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The National Consumer Tribunal (NCT), which adjudicates disputes between consumers and credit providers, has imposed a R1 million fine against Vodacom after finding its conduct was "unconscionable" when it, among other things, imposed hefty cancellation penalties for fixed-term contracts.
The National Consumer Commission, whose mandate is compliance with the Consumer Protection Act (CPA), said on Wednesday it had received numerous complaints for two years until March 2022, with consumers alleging that Vodacom denied them the right to cancel their fixed-term contracts by imposing a cancellation penalty of 75%.
Moreover, Vodacom required payment of all outstanding fees and the cancellation penalty before contracts were terminated, it said in a statement.
The commission said its investigation revealed that Vodacom had engaged in prohibited conduct by contravening a section of the CPA that allows for cancellation penalties to be imposed, but only if this didn't have the effect of negating the consumer's right to cancel.
Vodacom's cancellation penalty constituted a contravention, it said, as did the mobile operator's failure to cancel contracts timeously. Instead of cancelling contracts within 20 days of notice, it instead sent quotation letters with the cancellation penalty.
"The NCC received the bulk of these complaints during the [peak] of Covid-19 when many complainants lost their jobs or their salaries were cut, making it impossible for them to proceed with the SIM-only contracts," acting national consumer commissioner Thezi Mabuza said, referring to contracts that don't include devices.
"The tribunal also found that Vodacom’s conduct is unconscionable in that Vodacom continued to bill consumers after they duly 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 statement read.
Vodacom was ordered to pay an administrative fine of R1 million, their conduct was declared "unconscionable and prohibited".
"The commission welcomes this judgment as we believe that it is going to deter other suppliers/operators from engaging in the same conduct," said Mabuza. "We further see this as a victory for South African consumers who for the longest period were subjected to contracts that were in favour of the supplier."
