Misleading advertising promises big things

First printed in The Namibian 11 April 2013

Writing this weekly column has become the highlight in my week. In any given week I can expect at least three different issues to stick out their head that want to be brought to the attention of the esteemed readers.

The past week was one in which more than eight different issues have been raised and I found myself overwhelmed in making the decision of what to write about. Then on Tuesday while I was in a pharmacy seeking to purchase a vitamin supplement containing ginseng and St John’s Wort, it struck me that most of the issues the past week have been about misleading advertising. But first, let me tell you about my experience at the pharmacy.

For the past ten to twelve years I have been a big supporter of homeopathic medicines as an alternative to man-made medicine and worse, their expensive brand names that are pushed by our medical profession. In 2003, while spending a year studying the possibility of creating a central database for citizens in Germany, I was introduced to a natural product known as “Johanneskraut” (or St John’s Wort in English) for the treatment of depression. The doctor suggested I use the herb in a tablet form or in a liquid mixed with ginseng which would give me energy and combat fatigue. I have used the product over the past ten years and have felt it produced the desired result in regards cleansing my body and reducing the stress in my mind and increasing my energy levels.

This week, as I am returning to Windhoek, I felt I should once again get topped up in my vitamins and prepare for the stress lifestyle in the city. Purchasing the St John’s Wort was no problem, but I did not find the ginseng. At the next pharmacy I was in for a bit of a surprise. The pharmacy assistant guided away from the herbal medicines section to an area where the contraceptives and sexual stimulants were being displayed. The display cabinet had various packets advertising ginseng as an aphrodisiac to assist men in getting bigger or better in sexual performance. The packets all contained only an individual pill to be used for the specific purpose and were priced in the region of N$ 30 to N$ 40 each. After quite some discussion (some quite embarrassing I must add), I was able to make the assistant understand I was looking for the product as a herbal remedy and not because of any problem I might be having in the bedroom department. The assistant and I went through to the herbal department and we were able to find a packet of 20 tablets that was priced at a reasonable N$100. Thus the price would make it N$5 per tablet. Being the curious consumer activist that I am, I went back to check the contents of the expensive packets and compare with the one I purchased. When comparing the contents, it turns out both the single packet and the bulk packet contained exactly the same amount of ginseng per tablet.

My question now is: Why the big difference in pricing? The simple answer is that the products were aimed at different segments namely the natural herbal supplement market and the male sexual dysfunction market.
The biggest problem I have with the ginseng supplement is that it is being advertised as a product that will assist with a medical problem without any proof that this is the case. Worst of all, by making sure the product is being sold in a pharmacy the manufacturer is getting a silent endorsement as to the perceived effectiveness of the product.

If we had a consumer protection act, or at least some consumer protection agency, we as consumers would be able to register our complaints as get products that are using misleading advertising off our shelves.

Right now we have no protection.

Let us talk about debt, baby

First printed in The Namibian 04 April 2013

This week I wish to share with you my experience with debt and the threat by the lawyers that “the Sheriff of the Court” will come take my possessions and sell them to repay debts that have been registered with the court. I have two registered debts that I am aware of. Both are debts incurred while running my company and applied by the creditors to my personal responsibility. The one debt is stated by the creditor to be over N$ 25 000 and thus is a matter for the High Court.

Now, you must keep in mind that though you might not wish to discuss your debt, the creditor is doing everything possible to make sure as many people as possible know about it. The use of the threat to inform the widest possible audience is the greatest tool of the creditor to force you to pay what the court has agreed you owe them. (This is important: The amount you are supposed to owe is the amount they have convinced the court you must pay – and I will come back to that later.)

Allow me to share with you the information about my court registered with the High Court (all is public information supplied by the creditor and their lawyers).

The Deputy Sheriff of the High Court was ordered to serve on me a subpoena (an order to appear before the High Court) for 11 April 2013 at 10h00. On this day, the judgement creditor, namely Institute for Public Policy Research (IPPR) wishes the court to give an order  to pay the outstanding default judgement amount of N$ 28 630 When I appear in court, the creditor expects me to provide a proof of my monthly salary or income, my monthly income and expenses, proof or all debts and payments thereof, a list of my assets and liabilities, proof of expenses in respect of housing and all other documents that may assist the court to investigate my financial position and determine the instalments to be paid by me for this debt. (I am unfortunately an unemployed writer living on a friend’s farm ;-)

By now, most of us have learned that my explanation of “the behaviour of the organisation has led to me to withhold my labour” or the belief by the IPPR that “you have been duplicitous and give Black Economic Empowerment a bad name” is of no interest to the court. In the eyes of the law, I have been found guilty after due process has been followed by the creditor.

And now we come to the root of my problem. I accept the judgement, but would like some further information or assistance. For example:

• What was the original debt and what other costs have been added to get to the amount in front of the court?
• Why did the lawyers make use of a sister company to do the tracing and change my erf numbers as if I had a new address during the process of getting the default judgement (and neatly changed it back to get the summons served at the correct address)?
• Which amounts are actually allowed to have interest added? The main debt is stated in my papers, but can the lawyers charge interest on their charges? Or charge interest on the services provided by the Sheriff of the Court? I could really use a clear indication of which costs attract interest and which do not.
• When does my debt reach “in duplum”?

In Namibia, the Consumer Law can do a lot to prevent the endless circle of debt and poverty consumers get trapped in. Take for example the principle of in duplum. “In duplum” is a Latin phrase derived from the word in duplo which means “in double”. The rule has its origin in the Roman Dutch law. It basically provides that interest stops running when unpaid interest equals the outstanding capital amount.

It has always been considered illegal (and immoral) to charge interest which is more than the original amount owed, except in special circumstances but people such as banks, lawyers, debt collectors, etc. get away with it because it is a common law rule. This means there is uncertainty when applying the rule, especially by the courts. Thus, a creditor should not charge more than twice the original amount due - but lawyers charges, tracing fees, administrative costs, etc can inflate the debt to almost any amount?

This common law “in duplum” rule has been codified by statute in South Africa, which now protects consumers against predatory interest rates on loans and further provides better clarity about when the rule applies and when not.

Namibia needs legal protection for its consumers – the consumer law is a necessity not a nicety!

Joke of the week: Airtime has an expiry date

First printed in the Namibian of 28 March 2013

All of us have at one time or another bought a product and on using the product notice that the expiry date has passed. The expiry date (or shelf life) indicates the length of time that foods, beverages, pharmaceutical drugs, chemicals, and many other perishable items are given before they are considered unsuitable for sale, use, or consumption. This is a way in which consumers are protected from unsafe products, and it provides protection for the seller of the product as the consumer has sufficient information through the printed expiry date.

Now imagine going to the shop and buying a roll of toilet paper. You store the toilet paper and after two months you take it out of its packing to use for what you bought it. Would you not be a little upset if when you start to use the toilet paper it all falls apart while you are using it? When you go to the place you bought it to insist they refund you your money, you might have to sit down a while and breathe deeply when they tell you there is an expiry date on toilet paper. All of us have an expectation that most non-perishable products should last a reasonable time and refuse to allow companies to make or sell inferior products because they have an “expiry date”.

This now brings me to prepaid services. Most of us have become used to having a prepaid metre in our house for water and electricity. The prepaid services are a way for these companies to ensure they get their money. In other words, prepaid takes out the risk of giving people an account and then having to struggle to get your money out of the customer. Prepaid means that the supplier has the money of the customer in their hands – but it does not belong to the supplier until the customer uses the service they paid for. Just as what the company will charge you interest if you have an account that is paid late, these suppliers should give you interest (or more units) the earlier you buy their service.  In my opinion, the companies that sell prepaid service should be selling it cheaper to the cash customers rather than giving cheaper services to people who are buying it on credit.

The word “credit” is translated from the Latin principle of “I believe”. Credit is the trust which a person or company has to be able to give something to another party where the receiving party does not immediately reimburse the debt but promises to do so at a later date. Thus our cellular, electricity and water companies have created a mechanism whereby we give them money (credit) on the understanding they will pay us back later in the service we wish to use. This idea of prepaid services has saved companies lots of money in tracing bad debt, etc and provided them a way to get the money from the consumer before the service is used. I believe this innovation has led to a very profitable business model and a “win-win” situation for both the consumer and the company supplying the service.Now let’s come back to the story of the expiry date.

Imagine this scenario: You purchase the electricity at the prepaid meter and you decide to buy four different credit notes with prepaid electricity. You use three throughout the month to help with your weekly budget and are very well pleased with your savings when you still have one slip of electricity credit left. (Remember this is your money that has not yet been paid in service.) The next month you only buy three more credit notes as you were able to save on your budget and this is your reward. Now let us imagine further that when you use the credit note of the previous month, it does not work. When you enquire at the supplier they inform you that your money has expired. That’s right. The money you have given them has no value any longer to the supplier because you took too long to use the prepaid service. I am sure you will feel the same as the customer who finds out the toilet paper is not doing its job because it expired.I was sitting on the throne this week when I read about the expiry date of the MTC airtime vouchers. I quickly looked up and made sure the toilet paper was not the next thing that would expire.

Follow me on twitter: @miltonlouw or www.facebook.com/namibia.politics

ITC Transunion has no legal framework in Namibia

In conclusion the following can be said, consumer protection forms a cardinal part of our law. Most of the time consumers constitute the layman off the street, who is not always aware of what their rights are or what they should be. Once they enter into a credit agreement with a credit grantor it is as if they hand over all their trust and rights over to the credit grantor. For this reason it is not always possible for consumers to realize when they are being trapped into an agreement, which they might not be to their benefit.

It may happen that a consumer takes on more credit agreements than they can afford, and they end up defaulting on payment, in Namibia whenever a consumer defaults on the third to fourth time they are handed over to ITC, a credit bureau that blacklists consumers and restricts them from any other agreements or contracts. The consumer laws and legislation in Namibia is not reformed and up to standard to guarantee a consumer, that in the event of him/her defaulting on payment that proper procedure will be followed before handing them over to the ITC. Currently the legislation that governs consumer protection is the Credit  Agreements Act 75 of 1980, although section 28 provides for consumers right to privacy, there is no provision that governs the procedure to be followed for instance when a consumer defaults on payment or when a credit grantor blacklists a consumer. This is in sharp contrast to the South African position, whose Consumer Protection Act59 clearly states what can be done in instances of defaulting as well as lay out the circumstances in which a consumer is blacklisted. In other words it does not rule out ITC as a whole but it provides for certain guidelines and procedures to be followed so as to not wholly infringe on the rights of the consumer and at the same time balancing the rights of the credit grantor.

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I concede that currently in Namibia there is no procedure in place that regulates ITC, this makes it seem like the Transunion has no legal standing in our law. It has, however, become necessary for Namibia to reform their consumer legislation and consumer protection laws, and put in place as the South Africans procedural
guidelines to follow in instances of extreme default where blacklisting would be justified, because if we should declare ITC illegal, credit grantors would in actual fact have no remedy against a defaulting consumer, and this would render an imbalance of rights.






http://wwwisis.unam.na/theses/boonzaaier2010.pdf

Namibian Laws of 2011

Name	Act No	Date Ascented:	Date Gazetted:	Gazett-Nr:	Description	Act - pdf format
Statistics Act	Act-No: 9 of 2011	02.08.2011	18.08.2011	4777	To provide for the development of the National Statistics System and provide for its components and objectives; to establish the Namibia Statistics Agency and the Board of the Namibia Statistics Agency and provide for their powers and functions; to establish the National Spatial Data Infrastructure and provide for its objectives, to establish the Committee for Spatial Data and provide for its functions; and to provide for incidental matters.	( 302 kb)
Employment Service Act	Act-No: 8 of 2011	14.07.2011	29.07.2011	4764	To provide for the establishment of the National Employment Service; to impose reporting and other obligations on certain employers and institutions; to provide for the licensure and regulation of private employment agencies; and to deal with matters incidental thereto.	( 204 kb)
Income Tax Second Amendment Act	Act-No: 7 of 2011	29.06.2011	14.07.2011	4755	To amend the Income Tax Act, 1981, so as to provide for the registration of a retirement annuity fund under the Pension Funds Act as a further requirement for approval of such fund by the Minister in respect of any year of assessment; and to provide for incidental matters.	( 161 kb)
Inspection of Financial Institution Amendment Act	Act-No: 6 of 2011	26.06.2011	13.07.2011	4753	To amend the Inspection of Financial Institutions Act, 1984, so as to empower the registrar to inspect a person, partnership or company not registered as a financial institution, upon reasonable suspicion, to establish whether or not the business of a financial institution is being carried on; and to provide for incidental matters.	( 159 kb)
Pension Funds Amendment Act	Act-No: 5 of 2011	31.05.2011	14.06.2011	4735	To amend the Pension Funds Act, 1956, so as to empower the Minister to make regulations prescribing the minimum or maximum amount or both the minimum and maximum amounts which a pension fund may invest in or outside Namibia or in particular assets or in particular kinds or categories of assets whether in Namibia or elsewhere, prescribing a framework for the investment of pension fund assets in unlisted investments, authorizing the registrar to grant conditional exemption from certain provisions, and prescribing administrative penalties for contravention or failure to comply with certain regulations; and to provide for incidental matters.	( 168 kb)
Appropriation Act	Act-No: 4 of 2011	31.05.2011	10.06.2011	4733	To appropriate amounts of money to meet the financial requirements of the State during the financial year ending 31 March 2012.	( 171 kb)
Income Tax Amendment Act	Act-No: 3 of 2011	24.05.2011	10.06.2011	4732	To amend the Income Tax Act, 1981, so as to amend the definitions of “person”, “pension”, “preservation fund” and “retirement annuity fund”; to increase the amount which may be commuted for a single tax free payment; to increase the exemption from tax on a lump sum derived on retirement or retrenchment; to delete allowable deductions to mining companies in respect of rehabilitation expenditure; to provide for the administration of withholding tax on interest; to increase the threshold on income tax payable by individuals; to reduce the tax rate payable by non-mining companies; and to provide for incidental matters.	( 159 kb)
Long-term Insurance Act	Act-No: 2 of 2011	24.05.2011	20.06.2011	4731	To amend the Long-term Insurance Act, 1998, so as to empower the Minister to make regulations prescribing the minimum or maximum amount or both the minimum and maximum amounts which a registered insurer or reinsurer may invest in or outside Namibia; authorizing the registrar to grant conditional exemption from certain provisions; and to provide for incidental matters.	( 159 kb)
Animal Health Act	Act-No: 1 of 2011	03.04.2011	20.04.2011	4694	To provide for the prevention, detection and control of animal disease; to provide for the maintenance and improvement of animal health; and to provide for incidental matters.	( 273 kb)