Vodacom, a South African based company has been fined R1 million by the National Consumer Tribunal (NCT), an organization that decides disputes between customers of credit providers and those customers of credit providers.
The NCT came to the conclusion that Vodacom’s behaviour was “unconscionable” when it, among other things, levied exorbitant cancellation fees for fixed-term contracts.
The National Consumer Commission, whose responsibility it is to ensure compliance with the Consumer Protection Act (CPA), announced on Wednesday that it had received a large number of complaints from customers alleging that Vodacom had denied them the right to cancel their fixed-term contracts by imposing a cancellation penalty of 75%. These complaints spanned a period of two years and would continue until March 2022.
In addition, Vodacom stated in a statement that it demanded payment of any and all outstanding costs in addition to the cancellation penalty prior to the termination of any contracts.
According to the commission, the inquiry it conducted indicated that Vodacom had engaged in illegal activity by violating a part of the CPA that permits cancellation penalties to be levied, but only under the condition that this does not have the effect of denying the consumer’s right to cancel.
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Statement released by NCC
According to the report, the cancellation penalty imposed by Vodacom constituted a violation, as did the mobile operator’s inability to cancel contracts within the allotted time frame. Instead of terminating contracts after providing a notice period of twenty days, the company sent quotation letters that included 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.
The behaviour of Vodacom was deemed “unconscionable and prohibited,” and as a result, the company was required to pay an administrative punishment of one million rand.
“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.”
About Vodacom
Vodacom is the most successful and purpose-driven corporation focused on providing connectivity, digital, and financial services in Africa. From its beginnings in South Africa, the company has expanded its activities to include those in Tanzania, the Democratic Republic of the Congo (DRC), Egypt, Mozambique, Lesotho, Kenya, and Ethiopia. These countries are all located in Africa.
Customers that use their services are rewarded with a unified currency that can be spent in the VodaBucks store as part of their company’s loyalty programme, which is called VodaBucks and has over one thousand partner networks. Over 8.9 million active rewards users have signed up for the scheme, and they earn, bank, and spend their VodaBucks through the My Vodacom app on their mobile devices.
As they get ready for an integrated digital future, innovation is at the centre of the company’s preparations to diversify outside its core connectivity business. As the Group works to enhance their fintech capabilities, their financial services and digital lifestyle platforms are significant differentiators that set them apart from competitors.
