Vodacom fined R1m for high cancellation penalties
Vodacom was found guilty by the National Consumer Tribunal of ‘unconscionable conduct’ for, among other things, imposing a contract cancellation penalty so high that it negated its customers' right to escape their contract obligations early, reports TimesLIVE.
The tribunal has imposed a R1m ‘administrative penalty’ on the telecom company relating to its imposing of a cancellation penalty of 75% of remaining subscriptions on its customers 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 is up, but that the company may impose a ‘reasonable’ cancellation penalty.
While ‘reasonable’ is not quantified, the Act states that the penalty should not be so high as to effectively negate a customer's right to cancel early.
Vodacom also required payment of all outstanding fees on top of the cancellation penalty before contracts were terminated on request, said Thezi Mabuza, acting National Consumer Commissioner, who welcomed the decision yesterday.
That requirement worsened the consumers’ financial well-being 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 T&Cs.
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 also 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.
Its final transgression, the tribunal found, was marketing a data bundle package that was not available and not provided.
Article disclaimer: While we have made every effort to ensure the accuracy of this article, it is not intended to provide final legal advice as facts and situations will differ from case to case, and therefore specific legal advice should be sought with a lawyer.