Vodacom has been found guilty of contravening sections of the Consumer Protection Act, following a series of complaints from users about not being able to cancel their contracts, not being informed when their contracts had expired, and marketing data bundles that were not provided.
The National Consumer Commission (NCC) said the National Consumer Tribunal imposed an administrative fine of R1 million against the service provider.
The commission said between 2020/21 and 2021/22 financial years, the NCC received and investigated a number of complaints where consumers claimed their right to cancel their fixed-term contracts was denied. They claimed that Vodacom imposed a 75% cancellation penalty.
"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 that was valid for 12 days and return the letter to Vodacom with proof of payment," the commission said in a statement on Tuesday.
The commission's Thezi Mabuza said the bulk of the complaints were received during the peak of the Covid-19 pandemic when many people lost their jobs or had salaries cut.
"Section 14(3)(b)(i) provides that the supplier may impose a reasonable cancellation penalty with respect to any goods or services supplied to the consumer. Regulation 5(2) lists the relevant considerations in deciding on a reasonable cancellation penalty, and Regulation 5(3) of the CPA states that a supplier may not impose a cancellation penalty that has the effect of negating the consumer’s right to cancel. Vodacom’s imposition of a 75% cancellation penalty constituted a contravention of this section," Mabuza explained.
The network further failed to cancel contracts on time after having been notified by the consumers.
Mabuza said Vodacom’s refusal to cancel consumers’ contracts on the basis that any cancellation is subject to payment of a cancellation fee before the cancellation can be effected, constituted a contravention of Section 14(2)(b).
She explained that Vodacom also failed to cancel consumers’ contracts within 20 business days of consumers’ notice of cancellation; instead, the supplier sent consumers quotation letters with a cancellation penalty of 75%, contravening Section 14(3) of the Act.
Mabuza said Section 14(2)(c) states that 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 is to be renewed or may otherwise continue beyond the expiry date and the options available to the consumer.
She said Vodacom’s failure to inform consumers that their contracts were about to expire and to advise them of their options contravened Section 14(2)(c).
“Vodacom unconscionably imposed an unreasonable cancellation penalty of 75%, negating consumers from cancelling the contracts. Moreover, Vodacom required payment of all outstanding fees and the cancellation penalty before contracts were terminated on request, exacerbating the consumers’ financial wellbeing at that time. This conduct is not in the spirit of the promotion of the CPA," the commission said.
The Tribunal also found that Vodacom’s conduct is 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 bureaux, and threatening them with legal action. By repeatedly denying consumers the right to cancel the contracts, Vodacom contravened Section 40(1)(b) and (d) of the Act.
Mabuza said Vodacom was also found guilty of contravention of Sections 29(b)(i)(ii) and (v) read with Section 41(3) by marketing a data bundle package that was not available and not provided.
Vodacom was ordered to pay an administrative fine of R1 million, their conduct was declared unconscionable and prohibited.
“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,” Mabuza said.
“Vodacom notes the ruling of National Consumer Tribunal’s (“NCT”). As at present, we are studying this determination and will, in due course, give our views on the matter,“ spokesperson from Vodacom said.