“No more sneaky contract rollovers!” That was the intention of the good folk who came up with the Consumer Protection Act (CPA), because so many consumers were unwittingly remaining committed to cellphone and gym contracts because they didn’t read – or remember – the small print terms and conditions which stated that if they didn’t cancel in writing – usually with a month’s notice – before their contract expiry date, it would carry on, on a month-to-month basis.
And so, thousands of gym and cellphone debit orders stayed active, but unnoticed by consumers, for months or sometimes years, while the companies kept quiet and collected pure profit for undelivered services.
The legislators initially proposed that so-called fixed term contracts ended on their “expiry” date, but industry wasn’t too keen on that, so a compromise was reached.
The CPA compels companies which offer fixed term contracts to contact the consumer 40 to 80 business days before the contract’s expiry date, and notify them “in writing or any recordable form” of the imminent expiry of their contract, and spell out their options if they renew, or if they wish to cancel.
But the sneakiness continues – as does widespread ignorance of the need to cancel contracts in writing to prevent them from “rolling over”.
When Lauren Holley of Durban tried to escape her Cell C contract at the end of October – its “expiry” date – she was told she hadn’t given her month’s notice in time, so she was committed for another month.
Having done some homework, she asked the network why she hadn’t been sent the expiry notification in advance. In response she was sent a list of the “notifications” she received, starting with: “Great news, your Cell C contract is due for renewal next month! View the latest deals at one of our stores, or visit (our website)” and followed by 14 SMSs advertising “great” upgrade offers.
I put it to Cell C’s head of communications, Karin Fourie, that neither the first SMS nor the others complied with the CPA’s notification definition, being essentially promotional SMSs.
Responding, she said the network’s notification was worded thus: “Hi, Your Cell C contract ends on dd mm yyyy, after which it will run month-to-month. For the terms and conditions of your contract visit a Cell C store, call 084-143 or go to www.cellc.co.za”
“We refer customers to the full T&Cs as we are limited in terms of characters in an SMS. This way they are also able to fully peruse and understand all implications and details of termination, renewal and/or allowing the contract to run month to month,” she said.
Fourie didn’t respond to questions I raised about those Ts and Cs, which state that Cell C “may” send a notification notice about the impending expiry of a consumer’s contract, when in fact it’s compulsory, by law.
But the acting Ombudsman for Consumer Goods and Services, Magauta Mphahlele did have something to say about that.
“The use of the word ‘may’ implies it is not obligatory for them to notify the consumer of the impending expiry date,” she said. “This is not compliant with the CPA and should instead read ‘Cell C will notify you’.”
Asked whether directing a consumer to the company’s website met Cell C’s obligation to notify them of their options, Mphahlele said: “I would say not.”
“The discretion that the supplier has is the manner in which to notify the consumer, which can either be in writing or any other recordable manner,” she said.
Dare one hope that Cell C will amend its notification process and contract terms to comply with the CPA in the interests of empowering its subscribers to make informed decisions about their contracts?
HOW DOES THE COMPETITION NOTIFY?
lMTN sends subscribers the following SMS: “Dear Valued Customer, your contract is due for renewal on dd mm yyyy. Get a brand new handset when you renew this contract in store. Alternatively, you can cancel by giving 20 working days’ notice, failing which, your contract will continue on a monthly basis.”
l Vodacom’s reads like this: “Dear valued Vodacom customer, your contract term for this line will soon come to an end. Upgrade at your nearest Vodacom Shop or online at www.vodacom.co.za. If you do not wish to upgrade or cancel your contract yet, it will continue on a month-to-month basis from the end of the contract term”.
MTN’s notification is the most customer-friendly and CPA compliant, because it gives the most detail on how to cancel , which is the one thing the networks definitely don’t want to encourage their subscribers to do.
WHAT THE CPA SAYS
“Not more than 80, nor less than 40, business days before the expiry date of the fixed term of the consumer agreement, the supplier must notify the consumer in writing or any other recordable form, of the impending expiry date, including:
lany material changes that would apply if the agreement is to be renewed or may otherwise continue beyond the expiry date; and
lthe options available to the consumer on expiry; and
lthat on the expiry of the fixed term of the consumer agreement, it will be
automatically continued on a month-to-month basis, subject to any material changes…unless the consumer expressly directs the supplier to terminate the agreement on the expiry date; or agrees to a renewal of the agreement for a further fixed term…”