EDCON CLUB FEE RULED LAWFUL

The Edcon Group (“Edcon”) has successfully appealed the finding of the National Consumer Tribunal (“the Tribunal”) that Edcon unlawfully charged its customers Club fees and was in contravention of the National Credit Act 34 of 2005 (“the NCA”).

Following a complaint initiated by the National Credit Regulator (“the Regulator”), the Tribunal made a ruling that Edcon had engaged in repeated prohibited conduct by adding a Club fee to the credit agreement as this was contrary to Section 101 of the NCA. Edcon offers a ‘Club’ membership to its credit customers which membership gives access to various services and benefits.

Section 101 of the NCA sets out the costs, fees and charges allowed in terms of the NCA and does not allow for a “club fee” or anything similar. Accordingly, the Tribunal directed that a hearing should proceed on the appropriate sanctions to be imposed on Edcon.

Edcon appealed the ruling of the Tribunal in the North Gauteng High Court in Pretoria where Judge Johan Louw upheld the appeal and found that the Tribunal erred in its decision [Edcon Holdings Ltd v National Consumer Tribunal and Another 2018 (5) SA 609 (GP)].

In his ruling, Judge Louw held that Edcon’s credit agreements do not place any obligation on a consumer to pay a Club fee and the consumer has a choice whether or not to apply for Club membership. Furthermore, the consumer can cancel the Club membership at any time. Thus the Club fee charged is clearly not a cost of the credit which is extended to the consumer in terms of the credit agreement and is therefore not in violation of the provisions of the NCA.

As a result, the Edcon Group, which includes stores such as Edgars and Jet, may yet again charge Club fees for its willing customers.

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