Legal Articles

The promulgation of the Consumer Protection Act 68 of 2008 had, amongst its purposes, to promote a fair and transparent marketplace for goods and services in South Africa. The goal was to put in place a legislative framework to regulate and promote fair practices in the provision of goods and services. The National Consumer Tribunal recently delivered a decision in the case of National Consumer Commission v Vodacom Proprietary Limited (Case Number: NCT/260497/2023/73(2)(b)) whereby several complaints had been brought to the National Consumer Commission against telecommunications giant Vodacom.

In this article, we shall share some insights into the issues considered in this matter.

Consumer Protection Act in Action

The National Consumer Commission (NCC) had brought the matter before the National Consumer Tribunal (NCT) after it had received several complaints from consumers regarding some of the terms in fixed term contracts from Vodacom. Chief amongst those complaints was with regard to Vodacom charging a 75% cancellation/penalty fee when a consumer decides to cancel their fixed-term contract before its natural expiry. It is important to state at this juncture that the CPA is quite clear on the factors that must be considered in the determination of a cancellation/penalty fee. These factors include the duration under which the consumer had been under the contract, how much they have contributed under the contract already, what they will retain in their possession after the cancellation as well as the amount that is still outstanding under the contract. The NCT found that the cancellation fee being charged by Vodacom is unreasonably high. On its part, Vodacom had argued that the fee had been necessitated so as to lure customers to opt for fixed-term contracts as opposed to prepaid contracts, an argument which was not taken in much delight by the NCT.

The other complaint had been that cancellation requests took unreasonably too long to be processed, to which Vodacom responded by citing that this was due to the fact that they had sought the services of a third party agent (a call centre) for this task and therefore it was not their own doing. The NCT buttressed the fact that Vodacom still remained liable for the actions and conduct of its authorised agent and this responsibility cannot be wished away.

Further, the NCC had received complaints that Vodacom, in some instances, refused to cancel contracts where the consumer was unable to settle the cancellation fee or is still owing some arrears under the contract. Vodacom argued that this is justifiable because it is entitled to the arrear amounts. The NCT disagreed with this defence, citing the provisions of the CPA which provide that upon cancellation, the consumer remains liable for any outstanding arrears. The emphasis is on the fact that the consumer will remain liable even after cancellation, and the supplier must not prevent the consumer from canceling the contract which effectively meant that Vodacom was locking the consumer under the contract.

Vodacom was subsequently sanctioned to a penalty fee of R1 000 000.00 (One Million Rand).

Van Deventer & Van Deventer Incorporated - Consumer Protection Law South Africa

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