Moneyweb News Special Investigations Author: Patrick Cairns| 21 October 2014 00:08 Why is Cambist so evasive? Article tools More questions than answers. LONDON – It should be a fairly simple principle: when you buy something, you are entitled to know everything about what you are buying. Whether that is a car, an ice-cream or a hotel room, the principle doesnt change. So how does one respond to a company that is reticent about telling you exactly what they are selling? At the very least you have to ask what it is that they dont want you to know. For the last two months Moneyweb has been trying to make sense of what exactly is being sold on the Cambist platform. We have engaged with Cambist and its parent company OneLaw at some length, but we are still left with more questions that answers. Cambist became known for facilitating the sale of emolument attachment orders (EAOs) and promising a 19.5% return to those that bought them. Due to the recent shocks in the unsecured lending market, it is however now thinking about stopping the sale of these contracts. For now we will leave that part of its business aside and concentrate on two more recent additions to the platforms offering. Cambist is now promoting the purchase of cell phone contracts and what it is advertising as “sales agreements”. Both are also offered with a guaranteed 19.5% return. In both cases, the products are supposedly sold by the original issuers with the aim of generating immediate cash flow. The theory is that they will get a quick payout, while the new owners of the contracts will be paid the monthly fees and so make back their money with interest. To understand how this supposedly works, imagine company A creates a cell phone contract package that it sells to consumer B at a monthly fee. If that fee is, for arguments sake R100 per month, the contract is effectively worth R2 400 over a period of two years. However, company A might not want to wait 24 months to realise that income. So it uses the Cambist platform to sell on that contract to someone else, Cambist user C, at a discount – say R1 800 – to generate immediate cash flow. Cambist keeps some of the discount as commission, so Cambist user C actually pays R1 932. Over 24 months, he or she gets R2 400 back in total, which represents the 19.5% return Cambist is promising. That is the theory. But when Moneyweb scrutinised where these contracts were coming from, we came up against some rather evasive answers. On August 25 we asked the then manager of Cambist, Magda van der Merwe, who the companies were that were selling the cell phone contracts. Her reply was that there were “several owners of cellphone contracts, who are willing to sell the rights in terms thereof”. However, when she was asked to name them, she admitted that there was actually only one, which she called “Spice Phone”. Moneyweb had already been in contact with this company, which is actually Spice Mobile. They claim to sell mobile contracts to blue collar workers. Their business model is to package data and airtime from the mobile operators (MTN, Vodacom and Cell C) and to sell this together with devices as 24 month contracts. Their way of guaranteeing payment is that the monthly fee is paid directly from payroll. However, there are two big problems here. The first is that Spice Mobile has refused to disclose the name of any company that it deals with. So the origins of these contracts could not be verified. The second problem is that Spice Mobile confirmed that they had last sold contracts on the Cambist platform in May. That was nearly three months prior to Van der Merwe telling Moneyweb that they were the sole supplier of cell contracts on the Cambist platform. However, Cambist was still selling cell contracts at the time and continued to do so. When Annemi Olivier, a representative of OneLaw, was asked about this on September 26, she claimed that “since last week we have added other companies that sell these contracts on the same principle”. However, she has yet to name who these suppliers are. So we have a situation where Cambist claims to be selling cell contracts, but will not say where these contracts come from. They are also unable to explain how they were selling cell phone contracts for a three and a half month period when they did not have any suppliers. In a recent interview with Moneyweb reporter Hanna Barry, Arnoud van den Bout, Onelaw’s COO, said cellphone and sales contracts, now accounted for a much larger share of contracts sold via the platform. Moneyweb also asked how Cambist can be confident that Spice Mobiles business is sound, and Van der Merwes reply was that it was registered with the regulators in its industry. However, Spice Mobile is not registered with Icasa and Cambist has failed to come up the names of any other regulators that would fit this bill. A study of the “sales agreements” produces a similar story. These are supposedly contracts generated from the sale of goods. The principle is that they come from companies that sell something to their customers, but only require payment in instalments. Cambist argues that such agreements do not fall under the National Credit Act (NCA) because they do not charge any interest and so these are not credit agreements. On top of this, Cambist refuses to name the companies supplying these contracts on its platform or what it is that they sell. They will not even make a blank contract available for Moneyweb to scrutinise so that we can get legal opinion on whether or not these should fall under the NCA or not. Oliviers argument is that: “The sales agreement (sic) are between the individuals entering into the contract. I can suggest that if you would like to have an example that you purchase a contract in which case you will receive a sales contract.” This is, of course, absurd. You cant expect someone to purchase something on the basis that they will only find out what it is once they have bought it. I dont go to my car dealer and accept that I will only see what my new vehicle will look like once Ive paid for it.
Posted on: Wed, 22 Oct 2014 08:56:43 +0000