A decade on, the Edcon club fee is declared illegal

The National Consumer Tribunal has ruled that Edcon’s charging of a club fee on its credit agreements for the past 10 years contravenes the National Credit Act.

The National Credit Regulator, which referred the case to the Tribunal for a ruling, put out a statement yesterday saying that the Tribunal intends to convene a hearing to determine the “administrative fine” payable by Edcon.

And this: “The NCR will approach Edcon to request an independent audit of their loan book to establish the number of consumers to be refunded and the total amount to be refunded from 2007 to date.”

Clearly it’s a lot of money. Just how much I couldn’t establish, because Edcon’s spokesman wouldn't tell me how many of Edcon’s 3,4 million accountholders have been paying a club fee. And obviously I have no way of knowing how long that undisclosed number of people have been paying that club fee.

According to Edcon’s 2016 financial report, the company has about 3,4 million accountholders. Working on the conservative assumption that only half of those are paying monthly club fees of between R34 and R60 - depending on the benefit level - the company earns close to R75million a month in club fees.

And someone who has been paying a R44 club fee for all of those 10 years would have paid a total of R5280 - but that fee would’ve been less 10 years ago, so the total would be a bit less, but still running into the thousands.

An Edcon spokesman told me that the company intends to appeal the order, so club members shouldn’t hold their breath about getting all their fee payments refunded any time soon.

“This judgement relates to the merits of the issue, and does not deal with any sanction, which will only be determined at a later date,” he said.

It was only the club fee which was “under contention” not the club product or membership, he said.

As for what that club fee buys members: there are three tiers of club membership - Club Classic at R34 per month, Club Life at R44 and Club VIP at R60 a month, with benefits including preferential rates and savings on gyms and spas; movie and theatre tickets; accommodation and car rental and emergency services, as well as education benefits.

I asked that Edcon spokesman what percentage of Edcon’s club members actively claim those benefits on a regular basis, but he dodged that question and said: “Edcon estimates that a Club member can save up to R17 000 over a year if all the benefits are used on a regular basis”.

The key word in that sentence is “can”.

I spoke to quite a few Club members yesterday said they never claimed any benefits and hadn’t realised that they needed a club card in order to do so.

And several accountholders have complained to me in recent years that they acquired club membership and were charged a fee for it despite not agreeing to it when applying for an account or when cold-called with an offer to join the club.

So while the refund issue remains in the air, the publicity around this case will at least alert accountholders to the fact that they may be paying between R34 and R60 a month for club membership that they aren’t deriving any real benefit from, or don’t even know about.

Oh, and that the fee has been found to be illegal.

Edcon will no doubt continue to add that club fee to its club members’  accounts pending its appeal of the Tribunal ruling. At least to those who have haven’t cancelled their memberships.

To be continued…

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