Guiding consumers since 2009

Clients battle to end cell phone contracts

By Staff Writer

Cell C claims competitors are making it difficult for clients to switch to Cell C. “Cell C is concerned about the deliberate attempts by some of the other network providers to prevent customers from cancelling their contracts early by charging these customers excessive and unreasonable cancellation penalties,” said Cell C.
 
This comes after Cell C launched their contract buyout offer, where it will pay up to R10 000 to buy consumers out of their current cell phone contract if they wish to move to Cell C.
 
(For more information on the contract buyout offer, click here.)
 
Termination fees
 
According to the Consumer Protection Act (CPA), service providers are permitted to charge a reasonable termination fee when consumers cancel their contracts prematurely. However, the problem comes in when no ‘reasonable’ amount is suggested, leaving it up to the service provider to determine what a ‘reasonable’ and fair price would be.
 
The Act states that upon the cancellation of a contract, “the consumer remains liable to the supplier for any amounts owed to the supplier in terms of that agreement up to the date of cancellation.”
 
The supplier (in this instance the network providers), may impose a reasonable cancellation fee, however, “the supplier may not charge a charge which would have the effect of negating the consumer's right to cancel a fixed term consumer agreement as afforded to the consumer by the Act.”
 
In other words, the supplier may not charge a customer a termination fee that will exceed the amount they would pay if they were to remain in the contract.
 
With regards to CPA, Cell C highlighted that consumers are within their rights to cancel an existing contract with a network provider and change to Cell C.
 
However, it noted: “In some instances, customers are required to pay the full service or subscription fee for the remaining months of the contract plus an additional early termination charge to leave the network provider.”
 
Cell C added: “While Cell C understands that network providers must recover the cost of the handset, unreasonable charges for future services that the customer will never receive is in contravention of the CPA, and Cell C believes this does not constitute a reasonable fee.
 
“Cell C only charges customers the outstanding handset amount when they cancel their contract.  Cell C does not charge customers subscription fees for the remaining contract period or any additional early termination charge.”
 
Transferring numbers to Cell C
 
Cell C said other network providers are making customers’ lives difficult by making them jump through hoops before they are able to transfer their numbers. It said that network providers are telling some of their customers that “they first need to cancel their existing contract before their number will be released for porting purposes.”
 
 “The Mobile Number Portability Regulations set out specific grounds where a network provider may reject a request to port to another network.   The reasons provided by some of the service providers are not listed grounds in terms of the Regulations, and rejection of a request to port based on such grounds is in direct contravention of these Regulations,” said Cell C.
 
Vodacom responds
 
Vodacom hit back that it is compliant with the CPA. “Our cancellation terms are CPA compliant and there are no circumstances under which we’d end up “charging customers more to cancel their contracts early than to stay in their contract for the full term” (Cell C’s words), so I’m guessing that their complaint isn’t directed at Vodacom,” said Richard Boorman, a spokesperson for Vodacom.
 
“Our cancellation fees are based on the monthly subscription [multiplied by the number of] months left in the contract multiplied by 75%,” he explained.
 
In other words, consumers wishing to cancel their contract with Vodacom early, will pay 75% of the outstanding amount of their contract.
 
However, if you have additional handset financing, which you pay if the handset that you select is more expensive than the ones offered on the contract that you have selected to take out, that additional financing would have to be paid in full.
 
“As an example, your monthly bill could be R500, R400 of which is the monthly subscription and R100 of which is the additional financing fee. If you had six months left to run, the calculation is R400 X 6 X 0.75 plus R100 X 6,” explained Boorman.
 
With regards to the claim by Cell C that other network providers are not allowing consumers to port their numbers across to Cell C prior to the cancellation of their existing contract, Boorman suggested contacting Cell C for clarification.
 
He said: “I’m struggling to understand how/why they expect porting to take place before an account has been settled.”
 
MTN’s response
 
In response to questions regarding MTN’s contract termination policy, Eddie Moyce, chief customer experience officer at MTN, said: “MTN complies with the CPA with regard to contract cancellations.  Customers have the option to cancel a contract at any time on 20 business days’ notice. MTN has reasonable cancellation fee which is in line with the CPA and regulations.”

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