‘Unconscionable conduct’: Vodacom fined R1m for hefty contract cancellation fees
National Consumer Tribunal slams mobile operator for imposing a cancellation penalty of 75% of the remaining subscriptions on contracts between 2020 and 2022
The National Consumer Tribunal found Vodacom guilty of “unconscionable conduct” for, among other things, imposing a contract cancellation penalty so high that it negated customers’ right to escape their contract obligations early.
The tribunal imposed a R1m “administrative penalty” on the mobile operator for imposing of a cancellation penalty of 75% of the remaining subscriptions on contracts between 2020 and 2022, a time when many had been financially crippled by enforced lockdowns as a result of the pandemic.
The Consumer Protection Act (CPA) states that a consumer may cancel a fixed-term contract — such as a cellphone or gym contract — before the term expires, though the company may impose a “reasonable” cancellation penalty.
While “reasonable” is not quantified, the Act states the penalty should not be so high as to effectively negate a customer’s right to cancel early.
Vodacom also required the payment of all outstanding fees on top of the cancellation penalty before contracts were terminated on request, acting National Consumer Commissioner Thezi Mabuza said in welcoming the Tribunal’s decision on Wednesday. That requirement worsened the consumers’ financial wellbeing at that time, she said. “This conduct is not in the spirit of ... the CPA.”
The commission had referred to the tribunal many complaints from Vodacom subscribers about the company’s contract cancellation terms and conditions.
“Consumers also alleged that they were coerced to sign the acceptance quotation letter — valid for 12 days — and return the letter to Vodacom with proof of payment,” Mabuza said.
... many complainants had lost their jobs or their salaries were cut, making it impossible for them to proceed with the SIM-only contractsThezi Mabuza, acting National Consumer Commissioner
She said the commission had received most of the complaints during the pandemic “when many complainants had lost their jobs or their salaries were cut, making it impossible for them to proceed with the SIM-only contracts”.
Vodacom was also found guilty of contravening the CPA in that it failed to inform subscribers between 40 and 80 business days before their contracts’ end date of their options and the consequences of the various options.
The tribunal further found Vodacom’s conduct to be unconscionable in that it continued to bill consumers after they 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, the commission said.
The final transgression, the tribunal found, was marketing a data bundle package that was not available and not provided.
“We further see this as a victory for SA consumers who for the longest period were subjected to contracts that were in favour of the supplier,” Mabuza said.
Vodacom has been approached for comment.
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