Customers caught in Flexicell hell

Published Nov 19, 2007

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Tired of running out of cellphone time on a pay-as-you-go system, but don't want the cost and inflexibility of a 24-month cellphone contract?

"Now you can have your cake and eat it, thanks to cellular operator Flexicell, which saves you almost 20 percent on airtime."

That was part of a press release put out by Flexicell in April this year.

Flexicell buys airtime in bulk - in the form of thousands of two-year contracts - from various cellular network providers and parcels it out into monthly offerings at rates between 12 and 18 percent cheaper than pre-paid rates.

The company had lofty aims: "to drive down telecoms prices throughout Africa through a low-margin, high-volume business model, thereby making telecoms more affordable and accessible to the mass market".

Not only would the country's poorest be spared from paying the highest airtime rates - because they don't qualify for pre-paid contracts - but they would learn how debit orders work.

It clearly was a great business model, because Flexicell was named among the country's top performing companies of 2006/7.

The company's latest slogan is "With Flexicell, you always get a big offer and a little something extra", one of the current extra offers being a free funeral policy.

But journalists and consumer bodies around the country have fielded a significant number of complaints from Flexicell customers who complain they're getting little or nothing out of the deal, let alone something extra.

They've complained of having their bank accounts debited, but not receiving any airtime in return; of cancelling their contracts but being unable to get Flexicell to stop the debit order, month after month; and of having to spend huge amounts of airtime in trying to get some joy out of the company's call centre.

Reeling from a flood of negative publicity, Flexicell has taken the drastic step of closing down its "outbound" department. In other words, its telesales agents are no longer "cold calling" its target market in a bid to sell them airtime contracts.

Many of those agents have now been transferred to the customer care department, which has gone from 40 to 280 agents. But still some Flexicell customers are feeling the need to take their grievances elsewhere.

"Shari", for example, logged the following on the consumer site Hellopeter.com

"My account was debited in August for a sim card and connection fees which I have never received.

"I had cancelled the sim, however Flexicell was quite comfortable with taking the money and never refunding it. After numerous calls and empty promises I still await the refund."

Beauty Danise, a Cape Town domestic worker, was called by a Flexicell agent last June and offered 120 airtime minutes a month for R100. She agreed and a sim card was delivered to her home in Khayelitsha. For several months, her employer told me, airtime was loaded on to her sim.

"In December she didn't have enough funds in her bank account so they did a double deduction in January. In the middle of January she stopped receiving airtime, so she removed the sim card and replaced it with her old one," said her employer, who asked not to be named.

"In February she tried again with her Flexicell sim, but there was no airtime. She tried to call but could never get through to anyone and couldn't afford to hang on indefinitely.

"In September she realised that Flexicell had continued to make deductions from her savings account. She went to the bank to try and get them to stop the deductions as she was receiving nothing in return, but they said they could not as Beauty had to contact Flexicell herself.

"I eventually got hold of a consultant who acknowledged that money had been deducted from Beauty's account and that they would refund the R800 in 14 days."

Flexicell is refunding tens of thousands of rand to its customers every month in a bid to restore its credibility and counter the negative media reports.

But in many cases, senior manager with the company Wilna Peckham says, "the blame does not sit with us".

"Many of the complaints go to the heart of complex consumer issues, including the nature of verbal agreements, telesales in a developing market, and fulfilment in a highly mobile market," she said.

Part of the problem, as I see it, is that as this is a high-risk market to do business with, Flexicell does not dispatch its sim cards to new customers until the first debit order has been successful.

That first debit being the airtime payment, say R119, plus an "activation fee" of R99 - quite a whack for a low-income earner, especially if they don't have anything to show for it at the time.

Flexicell tells prospective customers that their sim card will be sent to their nearest post office within five to 10 days after their account has been debited, but in many cases it takes much longer than that, creating a distrustful and unhappy client.

If the sim card still hasn't arrived by month three, when Flexicell takes another R99 via debit order for an "annual levy", the situation reaches crisis proportions.

The fact that until very recently Flexicell clients, who had signed up to enjoy discounted airtime rates, were forced to call an 0861 number - at premium rates - only to be trapped in call centre "please-hold-on" hell, served to fuel the fire even more.

Peckham acknowledged the problem areas. "For security reasons, we won't send the sim card until we have got hold of the customer by phone, and discussed which post office Speed Services should deliver the sim to," she said.

"You wouldn't believe how often we can't get hold of the person, despite having asked them to supply three phone numbers."

And until that confirmation call is made, the sim card stays locked in Flexicell's cupboard.

In other cases, Peckham said, new or replacement sim cards were simply not collected from post offices, as arranged.

"Some forget to collect the card, or go to the post office after hours, assuming that their card will be in their post box."

Often the cards get sent back to Flexicell, and the process has to start again.

"Additional debits could have been collected before the clients successfully collect the sim card."

From the consumer's point of view that means more money gone, but no way to use the airtime.

Also, many of the complainants default on payment after the first few successful debit orders, Peckham said.

"When this happens we lock the sim card until payment is received. Until we have received payments of all outstanding amounts, the airtime accumulates on the sim card. If the full payment is not received within two to three months of the first unsuccessful debit, we block the card, and the client will forfeit the telephone number they originally received."

She pointed out that the company had never "blacklisted" any of its clients for non-payment.

As for those who complained of not being able to cancel their debit orders, Peckham conceded that in the past, this process had been "long and tedious and prone to human error".

The company had since drastically revised and improved its customer care systems, she said.

Clients were no longer forced to cancel in writing but could do so by phone, immediately, or could simply cancel the debit order with their bank.

Peckham invited me to see the company's new customer-friendly initiatives.

I took her up on the offer, and visited Flexicell's Cape Town offices recently, where I found several floors of dark empty telesales agent stations - the old outbound department.

"Our total focus has shifted from sales to customer care," Peckham said.

No longer do clients have to waste precious airtime waiting for someone on Flexicell's 0861 line to deal with their issue - they can SMS 39131 with the word "Help" and their account number, and they'd be called back within 48 hours, Peckham said.

Flexicell is not saying when or even if it will get its army of telesales agents back at their posts to sell more contracts in order to make its "high volume" business model work.

For now the company is paying the price of underestimating the effect of not doing enough to look after its existing clients.

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