Friday, 11 August 2017

Are we all pirates?

I caused some disturbance in our Facebook group last week when I posted the details of a conversation I had with someone who posted an advertisement in the group. His advertisement offered a range of technology services including “Laptop repair(any problem)”, “Theory Test Software(for Laptop/Desktop & phones” and “*asswords removal both pc & phone” but the one that interested me most concerned Windows.

The ad offered “Operating system Windows 7,8,8.1,10”. I messaged the guy and asked him how much Windows 10 would cost me. “p100”, he told me. Given that Windows 10 currently costs about ten times that much if you buy it directly from Microsoft, I’m sure you can understand that I was suspicious. “Is this legal”, I asked? “What's legal??upgrading your machine??that's ur laptop u do whatever u want...”, was his response. I asked if this wasn’t software piracy and he said “No sir if you know IT that's not a piracy”. My final question was “Are you paying Microsoft their licence fee?” and that when he lost patience.

“Old man get your facts together then talk to me when ready I got no time to argue with u let me help those who want my service”.

I posted this exchange as well as a copy of his original advertisement so everyone in the group could see it and the reaction was mixed. The overwhelming majority expressed surprise or shock at what was clearly software piracy but a vocal minority had different reactions. One member of the group said “Leave the guy alone, why are you trying to disturb his hustle”. Another asked “How are you ripped off when he sells a software worth more the P1500 to you for P100?” Someone else suggested that “That's how the world works, until then, let the guy be, hes trying to make cash akere”.

I should state that I admire small entrepreneurs, those people who try to make some money the hard way, by hitting the streets (or Facebook) buying and selling things, trying to make a profit. But I don’t admire hustlers. My dictionary defines the word hustle as “to obtain illicitly or by forceful action” and that’s an approach we shouldn’t accept. I also don’t admire thieves.

And yes, I do think this guy is a thief. The simple truth is that the only way he can afford to sell people copies of Windows 10 for on tenth of its normal price is if he is selling pirated copies of the product. And selling pirated copies of anything is a form of theft. The fact that it’s common is no excuse. Many people exceed the speed limit when they’re driving and drive through red lights but does that make it right? Does the frequency of a crime excuse that crime? No, it doesn’t. It also doesn’t matter that someone else might have done the same thing. That doesn’t excuse you doing it.

The fact that the person or company having its products stolen is fabulously wealthy is also irrelevant. Software pirates aren’t modern-day Robin Hood figures robbing from the rich to give to the poor, they’re keeping the money for themselves.

It’s also important to know that they’re selling you a product that probably won’t work properly. Companies life Microsoft are smart enough to build protections into their technology to ensure that piracy is difficult for its consumers. Sooner or later the computer running the pirated version will connect to the internet and then will declare itself to Microsoft’s servers and will then start the process of shutting itself down. One member of the group appears to have that problem, posting “My software is not genuine. My laptop keeps on popping that message whenever am using it”. Eventually the software is going to stop working completely.

Not everyone was sympathetic to our pirate. One member of the groups suggested that if “you are comfortable buying pirated software, then you might not mind buying a stolen cellphone or tv.” Another described his customers as “being ripped off by unscrupulous crooks masquerading as businessmen”. Yet another correctly suggested that his services should be avoided because “he's breaking a handful of laws in doing so and making the recipient a criminal as well.”

And that’s a very good point. Section 317 (2) of the Penal Code says that:
"Any person who receives or retains any property knowing or having reason to believe the same to have been unlawfully taken, obtained, converted or disposed of in a manner which constitutes any other offence, is guilty of an offence and is liable to the same punishment as the offender by whom the property was unlawfully obtained, converted or disposed of."
Meanwhile I also acknowledge that Windows 10 is an expensive product. It comes already installed on almost all personal computers but if you need to buy it new, you’ll need to pay about P1,200 online and more if you go to a computer store. If you add the price of Microsoft Office on top that’s roughly the same price again so it really can be an expensive business.

But the irony is that you don’t need to spend any money at all to get a computer working. You don’t need to spend a single thebe on Windows or Office if money is tight.

The alternative is to be radical. Go for an entirely legal, safe and free alternative to Windows. Yes, I did say “free”. Install a version of Unix such as Ubuntu or Linux which you can download for free and it even comes with the equivalent of Word, Excel and Powerpoint and is really easy to use. Better still it even runs on the older, lower power computer you might have. I’ve done it several times and I have computers at home and in the office running Linux right now. Even better still, like its distant cousin, the Mac, a computer running Unix is almost immune from viruses and malware?

If money is short (or even if it’s not) the alternative is there. You don’t need to spend your precious, hard-earned money with Microsoft or even a hustler selling you stolen goods.

The Voice - Consumer's Voice

Must I pay so much?

Kindly assist me with information and possibly solution.

Someone borrowed P5,000 from a motshelo. I had referred him to the lady. He did not pay as per agreement. It took long but I ended up paying P13,000 for this P5,000. The lady insists that she is owed P27,000 for this P5,000.

What help can I get if any and where can I get the help? Please note this is not a registered micro lender.

I would really appreciate your assistance with this.

I think the lady should stop smoking whatever has driven her insane.

This is nonsense. The “in duplum” rule, a piece of common law applicable in Botswana says that when a debt is settled, the interest charged may not exceed the capital amount outstanding. If the original amount borrowed was P5,000, the interest at the time you settle the debt cannot legally exceed that amount. The lender can charge a modest amount for administration costs but they can’t use that to avoid the in duplum rule.

Also, although motshelo schemes are “informal”, they are nevertheless covered by NBFIRA, the Non-Bank Financial Institutions Regulatory Authority. I suggest you call NBFIRA tomorrow and ask for their advice. Their numbers are 3102595 and 3686100. If you can’t get through to the right person let me know and I’ll find someone there for you.

Is this loan genuine?

I received an email from a company called African Loans offering to lend money. I applied for a loan of 15,000 Euros and they have asked me my banking details and a registration fee of 215 Euros. They say they will lend me the full 15,000 Euros and I must pay them 638 Euros monthly for 48 months at an interest rate of 2% per year. They say that the total monthly payment will be 15,314 Euros.

I’m concerned because I have also lost a lot of money through the 419 scams by Nigerians.

Could you please check this one out for me?

I think you know this is a scam, don’t you? Given that I can see from your email footer that you work as a finance officer, I’m sure you’ve done the maths already. 48 monthly payments of €638 is a total of €30,624, more than twice what they say it is. Also, I’m sure you will have calculated that interest rate they claim they’ll charge is 26% per year, not 2%. Tell me you noticed that they can’t do maths?

You’ll also have wondered how a lender would claim to lend anyone money at a level lower than the inflation rate either in Botswana or anywhere else, and so much lower than your bank can do.

I also hope that you’ve wondered why a genuine finance company would use a Gmail address ("") rather than a more business-like one? I’m certain that you’ll also have wondered why a company that says it’s based in Europe would consider lending money to someone in Africa.

Again, I’m sure you’ll have wondered why you need to pay them a “registration fee”. You’ll have tried to remember the last time your bank tried to charge such a fee, wouldn’t you?

Given that you fell for a 419 “advance fee” scam in the past I’m sure you’ll have noticed the overwhelming similarity between that scam and this loan offer? You’ll remember how the previous scammers offered you, a total stranger, something amazing so long as you gave them money in advance. You’ll remember how you didn’t get that money back. You’ll have learned that scammers don’t offer refunds if you complain.

Please tell me that you saw all these things? Please?

Friday, 4 August 2017

The Voice - Consumer's Voice

Can they keep my money?

Hi Richard. I went to a bed shop a month or two ago and saw a bed was interested in but I was told I can laybye it for 6 months. Unfortunately I am no longer working and won't be able to pay my monthly so I opted to cancel the laybye and they are saying they are going to charge me something out of the money I already paid. This was never explained to me when I took the laybye so they just won't refund me.

There were no instructions whatsoever on the laybye regarding the terms and conditions.

Are you sure there wasn’t a form you signed explaining the conditions of the laybye? I’d be surprised if a reputable store didn’t insist on a written agreement for this sort of purchase. If there isn’t how can they expect to know who owes what to who?

In normal circumstances I can see how a store might want to charge you a small fee because of the minor inconvenience you’ve caused them when you cancel the deal. They’ll need to update their records to show that the bed is no longer reserved for you and they might even have turned away another customer who wanted to buy the bed. This will have cost them some money through no fault of their own.

However, if there isn’t such a written agreement then I can’t see how they can demand that they keep a portion of what you’ve already paid them. They can’t just make up conditions to suit their interests. Section 15 (1) (e) of the Consumer Protection Regulations says that a company fails to meet minimum standards of performance if, when a deal is cancelled, they fail to pay back a down-payment or deposit “promptly”. Section 17 (1) (d) also says that they can’t cause “a probability of confusion or of misunderstanding” regarding your legal rights” by just making up conditions when they feel like it.

I suggest you go back to the store and ask them to show you where you agreed that they could deduct any amount from your payment. If they can’t then they have no right to do so.

How much interest can they charge?

I wanted to ask if it's within a Shop's right to charge one interest in a store card that is way more than what that said person owes them? E.g. Maybe I owe them 5,000 and I don't pay them for 1 year because I'm not working can they charge me interest monthly and then the amount I owe becomes 15,000?

Yes, they can. There are no limits to what a lender can charge you with one exception. That’s the so-called “in duplum” rule which says that when a debt is settled, the interest cannot be greater than the capital amount that is remaining. So if you go to them owing P5,000, they can’t charge more than P5,000 in interest. But that’s only at the time you settle the debt in full. If you’re paying the interest over an extended period then there’s no limit. That’s why if you buy something using hire purchase or have a long-term bank loan the interest could exceed the capital amount.

Meanwhile you’re entitled to a full statement of your account that should show you every payment you made, every charge they applied and the penalties and interest they applied when you were in arrears. I think you should ask for such a statement and check that their records are correct and that their arithmetic is correct.

As for the numbers they’re quoting they seem possible to me. The costs of using store cards and buying on hire purchase are enormous and if you get into arrears they can be even greater. Our advice is to avoid hire purchase and store cards like they’re an infectious disease. While store cards are sold to us by stressing their convenience and the ease with which you can buy things, the real reason stores want you to have them is that they make separating us from our money so much easier. If you do ever get one please make sure that you read and understand the terms and conditions before you sign the application form. If by any chance the store won’t let you take the T&Cs away to think about it, then you know they have something to hide!

We're ignorant

Last week I asked whether we’re stupid. This week I’ve been wondering if we’re ignorant. The answers are very different.

No, I don’t think we’re stupid, at least not all of us. Yes, we’ve all heard stories of consumers doing things that can only be described as stupid, like lending large amounts of money to total strangers without a written agreement but most of us are smarter than that, aren’t we? Most of us know to sign agreements that we’ve read and fully understood and that don’t screw us, don’t we? Please tell me that’s true?

Let’s assume that only a few of us are stupid. So that’s ok. I think that there’s a threat just as dangerous as stupidity and that’s ignorance. Don’t get confused, they’re not the same thing. Stupidity is the lack of ability to think properly, ignorance is just a lack of information. I’m fairly ignorant about the electrical systems in motor vehicles but that doesn’t mean I’m stupid. I also know almost nothing about gardening, dress-making or the traditional religious belief systems in Mongolia. But that doesn’t make me an idiot.

The problem is that ignorance threatens consumers just as much as stupidity. It puts us at the mercy of suppliers who don’t have our interests at heart or those who are actively trying to deceive us. The simplest example is with modern technology. Most of us know very little, perhaps nothing at all, about the technology that surrounds us. We don’t know how our cellphone or laptop works, how messages travel through the internet or how that video connection to our cousin in a faraway country happens. So long as it works we’re happy.

You might ask if it even matters? So long as it works, my emails arrive, I can chat to cuzzy and I can make that call, who cares how it works? That’s true in those cases but what happens when the laptop goes wrong and the company repairing is say you must pay them P2,500 for a new motherboard? Do you have any idea whether they’re telling the truth or not? What happens when you’re buying a replacement and the salesperson just starts talking about kilo-this, mega-that and giga-the-other. Do you understand a word they’re saying?

It’s no different with financial products. Very few of us are sufficiently well-educated to know the difference between different types of investments and we rely on the salesperson to give us the information we need. The same salesperson who is probably paid a commission on the size of your investment, not how well it suits your needs.

In all of these areas we need suppliers of complicated products, whether they’re computers, cellphones or investment policies to educate us openly and fairly, taking our interests into account. But you know they’re not going to do that, don’t you? So we need to force them.

Here’s a simple tip for you. Whenever someone claiming to be an expert in their area tries to explain something complicated to you and you don’t understand, use this phrase:

“Explain that do me again but this time imagine I’m only 12 years old.”

If that doesn’t work, try this one, my personal favourite:

“Explain that to me again, but using different words.”

Anyone who’s a real expert in their field will be able to do either of those things easily. Anyone who can’t clearly isn’t an expert.

There are also areas where we’re ignorant simply because we’ve never experienced something before. Bitcoin is the best example right now. As you might now by now, Bitcoin is a currency, but not like any currency we've known before. There are no coins or notes with Bitcoin, no bits of metal or paper. There’s nothing you can put in your wallet or purse. It exists purely in cyberspace. It’s a “cryptocurrency” and it’s all a bit confusing until you’ve done some serous research. Until then we’re ignorant? The danger is that this ignorance is being exploited by people who have only their own bank balance in mind. The crooks selling “Billcoin” and “Pipcoin” are doing their best to persuade us that their schemes are either similar, or connected to Bitcoin when in fact they’re nothing more than scams. Our ignorance in this area is likely to leave a lot of people very poor.

There are also situations when our ignorance of procedure presents a risk. Until last week, I didn’t know what you were meant to do when someone died in their home. The background isn’t relevant but we recently found ourselves alone in a friend’s house just hours after he’d died, having been discharged from hospital so he could die with dignity at home and surrounded by the people who loved him. Ok, we thought. What next? The first funeral parlour we called, one you all know, was unhelpful. No, we can’t do anything without a death certificate, they told us. But he died at home on a Sunday, we told them and no doctor was present. You need to take him back to the hospital so they can certify him dead, they told us. Can’t you do that, we asked, you’re the experts on transporting deceased people. Not without the death certificate, they said. You’ll need to take him back to the hospital so they can certify him dead, they continued. “Have you got a truck?”, they asked us.

That’s when we hung up and called a more sympathetic competitor. An hour later, a friendly doctor and the competitors’ team arrived and everything was sorted out. Between them, they’d been able to explain and provide some assistance.

I’m not asking for miracles but I think both the hospital and the funeral parlour have a duty to tell those of us ignorant about the technicalities of death how it’s meant to be. Why don’t hospitals produce a guide on what to do for those of us who are amateurs? Why don’t funeral parlours have a link on their web site that explains how the process should work? Why don’t they help us overcome our ignorance?

In this case our ignorance not only caused us some distress but it led to a big company losing business and receiving a formal complaint about their arrogance, lack of sympathy and stupidity.

Yes, I DO mean stupidity, not ignorance.

Sunday, 30 July 2017

Are we stupid?

It’s a question I sometimes ask myself. Are consumers stupid? Are we perhaps a bit insane? Should our mothers allow us out unaccompanied?

Some while ago we had a visit from a desperate consumer who wanted our help. She was a mature woman with a long, reasonably successful career in business. Now she was running her own store. She was the sort of person I really admire. She’d saved some money from her mainstream job, had quit and had invested it in a small start-up business and then worked very hard to make a success of herself. Until she made catastrophic mistake.

She had a regular customer, a man who would often visit her store, would have a chat and would then buy a few things. He sounds like the perfect customer.

After several visits the situation changed a bit. He visited the store one day and told the owner about a project he was working on and that he needed some capital. Would she lend him some money? She gave it some thought and because he was a nice guy, spent money in her store and had a nice smile she said yes, he could borrow the money. Off they went to the bank and she transferred the money directly into his account.

Guess what? He didn’t pay her back. My heart sank. But you and I both knew that was going to happen, didn’t we? You don’t lend money to strangers. Don’t we all know that?

A year later she was in my office asking me if I could think of any way to help her get money back.

My first question was simple. You put this in writing, didn’t you? No, she said, it was just a verbal agreement. My heart sank further. How would she ever be able to prove that she’d lent him the money, how much she’d lent him or what plan there’d been for him to repay her?

I plucked up some courage and asked the big question. How much did you lend him? “One point four”, were her exact words. I felt a little better. I was about to suggest that she forget the loan and give up because, well, it was only P1,400, wasn’t it? To someone running a successful store that’s not enough to ruin the business and she’d probably spend more trying to recover the money than the amount she might get back.

But I didn’t say that. I didn’t say it because of the expression on her face. My heart started sinking again. Rapidly. “Exactly how much did you lend him?”, I asked.

“One million, four hundred thousand Pula”, she said.

My heart sank so low that I was close to calling my cardiologist.

I think I was very restrained. I didn’t laugh out loud, my jaw didn’t drop to the floor, I didn’t get up and start shaking her. Instead I sympathized, told her that I suspected that it would be very difficult to recover the money without any evidence that she actually lent it to him but recommended an attorney that I trust who might have some ideas. The problem is simple. If she ever managed to get him in front of a magistrate or judge he’s just going to say that it was a gift between friends or perhaps even lovers and that she’d agreed he didn’t need to pay back the money. He could come up with any story that seemed plausible and she wouldn’t be able to prove otherwise.

I also think I was very restrained because I didn’t ask the women for her mother’s phone number so we can arrange to have her locked in her bedroom until she grows up and develops some common sense.

It’s important to note that this woman isn’t stupid. She had a successful career and then had the intelligence needed to start a small business. But she’s clearly catastrophically na├»ve.

It’s similar for the people who join Multi-Level Marketing schemes like Amway, Herbalife, Tupperware and pyramid schemes like World Ventures. They’re not stupid but they are gullible. Even when they’re presented with the facts that the companies very quietly reveal in the income disclosure statements they either ignore them or develop complex denial mechanisms to avoid the uncomfortable truth. Almost everyone who signs up for the schemes either makes no money or even loses money from doing so.

And then there are the victims of scams. The scams we’ve all seen about the daughters or widows of West African millionaires who need help transferring money out of their country, amazing job offers in exotic places or expressions of love and desire from strangers on Facebook. Are the people who fall for these scams stupid?

Yes, some of them obviously are but the majority are just gullible. Gullible enough to fall for that initial email of Inbox message. And that’s exactly why these scams are so successful. The scammers actively seek the most gullible people.

Cormac Herley, a researcher employed by Microsoft, wrote a paper (link to 553kb pdf download) in 2012 entitled “Why do Nigerian scammers say they are from Nigeria?” that examined these scams. He wrote:
“An email with tales of fabulous amounts of money and West African corruption will strike all but the most gullible as bizarre. It will be recognized and ignored by anyone who has been using the Internet long enough to have seen it several times. (…) The initial email is effectively the attacker’s classifier: it determines who responds, and thus who the scammer attacks (i.e., enters into email conversation with). The goal of the email is not so much to attract viable users as to repel the non-viable ones, who greatly outnumber them.”
The scammers send these ridiculous emails to millions of potential victims, and they’ve discovered that the best way to maximise their success rate, to get the highest proportion of victims to cough up cash, is to make that first message as ridiculous as possible. If they do that, then only the MOST gullible people will respond. The people likely to respond to those emails are the ones worth the scammer’s time. Make the first email as stupid as possible and the victims will select themselves.

Stupidity isn’t the biggest threat we face and no, most consumers aren’t stupid. But a lot of us are deeply, dangerously gullible. And the only way to combat that is by developing a national skepticism. Are you prepared to be part of the movement?

The Voice - Consumer's Voice

Is this award genuine?

Good day Richard.

I just received an invitation from the international Star Award For Quality and would like to ask you to assist in its authenticity. It seems to be a very good award and opportunity and would like to get more information before I make any payment as per their request.

Thanks and looking forward to your usual support.

I believe that this “International Quality Summit Award” scheme, run by a company in Spain called “Business Initiative Directions” is deceptive. As far as I can establish there are no genuine criteria used to identify the companies that are selected for the awards. I believe that it’s no more than a money-making scheme by the organisers.

Many people had received surprise emails from BID over the last few years, announcing that they’d won an award and inviting them to collect it at gala dinners in exotic places such as Paris, New York and Geneva. It was never entirely clear how they’d won, how winners had been selected and what qualified Business Initiative Directions to award anything to anyone.

BID charge companies €4,200 (about P50,000) to receive the award and that doesn’t include the travel costs associated with flying to Geneva. It just covers attendance at the gala dinner, some certificates, a prize and some photographs of people accepting these dubious awards. I’ve done the maths and I suspect that BID make a huge amount of money, probably about P30,000 from every “award” they give away and that’s what the whole thing is about.

I can think of many better ways to spend the P75,000 that it would probably cost to receive this dubious award. Why not invest the money in an upgrade to your web site, some quality marketing or better still, an awesome Christmas party for your staff! Don’t forget to invite me too!

Should they check everything?

I took my car for service at a garage in Lobatse on the 28th of June. Then I travelled to Francistown on the 1st of July only to find out that the battery is boiling. I took the battery to a specialist because it was still under warranty and they told me the car was over charging but they gave me a new battery nonetheless. I took the car to another garage from the same chain in Francistown and they told me I had to pay P850 for diagnosis.

My question is isn't it that when the car goes for service they are supposed to check all the faults in the car?

Firstly, I’m impressed that the battery specialist gave you a new battery even though they probably didn’t have to. That’s the sign of a good company, that they’ll bend the rules a little bit for a customer. I’m sure you’ll be using them again in future.

Regarding the garage, no, I’m not sure they are obliged to check everything in your car. A routine service just checks a few basic things unless you’ve asked them to check something in particular. They can’t really be expected to check every component in your car in the couple of hours a routine service takes.

However, I’m not an expert so I contacted a friend who is. I asked him your question and he said “No, they would check the battery for water levels and clean terminals but to do a charge test would be an additional item (in most franchises).”

I suggest you go back to the garage that serviced your car (or a better one if you know of one) and ask them to check the electrical system in your vehicle before something much worse happens.

Saturday, 22 July 2017

Will these schemes make you rich?

Last week it was Herbalife, the week before it was Amway. They’re two of the largest Multi-Level Marketing schemes in the world and they make a tremendous amount of money. Well, the people at the top of the pyramid do but that’s all. Their own published earnings statements show that the overwhelming majority, at least 90% and many experts think more than 99%, either make nothing or even lose money from joining them.

Maybe you’ll stand a better chance with one of the smaller schemes instead of these MLM titans?

No, they don’t work either.

What about World Ventures, or as it now calls itself, Dream Trips?

We’ve been warning people about the World Ventures pyramid scheme since 2009 when they took over an earlier pyramid scheme called Success University. World Ventures and Dream Trips promise fantastic holidays in exotic places but they’re rarely clear that none of these holidays are free. You have to pay to join the pyramid and then all you get are discounted holidays. You still have to buy the holidays, just at a slightly cheaper price. And here’s a thing. A discount isn’t a product, it’s a reduction in the price of a product but maybe that’s just me being pedantic. What World Ventures is really all about is paying to join a pyramid-structured scheme in which you do your best to recruit multiple layers of people beneath you, just like any other pyramid or Multi-Level Marketing scheme.

The interesting thing is that, like Herbalife, World Ventures publish an "Income Disclosure Statement" (124kb pdf download) in the USA every year and just like Herbalife their 2015 statement makes interesting but disappointing reading. Yet again the vast majority of the money is earned by a very small proportion of the people, the ones at the top of the pyramid.

Referring to what they call their “Independent Sales Representatives” (“IRs”), they report that "22.24% of all IRs earned a commission or override, while 77.76% did not". In other words, more than three quarters of all their American recruits made nothing from the scheme. Nothing at all.

Furthermore, more than two thirds of all the money is made by the 3.7% at the top of the pyramid. 84% is earned by the top 19%. To put it another way, 81% of the recruits who earn money have to share just 16% of the money.

So like the other schemes, if you're at the top of the pyramid you're doing very well. The 1 in 14,000 people at "International Marketing Director" level earned an average of $409,280. The 1 in 20,000 described as "National Marketing Director" have an annual income of $238,645.

Of the small proportion who made any money, the average income was just over $1,300 a year (about P13,000) but that's not a good indication of what the average recruit will earn because the figures are distorted by the tiny proportion at the top who earn a fortune. The median income level is a much better illustration of what you can expect to earn. That's a meagre $150 per year.

And yet again, these amounts refer to income, not profits. These figures are before the recruits took account of all the money they had to spend on travel, accommodation, electricity, internet access and the coffee and drink they had to buy when they did their best to recruit other victims into this scheme. The evidence suggests that most people earn less than they spend trying to make the money. So they lose money.

And don’t forget that less than a quarter of all the recruits earn anything. These figures just refer to the 22% of victims who earned anything at all.

So no, you won’t make any money from joining World Ventures or Dream Trips, you’ll just waste a lot of money, energy and time. Don’t take my word for it, their own figures say so.

Ok, what about Tupperware? They have real products, don’t they? Do people make money from them?

Again, no. The figures Tupperware revealed in their 2016 Income Disclosure Summary (39kb pdf download) in Canada were equally poor. To begin with, almost half of the 37,000 distributors were described as “Inactive, meaning that they were “participants that have earned some commissions from the sale of products, but have not achieved a minimum of $500 in personal retail sales”. Of the remainder, almost all of them, 94%, were in the lowest category of “Consultant”. They earned the equivalent of just P3,800 in a 10-month period. Again that was income, not profit, not taking into account the costs of selling all those plastic products.

Only 40 out of the 37,000 Tupperware distributors in the entirety of Canada earned more than the average annual wage. 97% of them made less than one-tenth of the average wage.

Tupperware, like Amway and Herbalife, is extremely top-heavy. 53% of all the money earned went to the top 6% of the people, leaving less than half of the money to be shared by the other 94%. You can see how uneven it all is.

Here’s the secret about Multi-Level Marketing schemes and their cousins, pyramid schemes. They’re all the same. They’re all based on a Get Rich Quick promise that’s actually a deception. While the people selling the scheme will promise holidays, exotic lifestyles and wealth this is all are lies. These promises are simply not true and many of the people doing the recruitment know this. They know they’re not making any money and that the only way they might do so is to recruit other people into their position, to suffer the way they do.

Over the years we’ve examined dozens of Multi-Level Marketing and pyramid schemes and they’ve all been the same. They’ve all, every single one of them, ended up with people poorer, more miserable and with a trail of alienated friends, relatives and colleagues who’ve been pestered into joining the scheme. Not once have we encountered a scheme that has made anyone money. Not once. So why would the next one be any different?

The Voice - Consumer's Voice

Why is it so much?

Good Morning Mr Harriman, I need help. I got a loan from a microlender, it was P3000. I have paid it for about six months in instalments of P220, but last month I wanted to top up to P16000 and before the loan was credited someone bought my plot and now I had the money I wanted. I went back to try and stop the loan but they said it was too late so from the P16000 they credited me P12000 and cleared the amount I owed before.

Right now I wanted to clear it but they are telling me the settlement amount is P21000. I don’t know maths, I wanted to know if I was credited P12000, why is the settlement that much or there is something that I don’t understand.

They said its that much because I did not even pay one instalment from the top up that I tried so much to stop. Please help me understand. Thank you.

Yes, this does sound outrageous but I suspect it’s legitimate, if that’s the right word for such an abusive, exploitative and wicked loan.

The only limit that the law currently applies to loans is the so-called “in duplum” rule which says that when a debt is settled, the interest cannot be greater than the capital amount outstanding. In your case you borrowed P12,000 (after they repaid your former loan) so the maximum possible settle amount could be P24,000 and they’re below that, even if only slightly.

Your problem is that when you signed the second loan agreement you committed yourself for the duration of the loan and also to their terms and conditions that presumably said that could charge an enormous settlement fee if they felt like it. Think about it from their point of view. They were eagerly anticipating all those lovely, lucrative monthly repayments that they could spend on beer, cigarettes and parties. By trying to cancel the loan you came close to losing them that money and they wanted compensation for that.

This is a good example of why we urgently need a right to a cooling off period whenever we take any loan, whether it’s from a bank, furniture store or micro-lender. And we need it now.

Is Helping Hands worth joining?

I was approached by a friend who told me that I should join Helping Hands and can make money. Is this true?

Helping Hands International is a pyramid scheme. The people marketing the scheme describe it as a “non governmental organization” attempting to “empower the less privileged people and orphanage homes”. They also claim that joining the scheme will offer “passive income”, new cars, laptops, a “house of your own”, free trips abroad, loans of up to P500,000, scholarships and “residual income for life” but none of this is true.

Unlike Multi-Level Marketing schemes like Amway and Herbalife, this scam has no products and the business model is entirely based on recruiting people beneath you and them recruiting people beneath them with the promise of money magically flowing up the pyramid in your direction. That’s a pyramid scheme.

I had a WhatsApp conversation with someone selling Helping Hands recently and I asked him “So you earn money by recruiting other people? I don't have to sell anything, just recruit more people?”. His answer was simple. “Yes Sir”.

They’re also liars. Their advertisements claim that they are “in partnership with Bill Gate Foundation, Hyundai Motors, Apple Corporation, HP” but in reality, there are no such partnerships.

So in summary, this is nothing more than a pyramid scheme run by people who tell lies. Like all pyramid schemes Helping Hands International will eventually collapse, leaving its victims disappointed, embarrassed and poorer. Do you really want to be a victim? Please warn your friend and anyone else they might have tried to recruit. Spread the word and help protect them!

Saturday, 15 July 2017

Will Herbalife make you rich?

Last week we looked at Amway, one of the world’s biggest Multi-Level Marketing schemes and asked the same question. Will Amway make you rich? Or will it make you any money at all?

The answer was simple. No. You won’t become rich by joining Amway and the odds are that you’ll probably lose money if you join the scheme.

Maybe you think I’m biased and this all based on my uneducated, ill-informed opinions? That’s certainly what several Amway distributors, or “Independent Business Owners”, “IBO”s have told me over the last few years and in particular over the last week. My opinions are, according to them, ignorant and biased. Actually this isn’t based on any opinions at all, it’s based on the figures that Amway are required to publish every year in the United Kingdom. When the UK authorities tried to close down Amway a decade ago, Amway dramatically cleaned up the way they did business over there and they started publishing an annual “Earnings disclosure statement” that showed how much their recruits actually earned. The latest statement, published in 2016 that covered the year ending in September 2015 made very sad reading. Only one out of almost 40,000 IBOs made more than the average annual wage from their Amway business. The vast majority of them had an income of less than 3% of the average annual wage. And that’s just their income, not their profit. Those miserable amounts are before they paid their internet, phone, electricity bills and their rent. It’s before they bought all the marketing material, attended all the workshops and seminars and before they spent all that time desperately trying to persuade people to join the scheme. The reality is that when these things are considered it’s reasonable to think that almost everyone, probably more than 99% lose money rather than make it from joining Amway.

So what about the other Multi Level Marketing schemes. Is it the same with them? For instance, will you make money if you join Herbalife? Will you make money from distributing their health, nutrition and weight-loss products? Will you make money from recruiting other people beneath you if you join Herbalife?

Again the answer is no.

Like Amway, Herbalife publish a “Statement Of Average Gross Compensation(441kb pdf download), this time in the USA and guess what, it's the same story. The income most people make is trivial and almost all of the money is earned by just a tiny proportion of the members.

According to their 2015 statement, more than 80% of Herbalife’s members, that's 437,152 people, are just people who buy their products and don't have a "downline". These are the people on the bottom rung of the pyramid. They buy products from Herbalife but there's no evidence they sell it to other people and they certainly don’t make any money.

The most interesting group is those people who earned commission from their “downline” sales, the people beneath them. These are what Herbalife refer to as "Sales Leaders With a Downline". In the USA in 2015 there were 68,768 of them. These are the people that Herbalife offer as examples of the riches you can earn from joining Herbalife.

But there are no riches.

Of these people, three-quarters of all the money was earned by the top 3.5%. The top 10% earned nearly 90% of the cash.

At the other end of the scale, the bottom 90% earn just over 10% of the money. The group earning between $1 and $1,000 in 2015 (that's 62.5% of the entire group) actually earned an average of just $303 in the year.

And again, like with Amway, that's their income, not their profit. That's before they paid all those expenses, their phone bills, transport costs and their electricity bills. So just like Amway, the chances of anyone making money by becoming a Herbalife distributor are almost non-existent.

But that’s not the biggest problem with Herbalife. The problem is that Herbalife distributors can be dangerous. Very dangerous.

I’ve had conversations with people selling Herbalife products that have included some remarkable claims. One advertised in a local publication that he had solutions to “Problem with asthma, BP, heart, arthritis, face, ulcers, diabetes, weight”. I contacted him and asked if he really could help with heart problems. “Surely”, he said, “We help with reversing heart conditions”.

Someone else told me that their products could help with weight loss, weight gain, “blood circulation, back pain and joint, period pains and skin prblm”.

Another told me that as well as improving “digestive health”, “heart health”, “dire health threating conditions” and offering “immune solutions”, his products were “very helpful with a lot of various ailement and serious health conditions” and could, get this, improve someone’s CD4 count. In other words he was claiming that his products could help someone with AIDS.

These are all incredibly dangerous, false claims to make and guess what? All of the people making these claims were doing their best to sell Herbalife products here in Botswana.

I contacted Herbalife on all of these and other occasions and asked them what they felt about the claims their distributors were making. Every time they seemed to be appalled and promised they would to kick these distributors out of their pyramid. But is that good enough? If these claims had been made by just one rogue, delusional distributor then we could probably overlook it. But the fact that this has happened several time and that they’ve told a series of lies about their products suggests something different. One even claimed that their products were “approved” by the Botswana Bureau of Standards, which was nothing more than a bare-faced lie.

One last thing about Herbalife. With the exception of pregnant women, the elderly and people with certain very specific medical conditions, none of us need to take the sort of supplements that Herbalife offer. Just buy some fruit instead.

My view is that Herbalife is even less appealing than Amway. Amway’s household goods are at least useful. Herbalife? Well, you can guess my view of them by now.

Friday, 14 July 2017

The Voice - Consumer's Voice

How do I stop being blacklisted?

How do I escape the fact that I am blacklisted? Sometime in 2011 I lost my job and was paying the furniture shop monthly for items I acquired on hire purchase. Upon realizing that I was unable to continue paying every month due to unemployment I requested the same shop to repossess the items and set me free from the chains of misery (bad payer record). Efforts to have the same items repossessed failed up until I had to go for years without paying. It wasn't intentional and only to find out that I’m blacklisted. My question is how do I deal with this? Are there any means of clearing my name and continue with paying now that I secured another job?

Unfortunately, you can't "escape" from being "blacklisted" because there's no such thing as being “blacklisted”. The records held on you by credit reference agencies simply reflect what happened in your past. It will show any bank loans you’ve had, hire purchase agreements you’ve signed, bank accounts you’ve opened, your complete financial history. That allows other lenders to make a reasoned judgment on lending you money.

You fell behind with your instalments and the store is entitled to submit that to the credit reference agencies because it's true, isn’t it? When you finally finish paying the debt they'll also record that as well. Maybe then you’ll present a more appealing profile to possible lenders.

More importantly, asking for the good to be repossessed won’t help you at all. In fact, it will only make the situation worse. The value of the goods you bought is now only a small fraction of their original price and an even smaller fraction of the total credit price you agreed to pay. Once the store adds on penalties and interest to your account, the amount repossessing and selling goods will raise will have very little effect on the amount you owe. The choice you have is whether you want to owe them money while you have the goods or whether you want to owe them money while keeping the goods. I suggest you keep the goods and contact the store and agree a repayment plan that satisfies you both.

Should I join Bitcoin?

Lately someone has been trying to convince me to join Bitcoin and I told them I have to ask you it's legitimacy first. Please advice. Thank you.

Bitcoin is a currency, but not like any currency we've known before. It's a digital currency, other times called a virtual currency or a cryptocurrency. There are no coins or notes with Bitcoin, no bits of metal or paper. Nothing you can put in your wallet or purse. Bitcoins exist purely in cyberspace and that’s confusing. What also confusing is the terminology used with Bitcoin. Terms like "blockchain", "distributed ledger" and "Bitcoin mining" are hard to understand unless you're an expert. There's also the simple confusion that your money is "out there" somewhere and not in your pocket.

Like all currencies Bitcoin’s value can go up but it can also go down. For instance, if you’d bought Bitcoins in November 2013 you would have lost 78% of your "investment" by January 2015. The value of a Bitcoin has now increased again but there’s no reason to think it will always go up.

Then there are security concerns. The technology underpinning Bitcoin is highly secure but anyone who says that a particular security system is fool proof doesn’t know their history. All security technologies will eventually be broken and if a flaw is ever discovered in Bitcoin's security mechanisms it would be valueless instantly.

The fact that it's completely unregulated is another concern. If a conventional currency like the Pula, dollar or Euro showed signs of failing, central banks can do things to support it but with Bitcoin, there's nobody to help you.

Another issue is that when you spend Bitcoins there are no payment protection mechanisms available to you. There are no rights to refunds. no chargeback mechanisms and Bitcoins are completely untraceable, that’s why they’re so useful to criminals and terrorists.

I think Bitcoin is fascinating and something like it is probably the future of money but you shouldn’t see it as an investment. If you have some money you can afford to lose then go ahead, otherwise you should be much more careful.

Friday, 7 July 2017

Will Amway make you rich?


Maybe I should just stop there? Do I need to go any further? Ok, maybe I do.

Amway is one of the world’s biggest Multi-Level Marketing schemes. Originally founded in the USA in 1959 it has a long history of selling a wide range of things including household goods, health and beauty products and foodstuffs. These products can’t be bought in stores but instead are bought and distributed via a multi-level recruiting mechanism. If you join Amway, not only will you be able to buy the products but you’ll also be encouraged (often very forcefully) to recruit people beneath you and you’ll then encourage those new recruits to recruit others beneath them. They call that your “downline” and the series of people above you will be your “upline”.

You can see why many people think of Amway as a pyramid scheme and it’s an accusation that’s has been made many times since Amway became the global company it is today. On various occasions government regulatory agencies around the world have investigated them, most notably in the USA, Canada and the UK. In each of these countries regulators either prosecuted them for crimes such as tax evasion and customs fraud, price fixing, and misrepresentation.

However, Amway is not actually a pyramid scheme, at least not technically. A pyramid scheme is usually defined as a business where the majority of the earnings come from the recruitment of other people lower in the pyramid and where the income from selling products is either minor or non-existent. In Amway’s case there are lots of products to buy. Whether they’re any good, or if they’re worth the money you pay for them, is another issue. Many Amway distributors will tell you that their products are good but, my observation is while this might be true, very often the same or better products can be obtained either at the same price or more cheaply via conventional channels. The spaghetti that Amway sell is certainly high quality and is made according to the traditional Italian bronze die method but Woolworths sell the same thing. And cheaper too.

My biggest concern about Amway is that Amway distributors, known as IBOs, Independent Business Owners, is that when they try to recruit you, they don’t mention the luxury spaghetti and beauty products, but something else. I know this is true because very occasionally I get the approach from someone I vaguely know (and who clearly doesn’t know me very well) who wonders if I’d be interesting in “an exciting business opportunity”. They’re selling a way to make money.

The problem is that this simply isn’t true. You can’t make a fortune or even a small amount from joining Amway. And don’t think I’m asking you to take my word for it. I’m asking you to believe Amway themselves.

About ten years ago Amway were investigated by the UK Government’s Department of Trade and Industry who sought to ban them. This case was eventually dropped but only after Amway dramatically modified its business practices. As a result of this, Amway in the UK are now required to publish income data for their IBOs and that’s where we get the evidence, the evidence that shows how little people actually make from joining the scheme.

The “Amway earnings disclosure statement(195kb pdf download) they published in March 2016 but which refers to the earnings people made between October 2014 and September 2015 make very poor reading.

The statement says that during this period in the UK they had 20,678 "Retail Consultants", people who are “developing a customer base through product retailing”. They also had 18,915 "Certified Retail Consultants" whose job was to “maintain a solid customer base through product retailing and introduce others to the Amway Business Opportunity”. Finally they had 59 "Business Consultants" whose job was to expand “the business by supporting and training RCs and CRCs on retailing products and building their Amway business”.

The average income figures for these groups were, I'm afraid, pathetic.

Retail Consultants had an average income of a mere £40 per month which is £480 per year, Certified Retail Consultants averaged only £106 (£1,272 per year) and the 59 Business Consultants only brought in £1,954 each month (£23,700 per year).

That last figure, the earnings for the Business consultants might sound impressive but for reference, the average annual income in the UK in 2015 was £27,456.

So the top group were, on average, earning less than the average worker, despite being the ones who presumably were working themselves harder than anyone else in the Amway pyramid. The statement also goes into a bit more detail about those 59 Business Consultants. Only one of them had reached “Diamond” status during the year, the level where they earn more than £50,000. Only one out of nearly 40,000 people in the business operating in a country of 61 million people.

That really is a very sad set of statistics.

But it gets worse. The statement refers to “income”, not profits. They don't take account of the costs involved in running an Amway business, of recruiting people beneath you, paying for electricity, phone, travel and internet costs. Nobody really knows how much Amway IBOs spend on such things, apart from the IBOs themselves, and they rarely tell the world about that because they’re too busy trying to recruit other people to make some money from them joining. However, the estimates I’ve seen suggest that 99% or more people who join schemes like Amway actually lose money rather than make some.

In short, even in a large economy like the UK hardly anyone makes even the average national wage if they join Amway. So why should we think it would be any more lucrative in Botswana, a country with a comparatively tiny population?

And what about the other Multi Level Marketing schemes that are constantly appearing? Surely if even the largest of them can’t offer people an income, how can you expect the little ones to do so?

The lesson is very simple. Multi Level Marketing schemes will cost you money, not make you any. The evidence shows that.

The Voice - Consumer's Voice

I’ve been blacklisted!

Good day. I am currently listed at CRB for default in a loan payment at a certain bank. I don't have a problem with being listed. But it's the length of time I am concerned about.

I took the loan in 2007 and due to circumstances I wasn't able to pay. But in 2011 I found a job and resumed payments but I'm still blacklisted even now. Even though I've been paying the loan every month. What can I do?

I’m sorry to hear about your difficulty but I’m glad you’re doing your best to repay your debt. So many people get into difficulties and try all sorts of tricks to avoid repaying which only makes things much, much worse for them.

Credit reference bureaux like CRB don’t actually “blacklist” people, they just hold records of what happened to people and this allows potential lenders make a decision based on the history they see a customer has developed. A potential lender can consult the bureau and will see that you took a loan, perhaps you later defaulted but also that you later recovered and settled the debt. That will give them a good picture of how much risk you’ll present to them if they decide to lend you money.

In your case, where I think you’re still repaying the loan and the debt remains unsettled, then that's what the credit history will show and will form the basis of the decision they take. Given that you had a problem and haven’t completely resolved it yet, you’ll be seen as relatively high risk. I imagine this might change once you’ve settled the debt.

When you do finally settle the debt, ask the lender for something in writing stating that the debt was settled and make sure they update your credit record as soon as possible.

Can I make him fix my engine?

On the 5th January, I bought a second hand engine from a dealer in Mogoditshane for P7,300. On the slip I was given a one month guarantee.

The engine was fitted in the car and I used the car for about two months. On the 21st April, while travelling I head a funny noise from the engine. I stopped by the road site to check, I could not see anything. I started the engine and the noise was there again. I moved the car but it failed to move. I then called a mechanic who came and assessed the car and said it had broken the tension bolt which affected the car timing and all the 16 valves had been bent.

I then consulted the mechanic whom I went with when I bought the engine and told him what happened. He told me that he informed the supplier. I then bought the parts that I was told to buy and the mechanic fixed the car. We had a meeting for me to understand what could be the cause that lead to this and the mechanic told me that it’s a factory fault because a he has never seen a tension bolt breaking in 20 years.

I also enquired with another mechanic and he told me the same thing that I was told by the first mechanic. In the process of repairing the engine I spend P4,500 on spare parts and P1,500 on labour.

Your advise will be highly appreciated so that I know if I can take this matter forward or not.

Unfortunately, I suspect you’re in a very difficult position here. The engine was second-hand when you bought it and was clearly offered with only a 1-month guarantee. The seller will probably argue that they sold it in good faith and were very open about its likely state so I suspect there’s not much you can do unless you have evidence that they lied about the state of the engine.

The lesson here is to be very skeptical about any item that comes with a warranty as short as one month. The warranty period on any item is the period that the manufacturer or seller is confident it will last. Anyone who thinks something will likely last only a month is probably correct. Do you really want to take that risk?

Saturday, 1 July 2017

It looks like a pattern

It is wrong to form stereotypes?

Generally speaking, yes, I think it is. It’s obviously wrong to make sweeping generalisations about groups of people based on things they can’t change such as their gender, skin colour, ethnic origin, country of birth or sexual orientation. You could perhaps argue it’s slightly more acceptable, but still dangerous, to make assumptions about people based on things they can control such as their political and religious viewpoints.

But you certainly should judge people by what they do. By their actions. Ye shall know them by their fruits.

I think that goes for organisations as well as individuals. I think you can judge a company by the way it behaves.

Sensible, mature, grown up organisations behave like sensible, mature grown up people. They don’t have tantrums when people complain, they don’t get aggressive when someone criticizes them, they don’t start throwing things when the quality of their products and services are questioned.

Unfortunately not all companies are sensible, mature and grown up. Search through our blog and you’ll find a wide range of organisations who have been upset by things we’ve said about them and instead of having a dialog with us about their complaint, have instructed attorneys to threaten us with legal hellfire and damnation. Do I need to say that not one of these threats has ever gone further than those threatening letters? All they’ve done is cost themselves a lot of money in attorney’s fees. If they’d just grown up, picked up the phone and asked to come over for a chat we’d have been happy to oblige. Instead they behaved like a spoilt child in a supermarket who was refused chocolate.

Before we even get to the tantrum stage I still think you can judge a company by how it behaves every normal day of the week. Or how it allows its staff to behave. Or its agents.

Hotel Express International is a case worth considering. I don’t remember how many times people have complained about the conduct of Hotel Express International agents but I know that I’ve reported on the situation fifteen different times. Now sixteen.

The story is always the same. A reader gets a “cold call”, an uninvited phone call from a stranger in South Africa explaining the amazing benefits of paying to join Hotel Express International, offering them discounts on hotels, car hires and flights. As part of the sales process they ask for the potential customer’s credit or debit card details either “to keep on file” or to check whether they are eligible for “Gold” or “Platinum” membership. Every time, the readers claim, they most certainly did not give permission for Hotel Express to actually deduct money from their accounts but guess what, that’s exactly what happened. Without the customer’s explicit permission they get enrolled into Hotel Express International, their bank balance is debited and they then have enormous trouble getting their money back.

We’ve sent these complaints over to Hotel Express International and sometimes we’ve been able to help get their people’s money back but not always.

As well as being upset for people who feel they had their money taken without their consent I’m also surprised that people are still falling for the suggestion that you need to pay to join a scheme like Hotel Express International to get hotel discounts. You can get discounts for free. I stay in hotels in South Africa quite often and do you think I ever pay the full rate? Of course not.

Just for example, I needed to stay in Joburg some months ago and booked a suite, yes, an entire suite in a hotel at a discount of around 40%, just by booking using their web site. Was I required to pay to join a scheme to do this? Of course not. In fact, if you compare the rate I paid against the official “rack rate” the hotel quotes I saved 60%. I even once got a discount of over 80% in a hotel in Cape Town, just by signing up for a newsletter from the hotel chain. For free.

So why would you need to pay to get a discount when hotel give them away for free?

The bad news is that this isn’t just something from the past. Just a few days ago we received an email telling the same old story.
“I received a call from Hotel Express International selling me an ‘exclusive membership discount’ card for hotels, a call that successfully ambushed, conned and bullied me into unsuspectingly giving them my credit card details so the caller could ‘check if my card is good for acceptance’ by the company. Lo and behold, an amount of R4,265 was debited, without consent, from my credit account!”
To make matters even worse, he told us that a few days later he “received yet another call from them this afternoon wanting to sell me an additional card. I told him I do not need want an additional card. A lady called me shortly thereafter, again I told her I do not need another card. A few moments later I saw an alert on my phone for another debit of R4,265. This is an unauthorized transaction and I want it reversed before I take action.”

Action certainly is needed in his case. So far they’ve taken R8,530 of his money without his consent and that’s a lot of money. We’ll get in contact with Hotel Express International yet again and see if they can remedy this situation but frankly I’m not optimistic.

So here’s my suggestion. Don’t give your credit or debit card details to Hotel Express International. In fact, don’t give your credit or debit card details to anyone who called you. If you called them, it’s a different matter but in 2017, I think that any company that calls you and asks for your card details over the phone is acting suspiciously. And can you really trust a company behaving that way with your money?

Wouldn’t you rather spend that money on a heavily discounted hotel stay? A discount you didn’t have to pay to get?

The Voice - Consumer's Voice

Is the EU Business Register legit?

Hi. I received an invitation to insert my company details into the EU Business Register for 2017/2018. The invitation says that it will let companies in Europe know about my company. The email says that it’s free but do you think it’s worth it?

Certainly not. Please don’t consider this, not even for a moment.

The EU Business Register looks remarkably like the “World Business Guide", a scam we warned people about a few years ago. They also offered companies a listing in an online business directory service and like them I think that the EU Business Register is a scam. Even though the invitation you received says that “Updating is free of charge”, in fact the small print says that: “THE PRICE PER YEAR IS EURO 995”. That’s over P11,000. Worse still, it also says that the “TIME OF THE CONTRACT IS THREE YEARS” meaning you’ll be entering into a contract for more than P33,000, all to have your details entered into an online directory that nobody actually uses.

If I’m correct that this is the same people who ran the previous, identical scam (and I’m certain they are, they’re almost identical except for the name) anyone who refuses to pay up will start receiving increasingly aggressive threats from debt collectors and law firms until they hand over the payments they’re demanding.

The good news is that they’ll never actually take anyone to court because no sober judge or magistrate would force someone to pay to be abused like this. I can certainly find no record of the people running the previous directory actually entering a courtroom to do so. Nevertheless, let’s not give them the opportunity to harass people. If you do want to market your business you could spend the same amount on a decent web site that really might get you some business.

Is BitClub Network legit?

Someone is trying to recruit me to invest in BCN (BitClub Network). Apparently they are dealing with Bit coins. What are you views? Is this a genuine investment, is it a pyramid scheme?

Please advise for me to make an informed decision?

The BitClub Network describe themselves as "The most innovative and lucrative way to earn Bitcoin" and they suggest that Bitcoin mining is a way to make money. It’s a complicated issue but Bitcoin mining is the process of storing and validating Bitcoin transactions and possibly earning Bitcoins for doing so. However, the resources such as computing power required to do this are immense and it’s not something that you and I can afford to do.

They go on to say that "With BitClub Network you earn daily profits from our shared mining pools. We also have a referral program so you can get paid for anyone you refer."

Yes, it’s true that they do mine Bitcoins but that’s not really what they’re trying to sell you here.

The clue was in that last statement. They say that you “get paid for anyone you refer”. Doesn’t that sound like a pyramid scheme to you? In fact, I suspect it’s a Ponzi scheme, where any returns people get are paid directly from the people who join after them. I’m not the only one that thinks so. If you fight your way through the advertisements for BitClub Network on the internet you can find a number of people warning that this is a Ponzi scheme.

I urge you not to have anything to do with BitClub Network. It’s yet another scheme that, sooner or later, will collapse, just like all other Ponzi schemes and pyramid schemes do, leaving a few people at the top of the scheme rich but the vast majority a lot poorer than before.

Before anyone thinks I’m against Bitcoin, think again. I’ve said repeatedly that Bitcoin is a fascinating new form of currency that may well be something like the future of money. However, Bitcoin is incredibly volatile and unpredictable and worst of all, is completely unregulated. There’s no central bank, no NBFIRA, no consumer body that can help you if things go wrong. Is that a risk you can afford to take?

Friday, 23 June 2017

Facebook. Get used to it.

Whether you like it or not, whether you’ve joined or not, whether you think it’s a good or a bad thing, Facebook is here to stay and you’d better get used to it.

I don’t know for sure, but the best estimate I’ve seen suggests that about half of us in Botswana are on Facebook. Given our population’s youthfulness that’s no surprise but us older-timers are also well represented. It’s also not just a toy for the affluent. The text-only versions of Facebook and the declining price of online data mean that anyone with a cellphone can be a Facebooker.

But still there are some people who are resistant. Some just have an aversion to technology while others seem to have a suspicion that Facebook brings with it threats to their way of life and that it offers nothing more than trivia, obscenity and offence.

I’ve got news for those people. That’s exactly what some people said about that internet in general. Before that people were saying it about the video recorder and television, before that about the telephone and the radio and going even further back in history, they said the same thing about newspapers and books.

And they were right. All of those things did indeed bring greater levels of risk but more importantly they all also brought even greater levels of education, openness, communication and understanding. All progress comes with an upside and a downside. However, almost always the benefits outweigh the risks and that’s particularly true of the internet and Facebook.

Facebook’s critics will say that the content is trivial, bizarre and offensive and again, that’s all true but isn’t that a bit like everyday life? Not every conversation we have with our friends, family and workmates is important. Most conversations are trivial, some are indeed bizarre and occasionally offensive.

But think of what Facebook offers us. Never before have half the entire population of our country been able to converse with one another so easily. Never before has it been so easy to chat to friends, relatives and workmates when they’re far from us. Never before has it been so easy to meet and grow to understand people different from us.

The problem with Facebook is that it’s a very good example of what the internet can be: largely out of control. You can understand Facebook best if you imagine it as being like a bar on a Friday night. A Friday night at the end of the month. Or, as someone suggested to me recently, a bar on a Friday night, at the end of the month and in a mining town. That’s what Facebook is like.

Normal people go to such a bar, or to Facebook, to have fun, hang out with their friends and meet new people but in doing so they become noisier, less diplomatic, less inhibited and a small proportion of them get aggressive and things can then turn nasty.

In the last two weeks I’ve removed eighty-eight posts from the Consumer Watchdog Facebook group. Over the last few years I’ve removed a grand total of 3,284 posts. Most of these were advertisements but a small number were the equivalent of drunken people shouting in that bar. A few have been racist, others bigoted in other directions, a few threatening and every so often, they’ve been defamatory. None of these things are permitted in our bar, sorry, I meant our Facebook group.

I do my best on these occasions to be polite and inform the person who posted the offending item why I’ve removed it and some while ago had an online conversation with a very unhappy Facebooker who didn’t like me removing his post which I thought had defamed someone. But what I said was true, he said. That doesn’t matter, I told him. And it doesn’t. Something that’s true can still be defamatory it it’s not “for the public benefit that it should be published”. The details of someone’s private life are very rarely something for the public interest, despite how inquisitive we might be.

One of the real strengths of Facebook, something that’s relevant to consumers, is how it’s transformed the way in which consumers and suppliers communicate. Yes, if you’re short-changed, let-down or insulted by a store you should probably go see the manager and express your outrage face to face but the landscape has changed. You can now use Facebook to express your complaint. I know this irritates people who insist we need to complain the old-fashioned way but that’s just too bad. Times have changed. Welcome to the modern era.

We’ve been contacted many times by companies who are terrified about this new way of interacting. Our consumers post nasty things about us on Facebook, they tell me. So what are you going to do about, I ask? We don’t know, they confess.

At least they’re asking. At least they realise that they need to do something. Other companies we’ve spoken to have a very different approach. They adopt the same approach my children did when they were little. If they covered their faces they thought they became invisible. Well, peekaboo, that doesn’t work. Stores have a stark choice these days. Either listen to what your customers are saying on Facebook or ignore them. Yes, if you engage with them they might not always react well but of you refuse to talk to them they will always react badly. Always.

So get with it. I don’t know if Facebook will still be with us in ten years time but I know this. Something like Facebook will be. There will be an online conversation forum where your customers will be talking about you, sometimes saying nice things but much more often saying nasty things. Your choice is whether you want to listen to them or not. And perhaps even fix some problems and make yourself look good. Get used to it.

The Voice - Consumer's Voice

They excluded my kid!

Hello. I hope you are fine. I have arrears for my child's school fees but show commitment in offsetting the debt. I paid P3500 last month and P1500 month. I went to the school to inform them that I have applied for a short loan and I am still waiting for the loan to be processed, but the school suspended the kid. Is it appropriate for them to do so?

Yes, unfortunately the school is entitled to do this. I know it seems harsh but they’re a business, not a charity

You don’t say how much your arrears were, but while I respect you for doing your best to pay them off, if there is still an outstanding amount owing, they’re entitled to withdraw the service they’re offering you.

It would be exactly the same if you were in arrears with your rent at your house. Even if you were paying off the arrears the landlord would be entitled to take legal action against you and evict you. It would be the same again if you were in arrears with your cellphone contract, your insurance policy or your home loan. If you’re in arrears, your creditor is entitled to take action against you to suspend the service they’re offering and recover the money you owe them.

I have a lot of sympathy for schools in this situation. I’ve met the head teachers of many private schools and all of them are the sort of people who really dislike excluding a child because the parents are in arrears. It’s not why they went into the teaching profession but they are nevertheless running businesses that have bills to pay and while they often show some tolerance there must be limits to that. Let’s also no ignore that small proportion of parents who are really bad payers.

I suggest you keep the school regularly updated on the progress you’re making in catching up and maybe they’ll be a bit more tolerant.

Where’s my laptop?

I’m asking you what I can do. I pawned a laptop and it got stolen from that pawn shop. Now they’re saying that I pawned it at my own risk so they are not taking responsibility for it. What can I do?

You can ask NBFIRA, the Non Bank Financial Institutions Regulatory Authority for their support, that’s the first thing. NBFIRA regulate the pawn shop industry in Botswana and I’m sure they’ll be interested to hear that a pawn shop is operating so badly.

The first thing I’d say is that any business that either owns a lot of valuable equipment, or which stores property on other people’s behalf, that doesn’t have an insurance policy that covers them against this sort of situation is an incompetent company run by incompetent managers and owned by incompetent owners. It’s reckless and reckless people shouldn’t be running a business. If NBFIRA don’t already make possession of insurance a mandatory requirement for pawn shops then here’s a free suggestion. Change the regulations today.

Secondly, I think you need to check the receipt they gave you when you pawned your laptop. Did you sign anything saying that you “specifically consented” to the store not taking responsibility for a loss like this? If you didn’t then they’ve just broken Section 17 (1) (f) of the Consumer Protection Regulations which forbids them from “entering into a transaction in which the consumer waives or purports to waive a right, benefit or immunity provided by law, unless the waiver is clearly stated and the consumer has specifically consented to it”.

I would also go back to the store and see if they have “clearly stated” this rule, perhaps with a sign on the wall that nobody can miss. If not, I think you should escalate this to both NBFIRA and the Consumer Protection Unit.

You should also demand to be given a copy of the police report they filed when they discovered the theft. If they don’t have one then you’ve got a right to question whether the theft ever occurred and in that case you should go to the police yourself and report the theft.

Saturday, 17 June 2017

The rights we deserve

For the last few weeks I’ve been describing the range of protections that we’re offered by the Consumer Protection Regulations. Given that these regulations were published and enacted sixteen years ago I think they’re doing well. They’re still largely relevant and there’s not a lot that needs to be changed.

But there are some gaps.

Here’s a big one. We don’t have much protection in Botswana against pyramid schemes and their equally rotten cousins, Ponzi schemes. Yes, the Bank of Botswana has the power to declare them illegal deposit-taking schemes but that requires a great deal of investigation and evidence. I think we need another weapon to use against them. A stronger one.

But is it really a big problem? Do we need to spend time and energy writing new laws to protect people against these schemes?

Oh yes.

Many of you will remember the Eurextrade scam that cost so many people in Botswana so much money in 2012 and 2013. This pretend investment scheme offered people the “opportunity” (which is always a warning word) to invest and earn “up to 2.9%” every day. Not 2.9% each year, 2.9% every day. Unfortunately, the vast majority of people who were suckered into joining the scheme couldn’t do the maths because if they could they would have realized how extraordinary that figure is. The numbers are simple. If you invest P1,000 at 2.9% per day after a day you’ve earned P29, giving you a total of P1,029. Another 2.9% each day on top of the previous day’s balance gives you P1,187 after a week, P2,291 after a month, P13,103 after 3 months and after a whole year, the massive sum of P33 million.

Everyone knows that’s simply impossible, that it must be a scam but thanks to a number of very persuasive recruiters many people willingly handed over their money, giving into temptation, gullibility and greed. In fact Eurextrade wasn’t any sort of investment, it was a Ponzi scheme, where the “investments” each victim made were split between the people running the scam and the previous person who joined. If I joined on Monday and you joined on Tuesday part of the money you paid in went directly to me, and you got some of the money from the sucker who joins on Wednesday. It’s “robbing Peter to pay Paul”. It’s a scam. Most of the money went straight to the criminals running the scheme.

We don’t know how many people lost money when the scheme eventually collapsed (as all Ponzi schemes eventually do) or how much money the scammers got away with but I know for a fact it was at least tens of millions. We heard from victims and their friends who cashed in genuine investments, sold vehicles and property and even took bank loans to invest in the scheme. They all lost everything. Of course a small number at the top of the pyramid made a little but that was all at the expense of the victims.

We’ve seen the same again more recently with Helping Hands International, a donation or “gifting” scheme where people are encouraged to add money to a central pool and then withdraw larger amounts. Nobody involved in the running the scheme ever explains where the extra money comes from because if they did they’d give the game away. In fact, as a few people confessed to me, the growth in money just comes from new people joining, not from any interest or profits. Just new victims. That’s the definition of a Ponzi scheme.

But what could have been done to prevent people falling for it? Consumer Watchdog did its best to warn people as did NBFIRA, the regulator of financial services in Botswana but clearly that wasn’t enough.

That’s where I think an addition to the Consumer Protection Regulations might help. I think a new regulation should be added, saying that it would be “an unfair business practice” to “cause a probability of confusion or of misunderstanding as to the origin, amount or likelihood of any income or profits from any business or investment mechanism”.

That would go some way to preventing the sort of lies and exaggerations that the recruiters for Eurextrade, Helping Hands International and all the other Ponzi schemes, pyramid schemes and Get Rich Quick schemes tell us to part us from our money.

It might also go some way to curbing the excesses of the Multi Level Marketing industry with their promises of a new “lifestyle” when all the figures that the companies are forced to disclose show that it’s incredibly unlikely that any new recruit will make anything at all.

Another change I’d recommend is to follow the approach adopted in many other countries about what happens when consumer buy something that goes wrong. Right now if we buy something that breaks down, Section 13 (1) (a) of the Consumer Protection regulations applies because it clearly wasn’t “of merchantable quality”. We then have a right to one of the three Rs: a refund, repair or replacement. But here’s the problem. We don’t get to choose which of those three Rs we get. That’s up to the store who sold us the broken-down item. I think that should change. I’d like to see consumers have the right to demand a refund or replacement for an item that fails. Obviously there should be some limitations, I don’t think I should be able to demand a refund for a cellphone that fails after two years but maybe we should have that right for the first 14 days? Maybe 30 days? That would be reasonable and I think it would make life a lot simpler for those of us who buy faulty merchandise.

The only challenge would be enforcement but that’s where we consumers have a powerful weapon: the law. If we complain to them, the Consumer Protection Unit in the Ministry of Investment, Trade and Industry is required to investigate and establish whether the rules have been breached. I think these few new powers would help them become even more effective, don’t you?