Consumers need to be aware of fake discounts, bait marketing
Shoppers must check real market price for Black Friday items they want to buy
Over the past few weeks, many of us have been receiving reminders about Black Friday, the biggest one-day shopping event globally.
Some retailers are even encouraging you to flex your fingertips to get ready for it. Others are giving you an option to save your payment details on their website, promising you easy and quick check-out.
This year, it falls on November 24.
But Black Friday is just the beginning of the festive season financial temptations as there’s Cyber Monday (November 27), and following President Cyril Ramaphosa’s address to the nation on Monday night, declaring Friday, December 15, a public holiday, there’s a long weekend on the cards.
Thereafter, there’s Christmas and New Years.
Benay Sager, chairperson of the National Debt Counsellors’ Association, says marketers usually extend sales they run from Black Friday to the beginning of the new year as a way “to entice consumers to buy, often on credit”.
“Besides the lure of shopping, people are on holiday, entertaining and enjoying themselves. By the time they go back to work and the children return to school, they start the New Year playing financial catch-up.
“There are other factors that contribute. Some companies pay employees in mid-December, so salaries have to stretch a month-and-a-half until the end of January. Many employers cannot pay full 13th cheques or year-end bonuses, so consumers have no cushion to cover the extra festive-season expenses. In both cases, many turn to loans to make up the difference,” says Sager.
Trudie Broekmann, an attorney specialising in consumer law, says fake discounts and bait marketing are some of the pitfalls that consumers must be aware of.
She warns that some suppliers might be tempted to raise prices for goods in the weeks leading up to Black Friday and then offer a big discount which just means the price is exactly where it was before. “So, don’t be fooled,” she says.
She says consumers can use some websites to check the “real market price for an item you want to purchase”.
“When you list the items you are interested to purchase as well as bulk grocery items, research the best prices available for both lists on-line.
“If you know the usual price of an item, you can spot a fake discount. Decide how much you can afford to pay for each item beforehand, taking into account that one can get discounts of up to 70%,” Broekmann says.
She says section 30 of the Consumer Protection Act makes “bait marketing” illegal. “That is when suppliers lure consumers into their shops or onto their websites with amazing offers which sells out almost immediately.
“If a retailer has advertised a special, but it is sold out and the retailer did not state beforehand that their stocks are limited at their price and precisely how limited stocks are, consumers can force the retailer to supply the product to you at the advertised price,” Broekmann says.
Sager says there are post-holiday expenses such as school uniforms, fees and transport, which escalate the financial pressure and can result in people taking on even more debt.
“This isn’t anecdotal, but a cycle that repeats itself year-after-year. It’s a treacherous tide, but with some planning you can swim against it,” he says, adding that the association’s members see a spike in inquiries about debt management every January and February.
“This has intensified over the past two years as higher inflation and interest rates exacerbate the situation. Typically, what we see happening in mid-January and extending into February is that consumers find themselves in a pinch and borrow money to make it through until they get paid.
“The problem is that the repayments on these loans add long-term pressure on households which are only just keeping their heads above water. One unexpected expense or emergency can then result in serious financial difficulty,” says Sager.
Broekmann warned consumers to “harness their inner sceptic and to be careful as there is a high incidence of fraud with online transactions, each time you are asked to click in a link, and give out your password or authorise a transaction”.
“Don’t take any risks. Check out websites carefully before making online purchases. Do these websites give an address, email and phone number in SA, and do those contact details work?
“If not, how are you going to contact them to return a defective product or inquire if your delivery doesn’t happen?”
Sager gives these tips to help consumers swim against the tide of borrowing this holiday period:
Plan ahead: If you get paid early in December, remember you will need to stretch your salary until the next pay-cheque. Allocate money for normal living expenses for the full period, factoring in January expenses, before you decide how much to spend on gifts and entertainment.
Also consider your existing debit orders will still run in December. If there isn’t enough money in your account to cover these, you might fall behind on your payments and your credit score could be affected. Your bank may also penalise you by charging additional fees.
Be considered: If you are lucky enough to get a bonus, you could suddenly have extra money in your account. Although you may feel flush, resist the temptation to splurge. Think first about your financial commitments and consider saving or investing some to provide a financial cushion for the New Year.
Get help if you need it: After a difficult year, most of us need a break and time to recharge. That’s not going to happen if you spend the holidays worrying about how much you owe and how you’re going to make ends meet in January.
A reputable debt counsellor will do a free assessment, advise whether you can benefit from debt counselling and explain how the process works. Having someone to help you can take away much of the anxiety associated with dealing with debt.
Sager says it is critical to keep up debt repayments over the holiday break, adding that the association’s data shows that on average, “it takes up to two years for consumers to catch up on payments missed in December. In the current economy, it’s likely that now it could take even longer”.
“While we advise people to keep up repayments, we recognise that this will not be possible for everyone. If that is the case, get help. Delaying can negatively affect your credit record, put your assets at risk of repossession and if you wait too long, debt counselling may no longer be an option,” says Sager.
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