Vodacom nailed over contract cancellation fees

The National Consumer Tribunal has fined Vodacom R1-million after finding that the telecommunications operator contravened the Consumer Protection Act by charging its contract customers a 75% cancellation fee.

“The complaints against Vodacom essentially relate to a cancellation penalty of 75%, which it previously charged customers upon prematurely cancelling their fixed-term contracts,” the tribunal said in its ruling.

“In some instances, the complaints relate to a delay in the timeous cancellation of the contracts upon request by customers, resulting in the customers being charged for periods after having requested the cancellation of their contract.”

Vodacom has one month to pay the R1-million fine. There was no order as to costs.

Before reaching the tribunal, the matter was investigated by the National Consumer Commission (NCC) after it received “various complaints of different kinds against Vodacom for several years”.

The NCC chose to investigate a sample of 21 of the total number of complaints it received about the telecoms operator during the 2021 and 2022 financial years. A November 2022 investigative report revealed that Vodacom had contravened a number of CPA provisions in 19 of the 21 cases.

Upon referring the matter to the tribunal for a ruling, however, the NCC only included 11 of the 19 cases in which it had found wrongdoing in its application, saying: “Some of the complainants did not grant consent to the NCC for the service of documents by way of e-mail.”

Interdict

In the application, the NCC sought an interdict that would stop Vodacom from imposing a 75% contract cancellation penalty; a repayment by the telecoms operator of the monies “improperly charged” to the complainants in the matter (these monies were outlined in the NCC’s investigative report); that Vodacom remove the subsequent “adverse listing” of the complainants on credit bureaus; and the imposition of a fine equivalent to 10% of its turnover but not less than R20-million.

Regarding the interdict sought by the NCC, the tribunal found that it was “trite” that an interdict be directed at future conduct, considering that Vodacom no longer imposed a 75% cancellation penalty.

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The tribunal also said that refunding the cancellation fees and improper charges would be “too difficult to implement if ordered”, citing that the commission’s report was “overly broad” and some customers chose to continue accepting the service from Vodacom.

“The tribunal is of the view that the orders asked for are too vague and that they should accordingly not be granted,” it said.

Regarding the fine, the CPA does not allow the tribunal to impose a fine exceeding 10% of the respondents (in this case Vodacom’s) annual turnover for the preceding year or R1-million. Since the tribunal judged Vodacom’s contraventions of the CPA to be “serious”, however, the maximum allowable penalty of R1-million was imposed.

Asked for comment on the tribunal’s decision, a Vodacom spokesman said: “Vodacom notes the ruling of National Consumer Tribunal. As at present, we are studying this determination and will, in due course, give our views on the matter.”  — © 2023 NewsCentral Media

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