Itching to purchase that new 55’ Hisense television, but due to your lovely bank balance, you are unable to do so, frustrating, as most people will know. Retailers are providing lay-by options to consumers who currently do not have the immediate funds available to purchase their products. Consumers have the option available to pay off products by way of instalments while the retailer in return reserves the product and only provides the consumer with the product as soon as the final amount has been paid. An economical method due to the fact that consumers now don’t have to apply for- and buy on credit, making this an interest-free transaction.
Even though so economical the Consumer Protection Act (CPA) regulates such a transaction. One of the aspects regulated by the CPA is the penalty amount.
According to the CPA, you can cancel a lay-by agreement and the consumer must be refunded all payments they’ve made up to that point, minus just 1% of the retail price as a cancellation penalty. So if the Hisense television cost R10 000.00, the cancellation penalty is just R100.00.
It is also of utmost important to take note that the retailer must refund you and cannot force down a store-credit should you decide to cancel the lay-by agreement.
The CPA restricts the penalty amounts that retailers can charge for cancelling a lay-by agreement. Should the retailer, however, fail to inform the consumer about the penalty fee, the retailer, however, may not impose any cancellation fee.
ABOUT THE AUTHOR
Damian Bothma is a Legal Advisor at SEESA Consumer Protection & POPI Legal department. He obtained his LLB degree from the University of South Africa. He started his career at SEESA in 2017 after leaving the practice.