The National Consumer Tribunal has slapped Vodacom with a R1-million administrative fine for contravening the Consumer Protection Act (CPA) as regards fixed-term contracts and their conduct was declared unconscionable and prohibited.
The National Consumer Commission (NCC) said on Wednesday in a statement that it welcomed the decision by the Tribunal after it found that Vodacom’s conduct was unconscionable by imposing terms and conditions that negated the consumers’ right to cancel their fixed-term contracts.
Thezi Mabuza, the acting national consumer commissioner, said: “The Commission welcomes this judgment as we believe that it is going to deter other suppliers/operators from engaging in the same conduct. We further see this as a victory for South African consumers who for the longest period were subjected to contracts that were in favour of the supplier.”
A Vodacom spokersperson said,“ Vodacom notes the ruling of National Consumer Tribunal. As at present, we are studying this determination and will, in due course, give our views on the matter.”
Shares in Vodacom, with a market capitalisation of R216 billion, were at 0.65% lower at R103.30 in midday trade, having fallen 15.26% in the year to date.
Between the 2020/21 and 2021/22 financial years, the NCC received and investigated numerous complaints of alleged contravention of various sections of the CPA by Vodacom.
Consumers alleged that Vodacom denied them the right to cancel their fixed-term contracts by imposing a cancellation penalty of 75%. Moreover, Vodacom required payment of all outstanding fees and the cancellation penalty before contracts were terminated on request. Consumers further alleged that they were coerced to sign the acceptance quotation letter, which was valid for 12 days, and return the letter to Vodacom with proof of payment.
Mabuza said the Commission’s investigation revealed that Vodacom had engaged in prohibited conduct of the CPA.
“The NCC received the bulk of these complaints during the peak of Covid-19 when many complainants lost their jobs or their salaries were cut, making it impossible for them to proceed with the SIM Only contracts,” said Mabuza.
The NCC explained that section 14(3)(b)(i) provided that the supplier may impose a reasonable cancellation penalty with respect to any goods or services supplied to the consumer. Regulation 5(2) listed the relevant considerations in deciding on a reasonable cancellation penalty and regulation 5(3) of the CPA stated that a supplier might not impose a cancellation penalty that had the effect of negating the consumer’s right to cancel.
Vodacom’s imposition of a 75% cancellation penalty constituted a contravention of these regulations as did the mobile operator’s failure to cancel consumers’ contracts timeously after having been notified by consumers and as required by the CPA.
Furthermore, in the case of a fixed-term consumer agreement, the supplier must inform the consumer in writing or other recordable form not more than 80 nor less than 40 business days before the expiry of the contract of the impending expiry date, including any material changes that would apply if the agreement was to be renewed or may otherwise continue beyond the expiry date and the options available to the consumer.
Vodacom’s failure to inform consumers that their contracts were about to expire and to advise them of their options also contravened the CPA
The Tribunal also found that the company’s conduct was “unconscionable in that Vodacom continued to bill consumers after they duly cancelled their contracts or attempted to do so, and by referring such consumers to debt collectors, blacklisting them with credit bureaus, and threatening them with legal action”.
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