Wendy Knowler masthead
June 20 2011 at 12:03

The Independent Communications Authority of SA (Icasa) plans to apply for exemption from certain key aspects of the Consumer Protection Act (CPA), saying that as the telecommunications industry regulator it is better placed to deal with those issues.

It wants to retain jurisdiction over charging and billing matters in the industry, as well as the handling of complaints and the resolution of matters it regulates.

It also proposes that the telecommunications industry be exempt from the section pertaining to prepaid vouchers being redeemable for up to three years, arguing that for consumers to be able to “hold on to” a number for that long “will have an adverse impact on the efficient and effective allocation of numbers, resulting in their early depletion”.

“An unintended consequence of section 63 of the act is that electronic communications service licensees would be restricted from recycling inactive prepaid SIM cards that have credit, with the result that Icasa may run out of numbers earlier than anticipated,” the authority said.

Icasa councillor Fungai Sibanda told Consumer Watch: “The question of what happens to the credit in the Sim card is a consumer matter that the act should address in favour of consumers. Icasa is of the view that consumers must be protected with respect to unused credit, while at the same time allowing inactive numbers to be recycled.”

Meanwhile, I continue to receive e-mails from subscribers complaining about prepaid data bundles continuing to expire after 60 days, despite the act being in effect.

Ian Wright wrote: “I have a 3G modem and a prepaid SIM card which I purchased some time ago from a Vodacom shop.

“I purchase data bundles on a prepaid basis as and when |I require for my home PC. Pre-CPA, they had a 60-day maximum before they expired, and any data was forfeited.

“I have been advised by Vodacom that this still applies, even though I have a prepaid voucher. Is this correct? I was under the impression that prepaid vouchers are legitimate for at least three years under the new act.”

Vodacom said that in line with the act, prepaid vouchers were now valid for three years.

“But when customers purchase data bundles, funds are deducted from their airtime in return for access to data bundles. So they are deemed to have exchanged the value of their prepaid airtime for access to data bundles.”

Pressed to clarify further, the spokesman added: “There’s a difference between a voucher and a product bought by that voucher. The three-year expiry rule refers to vouchers and not to products purchased by vouchers.

“For instance, a prepaid airtime voucher can be used to purchase a variety of mobile services like making voice calls, ringtones and data bundles. There is no prescription on the expiry of products bought using a prepaid airtime voucher.”

National Consumer Commissioner Mamodupi Mohlala disagrees. “Our reading of section 63 of the act is that the value represented by the voucher does not expire until the date on which its full value has been redeemed in exchange for goods and services or future access to service, or three years after the date on which it was issued, whichever happens earliest,” she said. “This includes vouchers for data bundles.

“The commission will engage the network providers with regard to the issue of premature expiry of data bundles.”

I asked Cell C and MTN about their policies on expiry of prepaid airtime and data.

Cell C said: “Icasa has started preparing for an exemption from certain sections of the Consumer Protection Act, including section 63 and 64, which cover prepaid certificates, credit, vouchers and services.

“Cell C will be able to comment once the outcome of the exemption process has been determined.”

MTN didn’t get back to me. Its website states: “When a customer tops up with a PayAsYouGo airtime voucher value of more than R25, this airtime will never expire.”

But if the top-up is between R10 and R25, “then value left over after 30 days from top-up date will expire”, and if the top-up spend is R5 or R10, the value left over after 20 days from top-up date will expire.

Clearly, that’s not in keeping with section 63 of the act.

I was unable to find any information about the expiry of data bundles.

There are two issues here – the rapid recycling of prepaid numbers, and the consumer’s right not to lose the right to redeem the value of prepaid airtime or data within three years of purchase.

Icasa does not appear to be in support of denying consumers the right to benefit from their prepaid purchases within the three-year period.

“The authority is of the view that consumers must be protected with respect to unused credit, while at the same time allowing inactive numbers to be recycled,” Sibanda said.

The mechanics of that dilemma should have been sorted out long before April 1 when the act came into force. It seems the cellphone industry has been somewhat slow to grasp the intention of the act in other respects, as well.

Mohlala said the commission was analysing cellphone contracts across the industry and hadn’t yet found one that fully complied with the act.

Asked to give examples, she said the consumer’s right to cancel their contract by giving 20 days’ notice was not properly “factored into” some contracts, nor was there provision for quick resolution of consumer complaints.

Please be patient

A few months ago I was impressed to learn the National Consumer Commission had committed to a six-week turnaround time for dealing with consumer complaints.

It turns out that refers to acknowledging receipt of a complaint. Resolving it can take up to six months.

But emergency cases – such as a dispute with an undertaker over a funeral that’s about to take place – are prioritised for immediate handling, said commissioner Mamodupi Mohlala.

To lodge a complaint about a supplier, call the commission at 0860 266 786, fax 0861 515 259 or e-mail ncc@thedti.gov.za

No hanging up on fees for early contract cancellation

I must admit to feeling a little foolish for getting readers excited about “an end to lock-in contracts”, thanks to the Consumer Protection Act.

The act says a company may impose a “reasonable” cancellation penalty on a customer who wishes to cancel a contract before the end of the fixed term, adding that the minister of trade and industry “may prescribe”, among other things, “the manner, form and basis” for arriving at such a reasonable cancellation penalty.

In November minister Rob Davies, published regulations relating to the act, including one which set the maximum cancellation fee a company such as a cellphone service provider or fitness club could charge at 10 percent of the remaining subscriptions.

Submissions were invited, and on April 1, the day the act “went live”, the final regulations were published. And the 10 percent reference was gone.

In its place, the final regulation says the supplier can demand a “reasonable” amount as a cancellation penalty, taking into account many issues, such as the duration of the contract; “losses suffered or benefits gained by the consumer as a result of entering into the agreement”; the value of the goods that will remain in the possession of the consumer – a cellphone, for example; and “the reasonable potential for the service provider, acting diligently, to find an alternative consumer” – that would refer to a rental lease.

The regulation says the penalty fee can’t “have the effect of negating the consumer’s right to cancel a fixed-term agreement as afforded to the consumer by the act”.

In effect, this regulation gives companies the right to decide what is “reasonable” as an early cancellation penalty.

I’m guessing that few, if any, will adopt the original regulation’s “10 percent of remaining subscriptions” as a reasonable cancellation fee.

Virgin Active, for example, has settled on 30 percent of remaining subscriptions as its early-cancellation penalty.

And the cellphone companies? Well, here’s a case which answers that, at least with regard to Vodacom.

Freddy Niekerk signed a 24-month contract (the act stipulates that fixed-term contracts can’t be longer than 24 months) with Vodacom on April 12. On June 9, he decided to put his right to cancel a fixed-term contract early to the test, and asked Vodacom for a “premature cancellation quotation”.

The total amount, including a “balance of contract” amount and a sum for the laptop he got with the deal, was R8 282.98.

Niekerk’s response, in an|e-mail to me, was incredulous. “Vodacom is treating things as if the act doesn’t exist,” he said.

I asked Vodacom what the premature cancellation fee would have been before the act  came into effect.

Vodacom’s chief officer of corporate affairs, Portia Maurice, said it would have been 100 percent of the outstanding balance, adding: “In an effort to embrace the heart and spirit of the act, we have decreased the cancellation fee to 75 percent of the outstanding balance.”

Well, well – 75 percent is a long way from 10 percent in anyone’s book. Is it reasonable? Depends who you ask.

E-mail Wendy Knowler at consumer@knowler.co.za



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