Consumer perceptions of hire-purchase
One of the biggest drawbacks for consumers in the hire-purchase (HP) industry is the inability of consumers to shop around before buying goods. In consumer terms, it is described as the failure to practice comparative shopping.
One of the key findings of the report on "Hire Purchase Industry in Fiji" launched recently indicated this failure. It showed that just under a half of the consumers (47 per cent) did not shop around for the goods before purchasing. This may be because of several factors.
First, a vast majority of the HP consumers are working consumers, many of whom also work on Saturdays, thereby having a constrained shopping time available.
Such a reality makes advertising a powerful tool in influencing consumer behaviour. The company which emerged as the market leader in HP sector, has had a long period of sustained advertising in Fiji. Branding works for the leading dealer has been quite effective. The outlet decoration is also a powerful factor in ensuring a sale when a customer enters the shop. Many of the leading market company outlets are stylistically designed, with air conditioned comfort, creating a feel of being with the sophisticated part of society by these outlets.
38 per cent of HP consumers have complaints on the HP system and their purchases. As the table below shows, 56 per cent of the first ranked complaint was on repayment, with consumers saying that the repayment sum was "too much", 19 per cent of the consumers who had complaints (that is 7 per cent of all HP consumers) ranked defective goods as the leading complaint, while 15 per cent had complaints on long queues during payment of installments.
Leading complaints (Ranked No. 1)
* The item was defective - 19 per cent
* I was sent a reminder notice or called over the phone when I had paid on time - 9 per cent
* Long queues when paying installments - 15 per cent
* Too much repayment - 56 per cent
The repayment amounts and other terms are contained in the pre-contract agreement which consumers sign with the sellers. This raises the question on whether consumers understood their contracts.
68 per cent of the consumers stated that they read all the conditions in the agreement. Of this, 61 per cent stated that they understood the conditions. This implies that 41 per cent of all consumers understood the terms of the agreement. Conversely, 59 per cent either did not read the conditions, or did not understand them fully. This assessment is confirmed, when asked separately whether they understand their rights under the agreement, and 55 per cent of the consumers stated that they did not.
A major issue relating to the conditions is that they are in fine print and dull lettering.
An assessment of the actual conditions in the leading HP dealers shows that the font size used is possibly Times New Roman 8 pts or Arial 7 pts while the printing has produced an outcome which is equivalent to background watermark standard. These make it immensely difficult for average people to read the conditions that are applicable in the contract.
Other complaints listed by consumers in the survey questionnaire were:
* After making the deposits they told us we pay insurance
* Customer service is not responsive and not helpful
* Given item for repair, still paying payment and don't have the item
* Hidden charges, high repairing costs, false/ wrongful charges, luring of consumers.
* High late payment fee
* Interest rate very high
* They never explained the consequences
* No choice
* Phone calls all the time even if payment was up to date, adding to costs
* Products not repaired on time
* The item bought is not working after just one month
* The machine was already damaged when we started using
* They don't attend to our complaints on time.
* They give defective items
* Too much penalty charges on late payment
* Travelling cost/expenses
* Warranty is not worth what we pay
* When paying for my sewing machine, it got bad, they had to repair it several times but they did not replace with a new one
* Wrong item was confiscated
Too often consumers fail to exercise their consumer responsibility of demanding pre-contractual disclosure prior to buying goods on hire purchase or shop around for best deals.
Shopping around for your white goods will not only save you few dollars but also assist you in signing up with a company that provides back up service. If you are not treated fairly by the HP Company when your goods are defective or the warranty is not honoured then you must report the matter to the Consumer Council of Fiji.
Next week: We look at analysis of consumer complaints on HP