How the ‘too good to be true’ car deal turned sour

TO thousands of South Africans, the “Drive a new car for R699 a month” deal seemed like the perfect solution to their “want a new car but can't afford it” dilemma.

Except that it turned sour with thousands of disgruntled car buyers who are now pursuing court action.

The deal was that you got a new car, with a 100 percent loan from a bank, making you responsible for the full repayment amount every month, but you offset that expense by signing a second contract with Hong Kong-based Blue Lakes Trading and Promotions.

In terms of this, you get paid a sizeable amount every month in exchange for turning your car's back window into an in-your-face moving billboard advertisement, mostly for the scheme itself.

The Satinsky group of companies owns Drive Car Sales, the company driving the unique car ownership model throughout South Africa. Satinsky is also the management agent for Blue Lakes Trading and Promotions and operates Blue Lakes' help desk in the country.

Earn While You Own: The car owner, referred to as the “advertising service provider” (ASP), had to drive at least 500km a month to earn R570. If a car was sold from the unique code on their car's back window, they were rewarded with R3 000.

Earn While You Drive: The ASP was compensated on a sliding scale, linked to the kilometres they drove in a particular month, with the advertising fee being calculated as a percentage of the repayment amount for the car. If they drove more than 2 000km in a month, they got 100 percent of the repayment for that month.

Both options required owners to submit photos of their vehicles, taken at specific angles and at specific times of the month. There were third party advertisers, who were said to pay the advertising fee, but most of the cars seemed to advertise only the scheme.

While the monthly repayment that went to the financing bank was fixed, the amount they could expect from Blue Lakes, via Satinsky, was not.

This made it hard for a person on a fixed budget to meet their financial commitments. Because of this, many opted for the second option, as they had more control over their monthly mileage than whether or not someone would respond to the advert on their car.

On its own, R570 wasn't much of a subsidy when it came to a car repayment. And there were other risks.

The contract stated that the payment would stop altogether should the car be in for repair or “overhauled at any stage” during the period of agreement.

Plus, there was this: “Payment will be suspended while there is any pending Advertising Services Authority or dispute between the company and/or any associate company as (sic) the ASP.”

I presume by “Advertising Services Authority” they were referring to the “Advertising Standards Authority”, and the last bit should have read “dispute between the company and/or any associate company and the ASP”.

So, if you were to raise a dispute with the company, your payment could just stop.

And there was more. Clause 4.10 reads: “This agreement will terminate in the event that the ASP places any derogatory statement in the media and/or on the vehicle and/or in any social network system regarding the company and/or any company associated with the company.”

Well, either the many people, from students to pensioners, who have spoken to journalists, commented online, or posted on Facebook recently, had not read that clause of the contracts, or were willing to take the risk.

Perhaps that risk hasn't paid off for some of them. Moneyweb reported in April that: “Other complaints centre on contracts being cancelled for no reason and without warning.”

While some claim to have been doing well out of their contracts, they were vastly outnumbered by those who reported to be bitterly disappointed, and suffering terribly financially.

This is the response I got from Siyanda Zuma, media liaison manager for the Satinsky group: “The Satinsky Group of companies consists of a number of divisions including Drive Car Sales and Just Group Africa.

“Blue Lakes Trading & Promotions is a separate company with no ties to our company. It is based in Hong Kong and is a trading, promotions and advertising company.

“The Satinsky Group of companies is not responsible for any payments to clients who purchased vehicles from ourselves.

“Please note that when customers purchase vehicles from our group of companies they enter into two separate transactions – a vehicle finance agreement with the bank, in which they are responsible for the full monthly payment, and they have the option to enter into an advertising agreement with a third party, Blue Lakes Trading and Promotions, in which they become service providers to the principal Blue Lakes Trading and Promotions.

“Blue Lakes is responsible for payments of advertising fees which vary and fluctuate.

“No contracts are changed unilaterally and advertising fees vary from time to time dependent on the campaign which is available.”

Zuma refused to explain why so many Option 2 “ASPs” were complaining of receiving fees which did not correspond with the amounts they were entitled to – and were getting previously – in terms of their mileage.

He said: “The Satinsky Group manages the help desk in South Africa and does so on instruction from Blue Lakes Trading and Promotions.

“We are aware that certain clients are unhappy with Blue Lakes Trading and Promotions and are in the process of addressing these complaints.

“We are launching a new rewards programme and will update you as soon as it is officially launched.”

So, essentially, Satinsky is distancing itself from the deals, in the face of complaints, saying it is only the “managing agent” for Blue Lakes.

Hence I asked Zuma: “Consumers are contracting with Blue Lakes, but who do they turn to when unhappy with the deal? A help desk run by Satinsky.

“But you say Satinsky is not party to the agreement, so who is the responsible party at Blue Lakes?

“And how does a disgruntled client get further than a help desk run by a company which takes no responsibility for the contract?”

His response? “Please note that all details regarding the parties to the Advertising Service Providers Agreement are contained within the agreement given to the relevant Advertising Service Providers.”

I haven't been able to find those contact details in any of the contracts and other documentation I have seen, and nor have the “ASPs”, or they'd surely be directing their complaints accordingly.

As for recourse? Well, cancelling the contract will leave them paying their car’s full instalment.

And complaining to the Advertising Standards Authority about misleading advertising could have the same effect, thanks to the wording of the contract, under Suspension of Payment.

A most unsatisfactory state of affairs, to say the least.

Wendy Knowler – IOL Motoring