Telecoms giants tell the lawmakers how it should be!
I don’t know anyone who doesn’t have a mobile phone. My friends and colleagues – people who typically ‘own’ the latest in handset technology by contracting with one of the country’s major cellular network providers – also have half a dozen or more handset
The point I’m trying to make is since 1998 I’ve been on contract with one or other of the country’s mobile network providers. What’s in the contract? I cannot even remember signing a contract with my current service provider – around seven years ago – let alone what terms and conditions were contained in the reams of small print. And although I scribble my name on a couple of forms each time I drop in to collect an upgrade I must confess to not being concerned with the paperwork. So it is with a sense of relief that I welcome the 94-page Consumer Protection Act (CPA), already in force, as an important custodian of my rights. Can I confidently put my faith in this legislation?
The law is often tailored to suit the heavyweights
Six months ago I may have answered this question in the affirmative. But my opinion was swayed after reading a couple of articles. The first was by tech journalist Simon Dingle, titled Redressing cellular and the CPA. “The CPA is a matter of great concern to South Africans who are fleeced for telecommunications services and have, in the past, been bound by service provider contracts that Satan himself would be proud off,” he wrote. Dingle’s second attempt at unpacking what the CPA meant for local cellular subscribers, based on the promulgated Act, was substantively different to his first, which was guided by the draft legislation. By taking a look at these changes we not only get a sense of legislative evolution in action, but also a feel for how large companies can influence the law to their ultimate benefit.
One of the major differences between the draft and promulgated legislation is how cellular service providers deal with penalties at contract cancellation. Dingle explains: The draft legislation indicated that only 10% of the outstanding contract fees could be included in the penalties subscribers would pay for a late cancellation, and that service providers would have to accept used handsets back from consumers in lieu of outstanding payments on those handsets! As a South African consumer of good standing this ‘deal’ seems too good to be true. It comes as no surprise the final legislation – carved out after service providers made their submissions to the regulator – did away with many of the consumer-leaning clauses. “In short, while consumers will have greater recourse in the future there won’t be much of a difference in terms of how easily one will wriggle out of contracts,” writes Dingle.
And instead of clearing up how much it will cost to ‘break’ a contract the new legislation introduces a hazy (to the consumer) and flexible (to the cellular giants) 10-point assessment methodology. Dingle reckons it is fair to consider issues such as outstanding contract fees, average monthly spend, handset values, intended contract duration and cancellation notices among others… But he questions the subjectivity and potential vagueness of other clauses. How, for example, will the service provider factor in the “reasonable potential” to find an alternative consumer? In a nutshell the service provider has total power to conjure whatever cancellation charge they please!
Stay sharp – because some protections come at a cost
The National Credit Act (NCA) was introduced with similar ‘good for the consumer’ fanfare. Everyone I’ve talked to believes that the Act protects them from unscrupulous lenders. But the financial institutions regulated by this Act were quick to build in some protections of their own. If you take out vehicle finance today the salesperson will quickly gloss over an initiation fee of R1,140 and monthly admin fees of R57 (both including VAT)… Question these fees and the quick-thinking salesman will say, “These fees are required as part of the NCA!” The industry has somehow turned legislated maximum (and optional) charges into legal requirements – and the consumer has simply lapped it up!
In much the same way cellular giants have muscled in on legislation aimed at curbing abusive contract behaviours to push for more absurd terms and conditions. When I worked in the UK between 2000 and 2003 it was easy to find 12-month mobile phone contracts. And shorter duration contracts would have been a great result from the local consumer protection drive… But instead of legislating 24-months as the maximum contract period the CPA allows local companies to offer 36-month contracts, provided “demonstrable financial benefit to the consumer” is shown. Go figure!
Dingle reckons the CPA is a vast improvement over what we had before. “It allows for recourse where consumers feel they have been wronged. It also brings the National Consumer Commission (NCC) into being to enforce the NCA and protect,” he says. But regardless of the protections contained in the legislation the buyer (or consumer) must still beware!
Surprise, surprise – the big players are late complying again!
The second article (referred to earlier) appeared in Business Report recently and alleges that South Africa’s telecoms giants have been slow to comply with the contract requirement stipulated in the Act. National consumer commissioner Mamodupi Mohlala determined that to date none of the contracts submitted to her office by the country’s cellular and fixed line operators were 100% compliant with the Act. In other words companies with massive resources have yet to fully comply with the regulation despite having had five years to think about the Act and an extra implementation delay (from September 2010 to April 2011) to plan. Mohlala said these companies would amend their contracts by latest end-October this year!
Editor’s thoughts: A close look at South Africa’s consumer protection legislation throws up many examples where manufacturers, distributors and sellers have fine-tuned conditions to their advantage. The good news is many customer facing staff have been conned by the ‘consumer protection’ tag too. All you have to do to get a complaint resolved is to throw your toys a bit and scream CPA at the top of your lungs… Have you ‘tested’ the Competition Protection Act yet? Add your comment below, or send it to gareth@fanews.co.za
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