Gauteng / Investment fraud
Consumers misled over credit-card instalments, Mohamed says
Customers buying expensive share-trading software are allegedly told the purchase price will be deducted in monthly instalments, while the supplier receives the full amount upfront.
Consumers buying expensive share-trading software are allegedly being misled about how credit-card instalment payments work, according to Ebrahim Mohamed.
Salespeople reportedly tell customers that the purchase price will be deducted in six or 12 monthly instalments. In reality, Mohamed said, the supplier receives the full amount immediately.
“They say to consumers, ‘You’ll pay in 12 monthly instalments or six monthly instalments.’ Meanwhile, the total amount is deducted.”
Ebrahim Mohamed
The customer is then left owing the bank and repays the purchase through a budget facility, with interest increasing the total cost.
Why the instalment pitch works
This distinction is particularly important when customers are persuaded to buy software costing thousands of rands. A seemingly affordable monthly repayment can conceal the fact that the entire purchase has already been completed.
Cancelling the agreement or recovering the money may consequently be far more difficult than the customer expected.
What consumers should do
Consumers should establish the full purchase price, interest charges and cancellation conditions before entering their card PIN or authorising a transaction. They should also obtain all promises about refunds and instalments in writing.
The allegations have not been tested in court. Gatvol has invited the company concerned to respond.
Warning signs for consumers
- Promises that the purchase price will be deducted in small monthly instalments
- Salespeople who do not explain the budget-facility interest cost
- Pressure to enter a PIN or authorise a transaction before terms are clear
- Verbal refund or cancellation promises not confirmed in writing
- The supplier receiving the full purchase price while the customer owes the bank
- Difficulty cancelling after discovering the true repayment terms
Consumers should read credit-card budget-facility terms carefully and request written confirmation of instalment arrangements. The National Credit Regulator and the National Consumer Commission can advise on credit and consumer-rights complaints.
Background on the record
Allegations have not been tested in court. Parties named in the complaints are given a right of reply.