The National Consumer Tribunal has ordered Volkswagen Financial Services to stop charging customers for ‘on-the-road fees’ and pay back added fees it has already charged.
This follows a 2017 judgement by the National Credit Regulator (NCR) which found that the fee is not permitted to be charged on credit agreements by the National Credit Act.
In the judgement on Monday, the Tribunal ordered that Volkswagen Financial Services must stop charging customers on-the-road fees on credit agreements from 10 April 2019.
The company – which is a separate entity from Volkswagen South Africa – was also ordered to calculate the total charges of the fees (including interest) added to the on-the road-fees, and to refund customers.
Following this, it must submit a report to the NCR to confirm that these refunds had taken place.
According to insurance company Hippo, an on-the-road fee – also known as a ‘dealership’ fee or ‘service and delivery fee – is added for extras such as pre-delivery checks‚ valets and admin.
The cost can be anything upwards of R4,000 on cars with a price tag of under R200,000.
When asked for comment, Volkswagen Financial Services said that it was currently reviewing the ruling and obtaining legal advice.
Understanding what is being refunded
Speaking to BusinessTech, legal advisor at the NCR’s investigation and enforcement unit, Ravashnie Venugopal, clarified that the refund mentioned in the judgment does not apply to the on-the-road fee itself, but rather the fees levied on the on-the-road fees.
“Any charges, interest or additional fees which were charged on the on-the-road fees must be refunded,” she said. “Because the consumers did benefit from these fees, the Tribunal couldn’t ask for consumers to be refunded for the full amount.
“Instead, Volkswagen will have to refund those additional fees on the on-the-road fees,” she said.
She added that going forward Volkswagen will not be allowed to charge on-the-road fees at all.
Venugopal said that it is possible for Volkswagen to appeal the judgement, in which case it would then head to the High Court.