Vodacom has been fined R1 million by the National Consumer Tribunal (NCT) for imposing terms and conditions that negate the consumers' right to cancel their fixed-term contracts.

The news was welcomed by the National Consumer Commission (NCC). The Acting National Consumer Commissioner Thezi Mabuza said they started investigating Vodacom following numerous complaints from consumers. “Between the 2020/21 and 2021/22 financial years, the NCC received and investigated numerous complaints of alleged contravention of various sections of the Consumer Protection Act by Vodacom.”

The allegations were the network provider denied clients their right to cancel their fixed-term contracts by imposing a cancellation penalty of 75%. She added Vodacom required payment of all outstanding fees and the cancellation penalty before contracts were terminated on request. Consumers alleged they were coerced to sign the acceptance quotation letter (that was valid for 12 days) and return the letter to Vodacom with proof of payment.

The NCC’s investigation showed Vodacom had engaged in prohibited conduct by contravening Section 14 of the CPA read with Regulation 5. “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.”

Vodacom failed to cancel consumers’ contracts timeously after having been notified by consumers and as required by the CPA. The refusal to cancel consumers’ contracts on the basis that any cancellation is subject to payment of a cancellation fee before the cancellation can be effected constituted a contravention of section 14(2) (b).

Vodacom also failed to cancel consumers’ contracts within 20 business days of consumers’ notice of cancellation, instead, the supplier sent consumers quotation letters with a cancellation penalty of 75%, contravening Sec 14 (3) of the Act.

“Vodacom unconscionably imposed an unreasonable cancellation penalty of 75% negating consumers from canceling the contracts. Moreover, Vodacom required payment of all outstanding fees and the cancellation penalty before contracts were terminated on request, exacerbating the consumers’ financial well-being at that time. This conduct is not in the spirit of the promotion of the CPA.

The tribunal also found Vodacom’s conduct unconscionable because 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. By repeatedly denying consumers the right to cancel the contracts, Vodacom contravened section 40(1)(b) and (d) of the Act.

Vodacom was ordered to pay an administrative fine of R1M as 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. 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.

OFM News/Tshehla Koteli