celebri-     advertising should “clearly communicate the likelihood of winning
■ encourage poor nutritional habits or an unhealthy lifestyle in chil-       ties or characters licensed from third-parties (such as cartoon char-     in wording readily understandable to them”; the prize(s) and the
  dren, or encourage or condone excess consumption (so portion sizes         acters) in television advertisements targeted at children of twelve       number of prizes should be clearly communicated, and these prizes
  featured in food and beverage advertising should not be excessive          years old and under.                                                      should be appropriate to the child audience.
  or more than would be reasonable to consume by a person of the
  age depicted)                                                              Inexperience and credulity                                                Marketing at pre-school and primary school premises
■ mislead consumers about the characteristics of the product – for           While the code recognises that fantasy, including animation, may          The code outlaws any advertising “on, or in close proximity
  instance, its taste, size, nutritional content, health benefits, nature,   be an appropriate way to communicate with young children, it              to, pre-school and primary school premises” of unhealthy food
  range of use, efficiency and performance, or environmental impact.         says that the child’s imagination should not be exploited in a way        and beverages. Also, these products may not be promoted in
                                                                             that “could create expectations of unattainable product benefits or       any way (such as free gifts) on these premises.
Social values                                                                exploit a child’s… difficulty in distinguishing between real ben-
The code also recognises that children aged twelve and under are par-        efits and fanciful benefits”.                                              Information
ticularly impressionable, so advertising aimed at this group should                                                                                     For more information, go to the website of the Advertising Standards
not mislead them about the benefits of using the product (such as the        Substantiation                                                             Authority of SA – www.asasa.org.za – or contact them by:
acquisition of strength, status, popularity, growth, proficiency and in-     All claims, including nutritional information and claims about              ■   post – PO Box 41555, Craighall, 2024
telligence).                                                                 nutrition and health benefits, should be substantiated (in ac-              ■   fax - 27 11 781 1616 or
     This advertising must also not undermine the role of parents or         cordance with Section II). Also, claims about nutrition and                 ■   email - complaint@asasa.org.za
others responsible for a child’s welfare in guiding diet and lifestyle       health benefits “should be conveyed in a manner easily under-




Dangers of ‘quack’ medicine
South Africa’s top pharmacology academics and experts warn that              ill-informed consumers and citizens from all strata of society is a       minister Dr Manto Tshabalala-Msimang, has failed to act against
the South African market is being flooded with all kinds of quack            direct attack on their bodily integrity (there is no guarantee of the     any of the distributors.
remedies and dubious ‘medicines’.                                            quality of the products and therefore no valid safety or efficacy              German vitamin seller Matthias Rath enjoyed tacit govern-
     In 2002, the health department told manufacturers and distrib-          claims are possible) and on their psychological integrity (as the         ment support in 2005 where he distributed his untested rem-
utors of complementary medicines to submit information on their              advertising creates and sustains false beliefs in the non-validated       edies in Khayelitsha and Durban, claiming that antiretrovials
products to the department’s medicines regulatory affairs cluster.           claims for quality, safety and efficacy of the products),” they said.     were toxic.
This was so that these medicines could be checked and audited.                    In the absence of independent assessment, the experts warned that         Former truck driver Zeblon Gwala has been making a mint from
The notice expired six months later, but manufacturers and market-           it was unknown whether the products contained any active ingredi-         selling Ubhejane, mostly in KwaZulu-Natal, refusing to disclose the
ers of these products continue to submit their information, but it           ents, contained toxic heavy metals, were possibly contaminated with       ingredients, claiming that his product is superior to antiretrovirals.
seems as if no audit ever took place.                                        bacteria, were contaminated with banned substance, contained sched-            In its strategic plan, the health department concedes that “com-
     A group of experts has written to the Department of Health,             uled substances or whether the formulations were rational or safe.        plementary medicines are currently not well regulated and this
warning about the lack of effective regulation. “The Bill of Rights               South Africa has experienced an influx of products promising         poses a serious health risk”.
states that everyone has the right to bodily and psychological integ-        anything from overnight weight loss to a cure for HIV/AIDS. The
rity. The free availability of these unregulated products to largely         health department, especially under the watch of former health            By Anso Thom, Health-e News Service
                                                                                                                                                                           Putting consumer issues on the agenda       11
                                                                                           Consumer tiPs


the top 11 credit mistakes
1. Spending money you don’t have              fund. This will probably involve go-         of these missed payments. Conversely,         8. Not understanding that there            ■ Reckless lending is prohibited – you
Its quite a simple concept really, but we     ing into debt, and there is an interest      when you meet your payment obliga-               are two credit bureaus and                are not entitled to borrow money if
all do it – spend money we don’t have.        cost that you will need to factor into       tions on time, a record of this fact is          scores                                    you are over-indebted;
How do we do it? We create debt. Any          the cost of the trip.                        sent to the bureaus.                          Many people think that there is only       You need to know your rights.
time you spend more money than you          ■ Thirdly, is the prospect of a refund                                                       one credit bureau that keeps your          If you are unsure, contact Lo-
have, you have gone into debt.                not an opportunity to save and in-           6. Keeping unutilised                         credit record, namely TransUnion. Ac-      gan Attorneys for advice on
     Lets say for instance you success-       vest the money? Get the money                   credit facilities                          tually, that company used to be known      011 242-4901.
fully apply for a credit card, and you’re     working for you, save it, invest it,         Starting from June 2007 the National          as ITC, before it changed its name to
quite happy with this new prestige            watch it grow. That’s the real clever        Credit Register will keep a record of         TransUnionITC, and then to TransUn-        10. Assuming that a judgment that
symbol. The bank has granted you a            way to do it!                                all your credit agreements, meaning           ion. The other bureau is known as Ex-          falls off your credit record is
limit of R5000, and you spend R2000 in      ■                                              your debts. If you have a credit facility     perian. Both companies are large inter-        now forgotten
the first month. When you receive your      3. Consolidating debt                          of R20 000 on your credit card, and you       national companies, and have a strong      The compulsory data retention period
first statement from the bank they will        into a consolidation loan                   are only utilizing R6 000 of this facility    influence on your ability to get credit.   for a judgment to remain on your cred-
indicate that they expect you to pay        This can be a wise thing to do, but a lot      (your balance on your credit card is R6           Each bureau may have differ-           it record is five years. It can however be
pay R100 this month towards the out-        of people get it all wrong. It’s wise if       000) then when you apply for a bond,          ent information on you. They do not        removed before this time by making
standing balance. You do so. Guess          you have some expensive debts “hang-           for instance, the bank will check this        share their information because they       application to court to rescind (reverse)
what? You’ve created debt of R1900!         ing around” that you want to tidy up           register, and will have to assume that        are competitors. You should check          the judgment. This application would
                                            and consolidate into a larger debt, and        you are utilizing 100% of your facility       your credit record with each company       typically be made through an attorney.
2. Pre-spending money you                   then use the full payments that you            – the full R20 000! This may lead them        if you want a comprehensive view of        We recommend the services of Logan
   expect to receive in the future          were spending on the smaller debts to          to conclude that you are not able to af-      your financial reputation in South Af-     Attorneys, as they are specialists in
You’ve submitted your tax return and        “throw into” the repayment of the large        ford the homeloan repayment as you            rica. We recommend that you draw off       this field.
met the deadline. Your tax consultant       consolidated debt. It’s not wise if you        have too much debt.                           the Credit Health Report™, which is a           Some people who have not settled
tells you that SARS owes you R8000,         simply want to reduce your monthly                 Try to reduce your facility to only       report that combines the information       the debt that underlies the judgment
and you’re quite pleased about this.        commitments by extending the term of           that which you expect to need. In this        straight from both bureaus in an easy      simply wait for the five-year period to
The next weekend you go shopping            the repayment of the smaller debts.            case, reduce your card facility to R6         to read, simple format.                    expire, thinking that the issue will go
in your local mall, and you happen to                                                      000 or R8 000.                                                                           away. This is not the case. A judgment is
walk past a travel agency that is adver-    4. Opening lots of store accounts                                                            9. Not understanding your                  an order of court for a period of 30 years.
tising a special to Mauritius for R6500     Its human nature! We want it, we can’t         7. Excessively shopping for credit               rights in terms of the National         This means that the judgment creditor
per person, all inclusive, 7 night stay.    afford it, and then the store comes up         Every time you fill out a credit appli-          Credit Act                              can use the judgment for a further 25
You briefly start to dream about how        with a plan for you to be able to buy it.      cation you are giving the credit pro-         The National Credit Act came into op-      years to force you to repay them.
wonderful this would be, before it oc-      We go for it! We get suckered into pay-        vider permission to access your credit        eration fully on 1 June 2007, and gives
curs to you that you can’t afford this      ing for things we can’t afford, and we         reports. When they access your credit         you more rights than ever before. Some     11. Not having a credit score
luxury at this time. Suddenly you re-       go into debt to be able to do so. Store        reports this fact is recorded in your         of these are:                              That’s right. Not using credit is a mis-
member the tax refund, and your heart       accounts are great provided you re-            credit records as an “enquiry”. This          ■ Quotes must be given on all credit       take. The way the credit system works
skips a beat, then two. Maybe you can       pay the full outstanding balance every         will remain on your credit record for           agreements, and are binding fro five     is that it rewards consumers who man-
afford it.                                  month, or if you open them in order            24 months.                                      days                                     age credit responsibly. The reward is
What’s wrong with this scenario?            to receive the incentive free vouchers,             Enquiries are used by credit scor-       ■ Advertising and marketing must           in the form of easy access to credit at
Three things:                               and then close them once you have re-          ing models to determine whether or              contain prescribed information on        reasonable rates. If you choose not to
■ Firstly, the refund from the taxman       ceived the benefits.                           not someone is shopping for credit. It          the cost of credit                       use credit then you choose not to build
  is not guaranteed. He could disagree                                                     is a statistical fact that consumers who      ■ Language in credit agreements must       a solid credit history, based on which
  with your tax consultant, and you         5. Missing payments                            have more inquiries are higher credit           be simple and understandable             future credit providers that you apply
  could actually end up owing him           Whenever you miss a payment on an              risks than consumers with fewer in-           ■ Credit sales at a person’s home or       to for home or car finance will be able
  money!                                    account, the details of this missed pay-       quiries. As such, the more inquiries            work are strictly limited                to assess your ability to repay them.
■ Secondly, you will need to finance        ment are sent to the credit bureaus, and       you have, the more points you will lose       ■ Reasons must be provided if a credit

  the cost of the trip pending the re-      a record is kept for the next 2 – 3 years      in your credit scores.                          application is declined                  By Credit Health – www.credithealth.co.za




 Letters
                                                of rude when we refused to buy from         my points. So we converted to points         that they would help me get out of         ters from TransUnion that I would
                                                him a holiday packet of R50,000! In the     on 27 November 1997, only to be told         my FHC membership, provided that           be blacklisted. During all of this I re-
                                                same audience were people who came          that such a promise was never made. I        I see one of their consultants. I said     ceived calls on my cellphone from FHC
                                                from townships and poor areas who           reported the case to the TISA ombuds-        that I would refuse to see anybody if      who continuously asked me why I was
  From: Chris Spies [spies.c@gmail.com]         were duped into signing contracts.          man, who could not make progress af-         any offer they make were to cost me        not paying. I refused to answer their
                                                There has to be protection against          ter one consultant disappeared and the       a cent. They said it would not cost        questions and said I would not talk to
  A consumer has written to ask how             such practices.”                            other denied that he said anything like      me a cent and that they would send         them anymore. When they called me
  consumers like him can be protected               The consumer wrote this letter to       that to us. I tried to sell my points via    someone. Lo and behold, when the           after hours I asked them to give me
  against unscrupulous behaviour by             the Vacation Ownership Association          the companies they suggested, only to        gentleman came on 28 January 2009          their private number so I could call
  companies such as Flexi Holiday Club.         Of Southern Africa:                         be disappointed by these companies           to see me, he offered me another con-      them back after hours as well. I cannot
       “A visit to www.hellopeter.com               “I have a history of more than 20       who took my money and provided no            tract for holiday membership which         even begin to tell you how disgusted
  will reveal how many unhappy cus-             years of being ripped off by Flexi Holi-    proof at all that they were trying to sell   would cost me R420 pm and on top           I am that what started out as a honest
  tomers there are who have fallen              day Club and its predecessor. I have        these points.                                of that I needed to pay R4995 arrears      effort in the 1980s to buy one week of
  prey to unethical behavior and ex-            all the documentation. I bought one              “So eventually I gave up, wrote         to FHC. I obviously refused and said       time share in peak time in Durban has
  ploitation.                                   week timeshare from Trafalgar Time          CANCELLED over my original cer-              that I was once again tricked by dis-      now degenerated into one scheme af-
       “We have recently ‘won’ a compe-         Share Resorts in November 1988 in           tificate and sent it to Flexi Club. They     honest people. The consultant said it      ter the other to hold us hostage and we
  tition after filling in a questionnaire       Durban in the peak red period. That         sent me a new certiciate and told me         was not his fault as the people who        have no recourse. I refuse to allow that.
  and was invited to attend a draw of           week was eventually downgraded to a         I could not get out of the contract. I       phoned to make appointments get            I must just add that we have not made
  the prizes, only to drive 100 km and          blue week with no value by RCI. The         sent them letters saying that I refuse       paid for making the appointment            use of any offers nor have we used our
  find ourselves, yet again, in a market-       short of the story is that I wanted to      to be held as an economic hostage and        and that they couldn’t care anything       points for the last couple of years. I
  ing campaign for a scheme selling             get out of the contract many years ago,     that I would refuse to pay or answer         about telling the truth. I then said I     need urgent assistance to rid myself of
  holiday opportunities – Flexiclub in          only to be told by Flexi Holiday Club       any questions from them. Then, ear-          would refuse to do business with           this company.”
  another uniform. And the consult-             consultants that if I converted my time     lier this year I got a phone call from       them and FHC in future.
  ant was quite taken aback and kind            share to points, FHC would buy back         Holiday Access, a company that said              “Now I receive threatening let-        Chris Spies, Stellenbosch
                                                                                                                                                                              Putting consumer issues on the agenda     13
                                                                ABsA – finAnCiAL LiterACY feAture




how insurance premiums are calculated
Many of us have had the experience             This article explains how premiums             ■ The first amount (excess) payable in        own assessment of the risk to deter-       value of your vehicle does not mean
of getting insurance quotes from               are calculated and what to expect over           the event of a claim; the higher your       mine the premium for each risk. This       that repairing it after an accident will
different insurers and having to               the lifetime of your policy.                     excess (which you have to pay before        means that they forecast the expect-       be cheaper.
choose one. More often than not,                                                                your insurance kicks in), the lower         ed claims for each policy, and in that
it is astonishing how different the            Factors affecting the price                      the premium should be                       lies the inconsistency between the         Where does this leave me?
premiums are, and we immediately               Insurers use a lot of information to           ■ Your home address                           quotes. These are forecasts only; as       There are many inaccurate rumours
get the idea that some companies are           determine your premium. Your bro-                                                            such, they can not be completely ac-       and misconceptions about the calcu-
just out to make a quick buck!                 ker or direct insurer will ask for a lot       On top of this, some insurers allow the       curate predictions of what will hap-       lation of premiums in the insurance
    Once you have chosen a policy              of personal details before they give           sales force (whether broker or direct)        pen. Because different insurers will       market. Although insurers are capital-
/ product / insurer (mostly based              you a quote.                                   the discretion to change premiums             go about it differently and also have      ist companies aiming to make a profit,
on cost), you pay your premium re-                  Increasing the number or value of         when selling new policies. This is done       different expectations and experi-         the competition in the market is such
ligiously every month, just to be con-         items you insure will increase your pre-       to allow for the difference in risk that      ence, the premiums you get quoted          that one cannot afford to be seen as the
fronted a year down the line with              mium. Other important factors are:             the insurer does not know about, be-          can differ dramatically.                   company who rips people off.
a change in the premium. Things                ■ The type of cover provided by                cause the insurer only has the stand-              On the anniversary of policies, it         As long as risk remains very
like parts cost inflation, the effect             the policy (for example, it will be         ard questions available.                      is general practise to revise the policy   volatile and unpredictable, insurance
of 9/11 on world insurance markets                cheaper to take out theft cover only                                                      to ensure that the premium being paid      premiums will differ from company
and the general deteriorating condi-              than to take out a full comprehen-          How insurers come up with premiums            still adheres to the insurer’s predic-     to company.
tions of roads are mentioned, but if              sive policy)                                Insurers use their own past experi-           tion of the risk over the coming year.          If you are serious about protecting
we believe that the insurer is just out        ■ The cover limits provided (R3 million        ence relating to your specific risk           One might expect the premium to go         your financial situation from the sud-
to make a quick buck, we probably                 of liability cover will be more expen-      profile, their view of the future so-         down after a year without claims, but      den impact of theft or accident, then
won’t believe their reasons.                      sive than R1 million, for example)          cio-economic situation and their              keep in mind that even a drop in the       good insurance cover is a necessity.




   insurance: how to ensure you have
   peace of mind                                                                                                                            Why is it important
  We all know that purchasing insurance is     the vehicle most of the time (they will       apply “Average” at point of claim.
                                                                                                                                            for you to have
                                                                                                                                            insurance?
  not nearly as exciting as buying a new car   be the “regular driver”), make sure that      This means that they will only pay in
  a beautiful sweater or a nice sound sys-     you tell your insurer this. It is better to   accordance to the portion of the value
  tem. Yet, when placed in a situation where   pay the correct premium for the risk          you have insured. So, if your house-
  we need to claim from our insurer due to     (even though it may be more expensive)        hold contents will cost you R100 000
  a loss incurred, we often regret that we     than getting your claim rejected due to       to replace, but you only insure it for
  didn’t pay more attention at the time!       you misrepresenting the information.          R50 000, your insurer will only settle
       As consumers, we need to under-                                                       50% of the claim.
  stand that insurance companies go to         2. Use of the vehicle                                                                        The answer is simple: life is unpredictable and the risk of not
  great lengths (using scientific analysis)    It is important that your insurer knows       5. Misrepresentation
  to insure that they price risks correctly.   what a vehicle is used for and how            Honesty is the best policy. Claiming for
                                                                                                                                            having adequate insurance cover often involves having to deal
  Statistics have shown that young driv-       often. A vehicle being used for work          items you did not have, or lying about         with added financial pressure, besides the personal tragedy
  ers are higher risks than, for example, a    purposes (eg. being in a sales role and       your true circumstances, could lead            that is experienced.
  40 year old who has learnt more driving      constantly on the road) will be at a high-    to your whole claim being rejected for
  skills over the years. That is why vehi-     er risk for accidents and losses than a       fraud and you may end up with a crimi-         Why carry all the financial risk when      also not be easy.
  cle insurance premiums for a young 22        vehicle being used for travelling to and      nal record if your insurer decides to          this can be mitigated by sharing in a          Insurance is not a nice-to-have
  year old will be more expensive than for     from work.                                    prosecute. If you have made an honest          collective financial pool that is avail-   item on a personal budget that should
  a married 40 year old.                                                                     error, always be open and honest about         able to cover unforeseen costs? A small    be struck off in view of the current eco-
                                               3. Risk address                               the situation.                                 premium is all that is needed to ensure    nomic scenario, but rather a guarantee
  What then does this                          Another area that often results in the             An Insurance Crime Bureau (ICB) is        financial peace of mind.                   that your finances will not worsen in
  have to do with you?                         rejection of claims is when your risk ad-     currently being established in an effort                                                  the event of an unforeseen incident.
  It is important that you understand in-      dress is incorrect or you did not advise      to address insurance fraud, especially         Question:
  surance and understand your obliga-          your insurer of changes of your risk fac-     organised fraud. Consumers who wish            Times are tough right now; doesn’t         Question:
  tion to provide the correct information      tors. An alarm can only be a deterrent        to report any alleged insurance fraud          it make sense to cut “unnecessary”         Can I at least find ways to reduce
  to your insurance company so that they       if it is activated and in working order. A    or inappropriate behaviour can contact         expenses such as insurance pre-            my insurance premiums for now?
  can insure your risks correctly.             vehicle locked up in a garage will be a       the Insurance Fraudline on telephone:          miums and start paying them again          Yes, you can ask your financial advis-
       Absa Insurance Company has put          lower risk than a vehicle standing out-       0800 25 26 27 or e-mail: insurance@            when one can afford to?                    er to assist you in identifying ways to
  a few tips together based on the most        side in a driveway.                           fraudline.co.za                                No! Times may be tough, but things         reduce your current insurance pre-
  common problems experienced at                                                                  If you have any doubts regarding          could get much worse if you were to        mium in the short term. Remember
  claim stage:                                 4. Replacement value                          your insurance needs, please contact           lose your assets through theft, fire or    though, that in order to pay a reduced
                                               Household contents need to be in-             Absa Brokers on 0860 111 555.                  a vehicle accident. If one compares a      cost you will probably have to take on
  1. Regular Driver                            sured for replacement value. In other                                                        small premium to the potential losses      a higher excess payment in the event
  Always provide the correct information       words, if you have to furnish your            Insurance Fraudline:                           that could be incurred by not having       of a claim.
  at the time when you take out insur-         house today, how much will it cost            Tel: 0800 25 26 27                             adequate insurance cover, only one              Contact Absa Insurance and Finan-
  ance. If, for example, the vehicle be-       you? If you don’t insure it for the full      e-mail: insurance@fraudline.co.za              conclusion emerges – it pays to in-        cial Advisers on 0860 111 555 for advice
  longs to you, but your child will be using   replacement value, your insurer can                                                          sure. Having the discipline to re-start    on how to best structure your insur-
                                                                                                                                            paying your insurance premium may          ance spend.


                                                                                                                                        Sponsored by Absa in the interest of financial literacy
14 Consumerfair Edition 3, 2009 • Published by the National Consumer Forum
                                                                    ABsA – finAnCiAL LiterACY feAture




Absa’s Debt Advice
  1. manage your money and change your life today                                   ■   A good option to consider is Debt Consolidation.                            until your financial situation improves, then change it back to the
    ■   Understand the difference between good debt (paying off a                   ■   If you have a lot of high interest rate debt, you should consider           original loan term.
        house that will increase in value) and debt to finance consump-                 putting all of it into a lower interest rate loan account such as
        tion (credit to buy consumables).                                               your home loan.                                                       b) Fix your interest rate
    ■   Keep your personal debt under control and your life free from worry.        ■   A home loan account usually offers the lowest interest rates in          ■ You may only fix your interest rate for a certain period of time.

                                                                                        comparison to other loan accounts.                                       ■ By doing this you will save on your repayments if the interest

  2. Draw up a budget                                                               ■   You can also use any extra cash that you’ve already paid into               rate increases.
    ■   A budget will help you to go from living beyond your means to                   your home loan to pay off your higher interest rate debt.                ■ You must also consider the fact that decreasing interest rates

        living within your means.                                                   ■   After you have paid off your store accounts, close them for good            will cost you more.
    ■   A budget helps you to spend less than you earn and you’ll have                  and cut up the cards.                                                    ■ If you want to terminate your fixed rate option, you will be

        extra cash every month                                                      ■   Don’t fall into the bad debt trap again – you don’t want to pay for         charged an early termination fee.
    ■   You can use this extra cash to pay off more than the minimum                    a new TV and pay the TV off for the duration of your home loan!
        payment due on your highest interest rate debt.                             ■   Put a direct debit order onto your account for your monthly debt      c) Thinking of buying?
    ■   If you owe R2 000 and your debt repayments are R500 per                         repayments so that money will be automatically deducted and              ■ Even though house prices and interest rates are lower than they

        month, then adding just a R100 extra every month, will take you                 you won’t be tempted to spend the money.                                   were, you must still check your budget to see how much dispos-
        about 4 months to pay it off completely.                                    ■   Once you’ve settled all of your debt, you can start to save and            able income you have to pay off on a bond.
    ■   Another way is to pay your smallest outstanding balance first,                  invest.                                                                  ■ If you don’t have enough for the house you’re looking for, you

        then work your way toward your highest balance debt.                        ■   We suggest you save three months’ salary in an easy to access,             may want to think about buying a smaller, less expensive home.
    ■   You must pay the minimum payment due on every debt                              high interest rate account that you can use in any emergency.            ■ By doing this, you will also ensure that you will be able to afford

        every month.                                                                                                                                               possible interest rate increases.
    ■   Then try to pay extra cash into your smallest debt until it’s paid off.   6. Keeping on top of credit                                                    ■ If you already own a home it’s a good idea to extend it using the

    ■   Then add the minimum payment of the paid off debt to your                 There are many benefits to having a credit card, but only if you manage          available funds in your current Home Loan rather than buying a
        “extra” cash and use that to pay your second smallest debt.               it responsibly. Here are some helpful tips:                                      bigger home.
    ■   Continue with this until all your debts are paid off.                         ■ Always keep up to date with your monthly credit card repayments.

    ■   Be honest when drawing up a budget – when you hide debt                       ■ This will enable you to build up a good credit record. If you’ve      d) Pay more
        you’re only fooling yourself.                                                   got a good credit record it’s easier to get bigger loans at better       ■ A direct debit order ensures your Home Loan gets paid on time

    ■   It’s a good idea to put 10% of your available cash into a                       rates in the future.                                                       every month.
        savings account.                                                              ■ Only spend what you can afford – according to your budget.               ■ By paying as much extra cash as you can into your Home Loan

    ■   This will help you grow your wealth over the medium to long                   ■ If you pay the full outstanding balance on your credit card every          every month, you’ll save on the amount of interest charged.
        term and also give you access to cash during emergencies and                    month, you won’t pay any interest on the borrowed amount.
        difficult times.                                                              ■ This will also ensure that you have finance available if you have     e) Save and deposit
                                                                                        any kind of emergency.                                                   ■ You have to put down a deposit before you can buy a home.

  3. important debt don’ts                                                            ■ Don’t exceed your credit limit. You will be charged extra interest       ■ It’s a good idea to save as much money as you can for this deposit

    ■   Don’t ignore any debt, don’t panic and don’t delay taking                       for doing this.                                                            as the bigger it is, the lower your monthly instalments will be.
        immediate action – call your bank!                                            ■ Try not to use the budget facility on your credit card. This option      ■ It is also important to remember that financial institutions are

    ■   Debt can mount up quickly and a non-payment can damage your                     has a higher interest rate than a normal credit card transaction           requiring much higher deposits than previously.
        credit worthiness and lead to repossession of your property or                  and will cost more in the long run.
        goods, sooner than you think.                                                 ■ Think very carefully before you increase the limit on your credit     8. some tips on how to avoid getting
                                                                                        card. You must make sure that you will be able to cover the              into too much debt:
  4. important debt do’s                                                                monthly repayments before you request a limit increase.                 ■   Put your credit or store cards in a place where you can’t imme-
    ■   Be honest with yourself, your family and those who you owe                    ■ Limit the number of credit cards you have. By doing this, you will          diately access them. This will give you some time to think if you
        money to.                                                                       pay fewer annual card fees and there will be fewer interest rates           really need the item you want to buy.
    ■   If you are not able to make a payment on your debt, you should                  to keep track of.                                                       ■   Only draw money you can afford to lose if you are going to the
        immediately explain this to your lenders and tell them you need               ■ This will make your monthly budgeting much easier.                          casino. Never take your credit or bank cards with you.
        a little more time before you make a payment.                                 ■ Most importantly, choose the credit card that is right for you.         ■   Luxury items such as the latest cell phones, plasma TVs or
    ■   It’s also a good idea to confide in your bank as they have spe-               ■ If you will not be able to pay off the full card amount, it would           holidays should never be bought on credit. If you can’t afford to
        cially trained people to help you in this situation.                            make sense to choose a credit card with a lower interest rate.              buy it with cash – just don’t buy it.
    ■   Choose which debt you’re going to pay off first – the largest                 ■ Consider using a Debit Card instead of a Credit Card. Transac-          ■   Don’t spend more than you make a month. This is a sure fire
        interest rate debt or the smallest outstanding balance.                         tions are immediately deducted from your account and it is safer            way to deplete your savings and max out your credit cards.
                                                                                        than carrying cash.                                                     ■   Don’t use your credit card to pay for ordinary purchases such as
  5. responsible borrowing vs too much debt                                                                                                                         groceries, clothes and entertainment. Use a debit card for these
    ■   Responsible borrowing is when you have enough money to make               7. homeowner tips                                                                 necessary purchases
        the monthly repayments comfortably.                                       Here are some tips if you own a home or thinking about buying one:            ■   Don’t use credit if you have cash.
    ■   Responsible borrowing is also borrowing capital to invest in a            a) Keep your home by extending the term of your loan                          ■   Don’t use credit to pay off debt.
        home, which is likely to increase in value, or in a vehicle, which           The term is the number of years you’ve agreed to pay your Home             ■   Limit the number of credit cards you own (including store cards).
        may help you generate income.                                                Loan over.                                                                 ■   Look for the credit card that offers you the best interest rate and
    ■   This type of borrowing is called secured lending and usually              You can increase the term of your Home Loan to up to 30 years.                    benefits.
        attracts a lower interest rate.                                              ■ Your monthly repayments will decrease if you increase the term           ■   Carry cash or a Debit Card. Because it’s real, you’re less likely to
    ■   Higher interest rate debt usually comes from borrowing money                   of your loan.                                                                make “impulse buys”.
        for consumer items such as clothing, furniture or appliances                 ■ You will, however, pay more interest in the long run.                    ■   Check your account carefully and regularly. Remember that
        over extended periods.                                                       ■ You should only increase the term of your loan for a short period            credit card fraud is on the increase.




                     Sponsored by Absa in the interest of financial literacy
                                                                                                                  Putting consumer issues on the agenda   1
                                                             ABsA – finAnCiAL LiterACY feAture




9. Before you get into debt
a) Set debt limits
   ■ Decide how much you can afford to be in debt, and then make

     sure your total debt is below this amount.

b) Learn about money
   ■ Understand how credit and money works. This will help you

     make the right spending and debt decisions.

c) Shop carefully for debts
   ■ Look for the lowest interest rate loan and make sure you under-

     stand how much you’ll be paying in interest.

d) Deal with debt properly
   ■ Stay in control of your money by paying your bills at the same

     time every month and checking your debts once a year.

10. What to do if you are in debt
a) Start saving
   ■ Put away a small amount of money every month. If you are

     struggling to pay off your monthly debt bills, you can use these
     savings to help.
b) Check your debts carefully
   ■ Check that all of your monthly statements are correct. Once a

     year check to make sure you’re still getting the best interest
     rates and best loan deals possible.

c) Don’t give in to temptation
   ■ After you’ve paid off all of your debt, you may find that compa-

     nies may offer you credit. Don’t accept it. Only take out a loan or
     credit service if you really need it.

11. get full value from your banking
Start saving on costs every month with these helpful tips:
  ■ Use your bank’s ATMs, as you’ll pay more for withdrawing money

     if you use another bank’s ATM.
  ■ It’s cheaper to draw one large amount of cash then many

     smaller ones.
  ■ Using your credit or debit card is cheaper than writing a

     cheque.
  ■ Make sure there is enough money in your account when debit

     orders come off your account.
  ■ Many credit cards offer reward’s programmes, find out how they

     work and get more value.
  ■ Always check your bank statements to make sure everything

     is correct.
  ■ Ask us, at Absa, whether you qualify for one of our banking

     accounts designed for lower income people, which offers very
     reasonable fees.
  ■ Always deposit your salary into one transactional account and

     transfer funds from there.
  ■ Choose the bank account that suits your requirements – there

     are some current accounts that offer you great services at very
     reasonable rates.
  ■ Remember, it’s cheaper to do banking at an ATM or through

     Internet, Telephone or Cell phone Banking. If you haven’t regis-
     tered, do it today and save yourself additional banking fees.
  ■ You must clearly understand the bank charges you will pay and

     what benefits and value you will receive. This will also help you
     take better charge of in knowing how your accounts work and
     what you are paying for.




                                                                                   Sponsored by Absa in the interest of financial literacy
1 Consumerfair Edition 3, 2009 • Published by the National Consumer Forum
                                                                       gLoBAL Consumer neWs

Dutch consumers still in the dark about green electricity                                                                                                                         Consumers better
Brazilian consumer group IDEC (Insti-
tuto Brasileiro de Defesa do Consumi-
                                         lation of the Market (CMED) is setting
                                         price limits much higher than actual
                                                                                  market price. The CMED price limit for
                                                                                  a dieting drug called ‘sibutramina’ was
                                                                                                                               CMED should revise its price-capping
                                                                                                                               procedures, says IDEC, who is lobby-               off with generic
dor) has found that brand-name medi-
cines can be as much as 564% more
                                         market prices, says IDEC.
                                              The investigation by IDEC shows
                                                                                  336% higher than the average market
                                                                                  price. IDEC carried out a price-collec-
                                                                                                                               ing for lower price caps that reflect the
                                                                                                                               reality of the market.
                                                                                                                                                                                  medicine, says
expensive than generic equivalents.
    In addition, the National Sani-
                                         that it is possible to buy brand medi-
                                         cines as much as 53% cheaper than
                                                                                  tion exercise between December 2008
                                                                                  and February 2009 in pharmacies from         Instituto Brasileiro de Defesa
                                                                                                                                                                                  Brazilian group
tary Surveillance Agency (ANVISA)        the CMED price limit. For generics       five areas of Sao Paulo in Brazil, which     do Consumidor                                     Many consumers in the Nether-
that regulates the prices of medicine    the price gap is even greater between    resulted in a total of 2,435 prices col-     Web: www.idec.org.br                              lands do not switch their electricity
through its Commission for the Regu-     the price cap set by the CMED and the    lected in 25 categories of medicine. The     Email: coex@idec.org.br                           supply to one drawn from renew-
                                                                                                                                                                                 able sources because of ignorance,
                                                                                                                                                                                 says a Dutch consumer magazine
                                                                                  teaching about gmos in russian schools
malaysian Consumer
                                                                                                                                                                                 Consumentengids.
                                                                                                                                                                                     Many believe that ‘green’


Protection Act needs amending
                                                                                  An innovative educational initiative         played the role of representatives of food        electricity is more expensive and
                                                                                  aimed at educating young people              producers, consumers and journalists.             are not convinced that it is bet-
                                                                                  on genetically modified organisms                 The press conference gave rise to            ter for the environment. A recent
 The Federation of Malaysian Con-        amendments is to make it manda-          (GMOs) recently took place at a tech-        some heated discussion on different as-           survey showed that 40% of Dutch
 sumer Associations (FOMCA) has          tory for businesses to pay court         nical College for Chemistry and Eco-         pects of GMOs, representing the points            consumers would be willing to
 urged the government to speed up        damages awarded by the Consumer          nomics in Moscow.                            of view of all of the various stakehold-          switch to ‘green’ electricity if it
 the amendments to the Consumer          Claims Tribunal. ‘At present, the tri-       College students received a question-    ers. The aim of the event was to provide          would save them at least €50 a
 Protection Act 1999 as every day lost   bunal has to resort to the goodwill      naire aimed at identifying their attitude    answers to 50 questions on GMO stand-             year.
 in ratifying the new Act is costly to   of the Domestic Trade and Consum-        towards GM foods in preparation for a        ards covering all possible angles.                    What they don’t realise, ac-
 the ordinary consumer.                  er Affairs Ministry’s Enforcement        role-playing seminar. They were also              At the end, all students were given          cording to the researchers, is that
     Its Secretary-General, Muham-       Unit to enforce the ruling,’ said Mu-    asked to conduct in-depth research on        free copies of past issues of the con-            going green can save you even
 mad Shaani Abdullah, said the           hammad Shaani.                           the issue from the point of view of their    sumer magazine, Spros, which had fea-             more. In fact, seven of the ten
 amendments were proposed over                                                    adopted role. The role-playing seminar       tures on GMOs.                                    cheapest electricity providers in
 eight years ago but they were yet to    Federation of Malaysian Consumers        was done as an improvised press confer-                                                        the Netherlands are ‘green’.
 be tabled in Parliament. FOMCA has      Associations (FOMCA), Malaysia           ence in which some students played the       Interrepublican Confederation of Consum-
 submitted a hundred amendments             Web: www.fomca.org.my                 role of experts on various topics such as    er Societies (Konfop), Russian Federation         Consumentenbond, the Netherlands
 to the Act. One of the proposed            Email: fomca@fomca.org.my             genetics, agronomy, economics, biology,      Web: www.spros.ru                                 Web: www.consumentenbond.nl
                                                                                  medicine, diet and nutrition while others    Email: konfop@mail.ru




                                                                                                                    Australian supermarket cakes packed with additives
                                                                                                                    An investigation by consumer group CHOICE into supermarket cakes in Australia has found some
                                                                                                                    contain more than 20 additives, including those used to prolong shelf life or to disguise poor quality
                                                                                                                    ingredients such as apples instead of raspberries in jam filling and palm oil instead of butter.
                                                                                                                         Of the almost 100 cakes tested, a cake from the supermarket chain Woolworths was the worst
                                                                                                                    offender with 27 additives. There is a long list of food additives used to enhance a food’s appear-
                                                                                                                    ance or shelf life, amongst them antioxidants, emulsifiers, gums, humectants, preservatives and
                                                                                                                    raising agents. More than half the cakes also contained food colours identified as likely to increase
                                                                                                                    hyperactivity in children, according to a UK study published in medical journal, The Lancet.
                                                                                                                         CHOICE also found that price was no indicator of quality, with some of the most expensive
                                                                                                                    brands among the heaviest users of additives.

                                                                                                                    CHOICE: Australian Consumers’ Association
                                                                                                                    Web: www.choice.com.au
                                                                                                                    Email: ausconsumer@choice.com.au

                                                                                                                    Chile swept by a drug price-fixing scandal
                                                                                                                    Three pharmaceutical companies in Chile – Farmacias Ahumada, Cruz Verde and Salcobrand
                                                                                                                    – have been accused of colluding to fix and raise the price of more than 200 medicines since
                                                                                                                    November 2007, including birth control medication and treatments for chronic diseases like
                                                                                                                    diabetes and epilepsy.
                                                                                                                        Government and competition authorities are not only concerned with the lack of competition in the
                                                                                                                    market but also neglecting to put the health of consumers at the core of public decisions, says Chilean
                                                                                                                    consumer group CONADECUS.
                                                                                                                        Penalties imposed on the offending companies will be marginal compared to the profits they’ve
                                                                                                                    made from the price-fixing, says CONADECUS, while compensation to consumers through collective
                                                                                                                    redress is not an option under the relevant Competition Law. In any case, with these three phar-
                                                                                                                    maceutical companies controlling a 90% share of the drug market, efforts to improve competition
                                                                                                                    regulation can only do so much.
                                                                                                                        CONADECUS advocates the creation of a state-owned drug manufacturing and supplier
                                                                                                                    agency, which would produce the 500 medicines most commonly used and supply free-of-cost
                                                                                                                    medicine to the existing network of municipal surgeries. It would also supply independent phar-
                                                                                                                    macies and, while pricing would remain their prerogative, a maximum 70% profit margin would
                                                                                                                    apply. The agency would also promote the use of generic medicine.

                                                                                                                    Corporación Nacional de Consumidores y Usuarios de Chile (CONADECUS), Chile
                                                                                                                    Web: www.consumidoreschile.cl
                                                                                                                    Email: conadecus@conadecus.cl
                                                                                                                                                                      Putting consumer issues on the agenda    17
                                                                             gLoBAL Consumer neWs



us consumers fume as banks squeeze credit cards
Prabhudev Konana travelled to Paris          along the Federal Reserve interest rate      year, up from $43bn in 2007, accord-
in December and used his Citigroup           cuts meant to boost the sagging econo-       ing to Hammer. The bad debts may
credit card to pay hotel and restaurant      my. US President Barack Obama, who           reach $65bn this year.
bills. When he got home to Austin,           met card executives at the White House            Credit cards became a cornerstone
Texas, he was upset to see two differ-       recently, says consumers deserve pro-        of US banking in recent years, offering
ent currency exchange rates for charg-       tection from unfair practices.               steady income to counter volatility in
es made the same day, one 3.6 percent                                                     trading and investment banking. JP-
higher than the other.                       Losing customer loyalty                      Morgan Chase’s card unit contributed
     He e-mailed Citigroup to complain.      Banks need healthy credit card earnings,     about 22 percent of total bank revenue
“The response was, ‘Go read your con-        since they can no longer rely on profits     in the past three years. Citigroup’s card
tract,’” says Konana, a professor at the     from trading the exotic securities that      revenue last year was $20bn.
University of Texas’s McCombs School         brought the markets to the abyss. Now             Now that bounty is threatened.
of Business. “The arrogance was just         they are squandering customer loyalty        Cardholders like Konana are fuming,
unbelievable.”                               and curtailing lending, which will hurt      partly because of the billions the gov-
     Next, the bank increased the inter-     them in the long run, says Robert Ham-       ernment has poured into the banks
est rate on his card to 20 percent from 13   mer, the chief executive of RK Hammer        in the past year. In December, the Fed
percent. “They lost me as a customer,”       Investment Bankers, a credit card advi-      asked for comment on rule changes to
he says.                                     sory firm in California.                     address unfair card practices - and got
     Citigroup, Bank of America and               The retreat occurring in credit cards   more than 60 000 e-mails.
the rest of the top seven US card issuers    is like nothing Hammer has seen in his            The Fed rules, which will limit sud-
together raked in more than $27 billion      30-year banking career, he says. “They       den changes in interest rates, for exam-
(R228bn at Friday’s exchange rate) in op-    are shooting themselves in both feet.        ple, are set to go into effect on July 1 next
erating profit from credit cards in 2007,    They are saying, ‘We aren’t going to         year. Democrats in Congress are push-
according to Bloomberg data. Now they        take risk.’” The banks say they need the     ing legislation to move up the changes
are mostly earning customer outrage.         higher fees and interest rates.              and add more consumer protections.
     Banks are cutting credit lines and           The industry absorbed about
raising fees - and are reluctant to pass     $55bn in credit card defaults last           Source: By Lisa Kassenaar, Bloomberg




     how the national Credit Act affects you
     1. What are effects of the national Credit Act (nCA) on consumers?
     Statistics show that there is a decline in both car and furniture sales, based on the following reasons:
       ■ Stricter consumer credit checks by creditors before granting credit

       ■ Negative consumer reports supplied by credit bureaus

       ■ Consumer’s over-indebtedness



     2. Why are consumers’ credit applications being declined?
        ■   Before the NCA, dealers or businesses would sometimes recklessly lend to consumers who did not qualify to get credit; these consumers would end up having their goods either
            repossessed or judgments passed against them in courts of law.
        ■   The new Credit Act categorically states that before any installment credit agreement is entered into, the responsibility lies with the dealer to assess the creditworthiness of that
            consumer. Further, the dealer has to verify with the credit bureaus to check if a consumer is worthy of being granted credit.
        ■   If a credit check reveals that a consumer is over-indebted, their credit applications will be denied.

     3. Do we still need credit bureaus after the nCA?
        ■   For the economy of the country to prosper, and to strictly control consumer over-spending, credit bureaus are vital to keep the history of consumer behavior before any credit could be granted.
        ■   Without the credit bureaus, the NCR would not be effective.

     4. how is credit assessment by business and credit bureaus benefiting consumers?
        ■   It helps consumers by preventing over-spending by consumers.
        ■   Credit assessment avoids reckless lending by business especially to consumers who are already over-indebted. It is therefore a guiding tool in assisting consumers to guard
            against overspending.

     5. What can consumers do to avoid over-indebtedness?
        ■   The most important thing for consumers to do is to plan their personal and family budgets.
        ■   Consumers should avoid buying impulsively (i.e. whenever one feels that he\she needs something without giving it a thorough consideration).
        ■   Should consumers find themselves being over-indebted, the NCA provides a remedy in a form of “Debt Rescheduling Programme” offered by the National Credit Regulator, who nor-
            mally would refer the request to debt counsellors.
1 Consumerfair Edition 3, 2009 • Published by the National Consumer Forum
                                                                              CreDit informAtion




CONSUMER RIGHTS WITH THE AFRICAN BANK CONSUMER ADVOCATE



understanding
credit bureaux
What is a credit bureaux?
A credit bureau is a private busi-
ness which gathers information on
                                           cell phone companies, etc who pro-
                                           vide the bureau with details about:
                                           ■ when they first enter into a contract
                                                                                     ■ Debt counsellors – when a consumer
                                                                                       applies for debt review, the debt
                                                                                       counsellor is required to report this
                                                                                                                                    privacy. If anyone who is not
                                                                                                                                    authorised to access your infor-
                                                                                                                                    mation, obtains a copy of your
                                                                                                                                                                                                Marilyn Budow
                                                                                                                                                                                                African Bank
                                                                                                                                                                                                Consumer Advocate


                                                                                                                                                                              into the wrong hands or being al-
                                                                                                                                                                              tered without proper process.

every consumer’s credit history. The         with a consumer (for example, they        under a special notice (no further           records, they are in breach of the    how do the credit bureaux
bureau makes a record of each con-           give details such as the contract/        credit may them be granted to the            law, and you have the right to        make their money?
sumer, with this information:                loan amount, instalment and total         consumer)                                    take the matter further               ■ The bureaux receive a fee from the
■ personal contact details and em-           amount repayable, as well as an         ■ The South African Fraud Preven-                                                      credit provider or person making an
  ployment information                       update of the consumer’s personal         tion Service or any entity involved      Who are these credit bureaux,               enquiry, on each consumer’s record
■ details of who has enquired about          information, such as contact and          in a fraud investigation – when          and who controls them to make               enquired about. In 2008 there were
  the consumer                               employment details)                       there is a suspicion of fraud includ-    sure that they are trustworthy?             over 458 million enquiries made
■ details about each of the consumer’s     ■ every month thereafter, advising          ing identity theft                       ■ There are 11 credit bureaux in South      with the bureaux!
  accounts and loans, as well as the         the bureaus how the account is be-                                                   Africa. The two largest are:            ■ Consumers can also access their bu-

  payment record on each account             ing paid                                What about my privacy? surely                ■ Transunion ITC                          reau records at any time. You can get
■ special categories which show poor       ■ when the credit provider wants to       i have a right to keep my                    ■ Experian                                one free report a year per bureau;
  payment performance in terms of            note a special listing about the ac-    financial situation to myself              ■ The NCA requires all bureaux to           after that, you pay a fee of up to
  an agreement or legal action taken         count payment (for example, when        ■ The only way to keep your finances         register with the National Credit         R22.80 (R20 plus VAT) for each copy
  on an account                              the account goes into default or is       private is if you do not access credit     Regulator, to provide annual re-          obtained.
                                             handed to a third party for collec-       at all                                     ports and to follow the rules as set
Where do the credit                          tion)                                   ■ Credit providers need to know about        out by the NCA. The NCR has the         the credit bureaux have a
bureaux get their                        ■ The courts (for example, when a             your credit history to assess whether      right to inspect any bureau and de-     bad reputation – i always
information about me?                      judgement is taken or a person is se-       they should give you credit (would         register them if they fail to comply.   thought they were the enemy
The bureau can obtain their informa-       questrated)                                 you lend money to a stranger?)           ■ The NCA rules include setting           of consumers. is this correct?
tion from:                               ■ Providers of continuous services          ■ At the same time the list of who           standards to ensure that the infor-     Credit bureaux were quite controver-
■ Credit providers (banks, micro-          (such as electricity and rates) – cur-      can provide and access your in-            mation on the bureau is accurate,       sial businesses in South Africa before
  lenders, fashion stores, etc), debt      rently in South Africa this informa-        formation is controlled by the             up to date and that all consumers’      the National Credit Act was passed in
  collectors, insurance companies,         tion is not yet updated                     NCA to protect your right to               records are protected from getting      2007. Originally, the bureaux only kept




                              ?                                                                                                                         !
                                                                                                                                                                                  Putting consumer issues on the agenda       19
                                                                                             CreDit informAtion




CONSUMER RIGHTS WITH THE AFRICAN BANK CONSUMER ADVOCATE

negative lists of people who did not             ■ invaded a person’s Right to Privacy as            pay more than R22.80 for a copy. Note          Different credit providers use dif-    ■   You, the consumer also have the
pay their debts and that is why we talk            protected by section 14 of the South              that the bureaux use your request for      ferent bureaux to check your records,          right to access a copy of your bureau
about ‘blacklisting’.                              African Constitution – there were no              a copy as an opportunity to update all     so it is in your interests to get copies       record at any time – you are entitled
     But since the 1980s many retail-              proper controls as to who could ac-               your details and require you to register   from both the two largest bureaux (Ex-         to a free copy once a year from each
ers started working with the bureaux               cess information about a consumer                 with them, complete forms with your        perian and Transunion ITC) to check            and any of the bureaux.
to share all information about credit              on the bureau and for what purpose                personal details, and send them a copy     the accuracy of all the information.
granted to consumers and how people              ■ were used for inappropriate pur-                  of your ID (to prevent any third party                                                What do i do if i am unhappy
paid their debts, whether good or bad.             poses (for example, employers would               accessing your information).               Who has the right to get a                 with the information on
Consumers still had many complaints                check a person’s bureau records                                                              copy of my bureau report?                  my bureau record?
and from 2000 the trade unions, the                when they applied for a job)                      Here are the contact details to use        The NCA Regulations control who can        First contact the credit bureau. If they
Communist Party and many NGOs                    ■ sold the data to others for marketing             to get your credit report:                 see your credit bureau report. The most    do not help, the next step would be to
and consumer organisations led a cam-              purposes                                          ■ Experian: 0861 10 5665 or                common users are:                          send the complaint to the CREDIT IN-
paign against the credit bureaux. They           ■ acted not only as places where infor-               www.creditexpert.co.za                   ■ Credit providers - when you apply        FORMATION OMBUD.
complained that the bureaux:                       mation on a consumer’s credit record              ■ Transunion ITC: 0861 482 482 or            for credit or when they want to trace         The office of the Credit Information
■ ‘blacklisted’ consumers even when                was stored, but that the bureaux also               email freecreditreport@itc.co.za (for      you if you default on your payments      Ombud is an independent body which
  their debts had been paid up                     set themselves up as debt collectors                your once a year free copy) or www.      ■ Fraud detection and prevention           was set up to protect the rights of consum-
■ had information about debts which                – this was a conflict of interest and               mycredit.co.za                             agencies like the South African Po-      ers by amongst others, assisting them free
  were very old and where the consum-              an inappropriate use of the bureau                ■ Compuscan: 0861 514 131                    lice Services – when investigating a     of charge to resolve complaints with the
  er was not to blame for the defaults             information stored.                                                                            possible fraud                           bureaux. All decisions taken by the Om-
  as with the bond boycotts in the late          Many of the above concerns were ad-                 should the different bureaux               ■ With your consent, anyone who:           bud, Manie van Schalkwyk, are binding
  1980s/1990s before the end of apart-           dressed by the National Credit Act                  have the same reports with                   ■ is considering employing you in a      on the credit provider and the bureaux.
  heid                                           (NCA) which placed all credit bureau                the same information?                           position of trust and honesty and
■ listed people for small amounts                under the regulation of the National                As the information recorded on the              where you handle cash or finances     Credit Information Ombuds contact
■ had no effective process where con-            Credit Regulator (NCR). Through an                  bureaux should be accurate and up-           ■ wants to verify your educational       details:
  sumers could complain about incor-             Amnesty, the Act allowed for certain in-            to-date, in theory the information on           qualifications or employment (note    www.creditombud.org.za
  rect or unfair information on the              formation which existed on the bureaux              each bureau should be the same as any           that the educational qualification    ombud@creditombud.org.za
  bureaux                                        before December 2007 to be removed.                 other. However, in practice these com-          aspect is not yet functional)         0861 OMBUDS / 66 28 37
■ were not regulated and could do as                                                                 panies are competitors (they do not          ■ needs to assess your insurance ap-

  they please (the bureaux formed a              how do i get a copy of                              share all the information they receive),        plication                             For more information:
  trade association which drafted a              my bureau report?                                   and some may be better at keeping            ■ has your permission to check your      Marilyn Budow
  Code of Conduct for bureaux but or-            You can contact the credit bureaux                  accurate and up to date records than            report for an agreed/specified pur-   ABIL Consumer Advocate
                                                                                                                                                                                           ABIL Consumer Advocate’s Office
  ganisations felt the Code did not go           and ask for a copy of your report. One              others. So you will find that the infor-        pose (for example, landlords will     Tel: 011 256 9743
  far enough to protect consumers and            report per year per bureau is free; the             mation is not always the same, and the          often get your consent when they      Fax: 011 207 3890
                                                                                                                                                                                           Cell: 082 821 5678
  there was no regulator to check that           rest you will have to pay for. The NCA              layout/format and details may be a bit          are considering signing a rental      mbudow@africanbank.co.za
  the bureaux followed their own rules)          Regulations state that you may not                  different.                                      agreement with you)




  Consumer credit barometer
  As at March 2009 the credit bureaux had               on-year. Of the total enquiries made
  records for 17.61 million credit-active con-          on consumer records, enquiries from
  sumers:                                               banks accounted for 38.3% and enquir-
  ■ The percentage of consumers in good                 ies from retailers accounted for 22.4%.
     standing was 57.6% at the quarter               ■ In the quarter ending March 2009,

     ending March 2009. This is a decrease              8,370 disputes were lodged by
     of 0.8% when compared with quarter                 consumers relating to the accuracy of
     ending December 2008 and a decrease                the credit information on their credit
     of 4.0% when compared with quarter                 records. This is a decrease of 7.2%
     ending March 2008.                                 quarter-on-quarter and a decrease of
  ■ The number of consumers with an                     33.8% year-on-year.
     impaired record increased by 160,000            ■ The number of credit reports issued to

     quarter-on-quarter and increased by                consumers have decreased in the quarter
     870,000 year-on-year.                              ending March 2009, with 30,652 free
  ■ On average, each credit-active con-                 credit reports being issued, a decrease of
     sumer has three active accounts.                   9.4% quarter-on-quarter. A further 2,889
  ■ In the March 2009 quarter, the total                credit reports were issued with charge.
     number of enquiries made on consumer
     credit records was 99.93 million. This          Source: The National Credit Regulator’s
     is a decrease of 3.1% from the previous         Credit Bureau Monitor
     quarter and a decrease of 8.2% year-            (First Quarter, March 2009)
0 Consumerfair Edition 3, 2009 • Published by the National Consumer Forum
                                                                                  CeLLuLAr reguLAtion


All cellphone users
must register now
The Regulation of Interception of Com-        individual may be sentenced for up to 2
munications and Provision of Commu-           years’ in prison or may be fined for fail-
nication-Related Information Act (RICA)       ing to report the theft, damage or loss of
came into effect on 1 July 2009; the law      a cellphone.)
hopes to cut down on cellphone theft               In April 2005, with regard to the
and other related crime.                      need to make the blacklisting of stolen
     From now on, any person that buys        cellphones standard practice, a blacklist-
a SIM card from must produce an ID            ing agreement was signed between all
book and proof of residence. Consumers        three cellphone operators and the SAPS.
are supposed to benefit from this proc-       Initiated and facilitated by Business
ess in the event of your cellphone being      Against Crime (BACSA), this joint ini-
stolen – making it easier to identify the     tiative helped to establish the Cellphone
rightful owner.                               Theft Prevention Project which involves
     In some instances, a person’s cell-      key stakeholders from the private sector
phone may give police the only link to a      and government.
person’s identity. The cellphone network           The agreement calls for the black-
operators’ database (which contains all       listing of all lost, stolen and destroyed
users’ information) is then an important      cellphones and aims to make these cell-
tool for law enforcement officers. Impor-     phones useless to criminals. Damaged
tantly, it helps them to investigate crimes   cellphones also need to be blacklisted to
more efficiently and effectively by clos-     prevent their IMEI numbers from being
ing down the information gaps which           duplicated, while these are no longer ac-
existed previously.                           tive due to permanent phone damage.
     If a SIM card is purchased from a             “The initiative has begun its journey
street corner vendor, consumers have          through other African countries, with
been urged to register the new SIM card       the aim of setting up a central equip-
with their chosen network operator.           ment identity register within Africa.
     Consumers will benefit from this         Such a register will ensure that a cell-
process, as once this information is          phone blacklisted in South Africa, will
captured on the network operators’ da-        remain blacklisted throughout Africa,
tabase, a person can be linked up as the      and vice versa, making the theft of cell-
owner of a particular cellphone or SIM        phones a useless and unprofitable exer-
number.                                       cise for thieves on the continent. This is
     RICA also makes it compulsory for        one of the ways in which we are seeking
a consumer to report their stolen, lost       co-operation on a regional level to close
or damaged cellphone as soon as possi-        down the market for stolen cellphones,”
ble at the nearest police station. Failure    said Simi Pillay-van Graan, BACSA Na-
to do may result in a criminal prosecu-       tional Project Manager for the Cellphone
tion. (In terms of Section 41 of RICA, an     Theft Prevention Project.




 Where Do You go When You neeD to ComPLAin?
 Consumer Affairs offices                     KwaZulu-Natal                                Free State                          Northern Cape                       Mpumalanga
 These are government agencies                Tel: 033 264-2500                            Tel: 051 400-4700/4852              Tel: 053 832-2566/7                 Tel: 013 752-3761/5
                                              Fax: 033 264 2676                                                                Fax: 053 832-2564                   Fax: 013 752-3729
 that offer a free service.                                                                Fax: 051 400-9610


  Eastern Cape                                North West                                   Limpopo                             Gauteng                             Western Cape
  Tel: 040 609-3052                           Tel: 018 389-5046                            Tel: 015 298-7071                   Tel: 011 355-8117                   Tel: 021 483-5133
  Fax: 040 609-3231                           Fax: 018 889-5636                            Fax: 015 295-8750                   Fax: 011 355-3017                   Fax: 021 483-5872
                                                                                                                                                                   Toll Free: 0800-007-081


 these organisations and associations
 can also help answer your questions
                                              Banks                                        Furniture retailers                 Building companies
 and hear your complaints:                    The Banking Adjudicator                      The Furniture Traders Association   The National Home Builders          National Energy Regulatoir
                                              0860 800 900                                 Toll-free: 0861 99 88 77            Registration Council 011 348-5700
                                                                                                                                                                   (NERSA)
                                                                                                                                                                   Tel: 012 401-4600
                                                                                                                                                                   Fax 012 401-4700
                                              Credit providers/bureaus                     Unfair competition                  Medical schemes
                                              The National Credit Regulator                Competition Commission              Council for Medical Schemes
                                              0860 627 627                                 012 349-3200                        Share call: 0861 123 267            Financial advisors
                                                                                                                                                                   Ombud for Financial Services Providers
                                              Blacklisting                                 Motor vehicles                      Tourism Grading Council             0860 324 766

                                              Credit Information Ombud                     Motor Industry Adjudicator          Tel:011 783-0383/ 11 384-7600
                                              0861 662 837                                 012 361 8824                        Fax: 011 783-0485

				
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