Firms slow to comply with Act when contracts end

When my son was small, he came up with a game he called “Never Letting Go”, involving him entwining his limbs with mine and daring me to try to escape.

It’s a game the companies which have their customers sign “fixed term” contracts love to play too. They call it “Retentions”.

Cellphone companies and fitness clubs especially love it when customers assume that their contracts automatically become null and void on their expiry date, having either not read, or forgotten the clause in the contract they signed two or three years earlier, stating that they had to give one or two month’s written notice to cancel, and if they didn’t, the contract would roll over to a month-to-month basis.

And so the gym or cellphone debit orders stay active, but unnoticed by them, for months or sometimes years, while the companies keep quiet and collect pure profit for undelivered services.

And when the consumer finally discovers their error and cancels, there are no refunds of all those payments-for-nothing.

The Consumer Protection Act (CPA) legislators attempted to put an end to this scenario.

The Act 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.

In other words, no more sneaky contract auto roll-overs.

But letting go of the retentions mindset is predictably not easy for companies.

In January, I pointed out to Virgin Active that the contract expiry notification they were sending out at the time was totally non-CPA complaint, as it mentioned a fee increase and nothing else.

The company assured me they’d correct this, and I’m happy to report that they have.

Last week I asked Planet Fitness how it worded its pre-expiry notification.

This is how: “Thank you for your loyal support to Planet Fitness. You now have the benefit of continuing your training on a month-to-month basis. Call us if you have any questions.”

Again, cancellation appears to be the hardest word for these companies to say.

I pointed out to Planet Fitness that this did not comply with the CPA and asked if the company was prepared to alter it accordingly.

Yes, I was told, “from next month we will state that the membership will now continue month-to-month unless they request termination and this can be done by contacting the call centre.”

Excellent. And what about the cellphone companies – are they doing a proper, CPA compliant notification job?

Only MTN got back to me in time, and no, they’re not: their notification is all about upgrading – not a word about cancelling.

They get the timing right – 40 to 80 business days before contracts expire, but the wording doesn’t cut it.

“Please note that your 24-month subscriber contract is due to expire on (date). Please go to your nearest MTN Store or call MTN Direct on 083xxx to upgrade. T&C’s apply.”

One hopes they’ll see fit to amend theirs too.

How long has the CPA been in force? Since 1 April 2011: 53 months.

Anyone whose contract automatically rolled over after the expiry date against their wishes – and provided they didn’t make use of the company’s services in that time – would have a right to demand a refund of those debit orders if the notification they received didn’t comply with the CPA.