Skip to content

Why the recent criticism of VW’s financing agreements is important for ecommerce

On 11 April the National Consumer Tribunal ruled that Volkswagen Financial Services must refund, with interest, customers it charged for on-the-road, administration and handling service fees since 2007.

This ruling has raised the legality of installment agreements that consumers sign prior to taking delivery of vehicles bought from dealers (and other financing agreements for other products). The Tribunal said that Volkswagen Financial Services must stop charging consumers these fees and must submit a written confirmation that it had done so by 25 April. VW Financial Services is expected to challenge the Tribunal’s ruling in the High Court.

This is not the beginning of this issue. Way back in Oct 2017, the National Credit Regulator (NCR) issued a compliance notice to VW for charging consumers an on-the-road admin fee and handling fee on credit agreements. These fees are not permitted to be charged on credit agreements by the National Credit Act.  The NCR compliance notice instructed Volkswagen Financial Services SA to refund consumers and submit an audit report to the NCR. VW blocked that by appealing. 18 months later the regulators have again caught up with VW. The problem here is that when consumer protection rules are put into question by large brands trying to avoid their responsibilities issues of consumer trust and fair competition are raised. This is not necessarily a problem of consumer education (as some claim), rather it is a failure of corporate governance and corporate responsibility.

In a paper, ‘A New Multilateralism for Shared Prosperity: Geneva Principles for a Green New Deal’, recently published by UNCTAD, the type of practices which VW has been found guilty of are labelled “crocodile capitalism”.

Posted in

Shahrain Coovadia

Shahrain Coovadia is a Cyber Security Consultant at Deloitte, South Africa. Prior to joining Deloitte she started a web-design studio, and worked at the University of Cape Town as a teaching facilitator. Shahrain graduated from the University of Cape Town with a Bachelor of Commerce Honours specialising in Information Systems. She currently facilitates web & database management for Ecommerce Forum South Africa (EFSA).

Become a member

Join the Ecommerce Forum South Africa and benefit from industry insights in South Africa and Africa.

Sign up to newsletter

Sign up to our newsletter and stay informed of the progress we are making at the Ecommerce Forum South Africa with government during Coronavirus.