Picture: for illustration purposes
In a ground-breaking decision, the National Consumer Tribunal (NCT) has issued a hefty R1 million fine against leading mobile service provider, Vodacom. The company was found to have engaged in "unconscionable conduct" when it imposed extreme cancellation penalties for fixed-term contracts.
The National Consumer Commission received a stream of consumer complaints over two years, up until March 2022. The grievances mainly revolved around the fact that Vodacom denied their right to premature termination of their fixed-term contracts by imposing a high cancellation penalty of 75%. The complaint further stated that Vodacom necessitated full settlement of all remaining dues, along with the cancellation fee, prior to rendering the termination effective.
Throughout the probe, the commission discovered Vodacom had contravened sections of the Consumer Protection Act (CPA) that permits the imposition of cancellation penalties. However, the termination fees should not deny consumers their right to cancel. And that's exactly where Vodacom faltered.
The mobile operator's failure to cancel contracts within the statutory 20 days was deemed a contravention, as evident from their standard practice of sending quotation letters including the cancellation penalty upon notice of cancellation. This practice prevailed ominously throughout the peak Covid-19 period, a time when job loss and salary cuts were rampant amid the pandemic, rendering consumers unable to continue with the 'SIM-only' contracts.
In the harsh light of these events, the tribunal has declared Vodacom's actions as both "unconscionable and prohibited," mandating the corporation to pay a hefty fine of R1 million penalized for its conduct.
The commission warmly welcomes this judgment, with acting national consumer commissioner, Thezi Mabuza, stating, "We believe this will deter other suppliers from similar conduct" and recognising this decision as a victory for long-suffering South African consumers.