Redressing cellular and the CPA

2011-05-07 00:00

SOME weeks ago, I wrote about the new Consumer Protection Act and what it means for cellular subscribers in South Africa. The information that article contained was accurate at the time of writing, but things have since changed, prompting some reaction from readers and requests for a revisiting of the subject.

It is something of great concern to South Africans who are fleeced for telecommunications services and have, in the past, been bound by service provider contracts that Satan himself would be proud of.

Service providers have since made their submissions to authorities and the legislation was finalised.

In its final form, the legislation is less restrictive for service providers. It is also rather vague on exactly how much you will be expected to pay for the early cancellation of contracts.

Now, the regulations stipulate that the calculation of reasonable contract cancellation charges has to take 10 points into consideration.

These points include some sensible considerations, such as outstanding contract fees up to date of cancellation, the consumer’s average monthly spend, the value of handsets that will remain with the consumer after cancellation and those that will be returned to the service provider, the duration of the initial contract, losses suffered or benefits accrued by the consumer and the length of the cancellation notice.

However, they also contain some subjective and potentially vague matters, like the “reasonable potential” of the service provider to find an alternative consumer, general practice of the relevant industry and the nature of goods and services that were detailed in the contract.

The act refers to “cancellation charges” instead of “penalties”, but it seems there is leeway for cellular service providers to lash consumers for cancellations.

The act also doesn’t do much to curb contract periods. The usual 24-month contracts are still allowed, and the act even makes it possible to have 36-month contracts, so long as “demonstrable financial benefit to the consumer” is shown.

The contract terms we have in South Africa are fairly typical of what you will find in most of the world — although instalments and tariffs are somewhat lower than what we pay in South Africa.

The stipulation of the CPA relating to demonstrable financial benefit to consumers is vague and doesn’t do much to encourage more reasonable fees and cancellation charges. How does one demonstrate financial benefits? Will this calculation take the spending patterns, income and personal budgets of each cellular subscriber into consideration?

That said, the Consumer Protection Act is a vast improvement over what we had before. It allows for recourse where consumers feel they have been wronged. It also brings the national consumer commission (NCC) into being as a body that will enforce the National Credit Act (NCA) and protect consumers.

Ultimately, it is the free market that does the best job of protecting consumers. In a highly competitive environment customer service and fairness towards consumers are differentiators and something that service providers have to be better at than their competitors if they are to retain customers.

A contract is serious business and South Africans should be less eager to sign them. The CPA brings a reasonable level of protection while still making contracts serious business.

You should think twice before you sign with anybody. And that shouldn’t change. — Fin24.

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