CPUT student Sergio Nomdo put down a deposit of R3 500 for a drum kit from Musician’s Gear Zone at Canal Walk, which he understood was on lay-by.
Six days after he signed the agreement he changed his mind and wanted his money back.
“The manager, ‘Mr Ron’ (Naicker), refused to give me a refund because he told me that lay-bys don’t ‘have refunds’ and if I wanted to take it further I can go to court, he told me. I would really like some help,” the Bridgetown student said.
Just hours after I contacted Donovan Rasch, director of Tradelius Music Group, the holding company based in Ballito Bay, Kwa-Zulu-Natal, the problem was resolved.
“At the outset Tradelius prides itself on being fully compliant with the Consumer Protection Act (CPA) and our staff are also fully expected to abide by CPA rules. It is company policy not to offer lay-bys but issues do arise which require our personal attention and this is one of them,” Mr Rasch said.
“I have spoken to Mr Naicker and as I understand it Mr Nomdo bought the drum kit which was on a clearance sale. It was the last one available and Mr Nomdo was particularly enthusiastic about it but did not have funds to immediately pay for it.
“According to Mr Naicker it was not a lay-by agreement and Mr Nomdo signed a full sales invoice as he did not want to pass up on the incredible price and the fact that it was the last item available. Since Mr Nomdo did not have the full funds available immediately and really wanted the item, Mr Naicker allowed him to pay R1 000 to reserve the item and Mr Nomdo subsequently paid R2 500 the next day and wanted to pay the remainder within the next few days,” Mr Rasch said.
Mr Naicker indicated to Mr Rasch that he subsequently lost several customers who had wanted to buy the drum kit and couldn’t sell it as it had been reserved for Mr Nomdo.
“Mr Naicker offered Mr Nomdo a credit voucher to the value of R3 500 to be used at any time when he said he no longer wanted the kit, but Mr Nomdo wasn’t interested, “ Mr Rasch said.
“We have looked at the issue and although we understand Mr Naicker’s premise that the item was not purchased as a lay-by agreement, according to the CPA, it is still considered a lay-by, as the customer had reserved the item, although he did not pay the full price or take possession of it, Mr Nomdo is within his rights to ask for a refund,” said Mr Rasch who instructed Mr Naicker to refund the customer the full R3 500, “and we will waive the 1% penalty”.
And it was done a few days later as a grateful Mr Nomdo confirmed.
More businesses should follow the example of Tradelius Music Group and do the right thing, just like that.
Ashley Searle, director in the Office of the Consumer Protector (OCP) in Cape Town, said lay-bys are governed by Section 62 and 32 of the CPA Regulations issued in 2011 by Trade and Industry Minister, Rob Davies.
“In short, section 62(4) of the CPA allows a consumer to terminate a lay-by agreement and also allows the supplier to charge a cancellation penalty. The calculation of the cancellation penalty is prescribed in the regulations and is currently set at 1% of the purchase price of the goods,” Mr Searle said.
If the total purchase price of the drums was R5 000 then the maximum cancellation penalty would be R50 – 1% of R5 000.
“The regulations also provide that upon request by a consumer the supplier must in writing stipulate how the cancellation penalty was calculated. This was put in place so that consumers can evaluate the cancellation penalty and determine if it is in accordance with the regulations,” Mr Searle said.
“I am aware that industry is unhappy with this prescribed rate as they claim that it is insufficient to cover all the costs associated with administering a lay-by. There may well be merit in this argument. However, at this stage the reality is that the law prescribes the cancellation penalty at 1%. As such this is what a supplier is allowed to charge lawfully. Anything outside of this would possibly constitute a transgression of the CPA.
“From the facts provided to us it appears that the manager of the store may not be aware of the provisions of the act. I trust that once he is advised he will abide by what the law prescribes,” Mr Searle said.
In the revised fourth edition of Everyone’s Guide to South African Law (Zebra Press) just released, the authors AM Anderson, A Dodd and MC Roos explain that if anything happens to the goods bought on lay-by while you are still paying for them it is the supplier’s loss and they have to replace the goods or refund you.
If it is the supplier’s fault, if they sold the goods or failed to keep control of the stock levels, you are entitled to double your money back (see Read of the Week).
* Contact the Office of the Consumer Protector on 0800 007 081, Consumer.Protector@western cape.gov.za or you can visit www.westerncape.gov.za for more information.