Consumer Commission starts to flex its muscle

The National Consumer Commission is poised to crack down on exorbitant cellphone charges, shops that sell bags of expired mealie-meal full of insects, and medical aid schemes that authorise hospitalisation but refuse to pay for it.

Five months after its establishment, the commission is taking on the country's heavyweight businesses for violating consumers' rights - and is refusing to back down when the businesses fail to comply with the new Consumer Protection Act.

The commission's bosses told parliament's portfolio committee on trade and industry yesterday that they would "zoom in" on high ATM charges and charges levied by banks on unpaid debit orders.

Trade and Industry deputy director-general Zodwa Ntuli said big companies were putting up "resistance" to the commission, which operates on a budget of only R33-million a year.

"Most of the cases are going to land in court.

''The big players will use their financial muscle to frustrate the work of the commission by going to different courts," Ntuli said.

The commission can impose penalties of R1-million, or 10% of a company's annual turnover, for failure to comply with the Consumer Protection Act.

The commission has launched investigations into medical aid schemes and retailing, and has made some shocking findings.

Most recently, the commission served a compliance notice on a Johannesburg BMW dealership for refusing to repair a car.

It has issued compliance notices to Vodacom, Cell C, MTN, Telkom and 8ta for refusing to bring the terms and conditions of their subscribers' contracts into line with the Consumer Protection Act.

The commission wants the companies to stop automatically renewing cellphone contracts when they expire, and for new subscribers to be given 20 days' notice if they want to cancel - instead of being stuck with the contract for two years.

"The commission adopted a strategy of giving the companies a chance to enter into consent agreements.

"To date, only one mobile operator [Neotel] has entered into the consent agreement and the rest have raised issues," the commission's head of enforcement and investigations, Prudence Moilwa, said.

The companies have until the end of this month to bring their contracts into compliance.

Yesterday, Vodacom referred The Times to a statement it released two weeks ago in which Portia Maurice, its head of corporate affairs, said it was surprised to receive the compliance notice from the commission because it had an amendment process under way and had agreed on an implementation date of October 31.

"Similarly, there is simply no basis for the statement that we have refused to amend our customer contracts.

"This statement is patently untrue; we have been in the process of amending the contracts for some time," said Maurice.

Robert Madzonga, MTN's chief corporate services officer, said: "MTN believes that it is indeed in compliance with the Consumer Protection Act and has in fact already amended its subscriber agreement to comply with provisions of the act."

Cell C and Telkom could not be reached for comment.

National Commissioner Mamodupi Mohlala said her office's next investigation would be into the "exorbitant cost" exacted by cellular network operators for global roaming, and into the calculation of the costs of per-second billing, SMSs and the peak and off-peak charges.

Recently, the commission found that rural shops were selling "expired mealie-meal filled with insects, and that shopkeepers sleep on top of these mealie-meal bags, which consumers feel is a health hazard".

The commission made a spot check on 50 shops in the Pretoria area this year, issuing summonses to several of them after complaints of lay-by irregularities.

Shops may keep 1% of the sale price of an item if a consumer cancels a lay-by, but many shops are "withholding the whole amount".

"We will be putting money back in consumers' pockets and when consumers have cancelled they will have to . refund them," said Moilwa.

The commission has told the top four open medical aid schemes to amend their contracts after it found that some of the schemes require three months' notice by members, while others had long waiting periods for new members.

From January, the commission will investigate levies by medical aid schemes after consumers complained that they had to pay large sums of money when hospitalised to cover medical aid "shortfalls". - Additional reporting by Amukelani Chauke