If a company or an industry wants a self-serving legal interpretation of the Consumer Protection Act, they will have no trouble finding it.
That’s a sobering thought with the 10th anniversary of the CPA just days away.
The best example of that is the cellphone industry’s argument that the CPA’s requirement that prepaid vouchers – specifically the value of them – may not expire for three years, does not apply to prepaid data or airtime.
And thus thousands of people routinely have their remaining paid-for airtime and data confiscated if not spent in a month or two or three. And that’s just the way it is.
So let’s take a look at the CPA’s section on fixed-term contracts, such as gym, cellphone and private security contracts.
The contracts do not automatically end on their expiry date, as many people continue to assume.
Any supplier requiring a cancellation notice that is longer than 20 business days is in contravention of the CPA.
— Phetho Ntaba, National Consumer Commission
If you don’t give 20 business days’ notice of cancellation, the contract will continue on a month-to-month basis and you will remain liable for monthly payments.
Cathy de Abreu of Germiston had a fixed-term contract with private security company Spot Watch Security, which was in its month-to-month phase when she submitted her cancellation notice in February, expecting to be free of the contract within a month.
But the company insisted their contract, signed by her, required a three-month cancellation notice, and thus she would remain liable for two more debit orders than she had budgeted for.
Annoyed, she approached the consumer goods and services ombud (CGSO) for help and was referred to Private Security Industry Regulatory Authority (PSIRA).
A PSIRA agent told her in an e-mail: “Please note that the contract and its contents must be an agreement between the client and the service provider. Please contact the National Consumer Commission (NCC) for further assistance in this regard.”
The National Consumer Commission told her to contact the CGSO, taking her back to square one, which is when she contacted me for help.
When I approached CGSO Magauta Mphahlele, she told me: “The security industry is subject to the CPA, but they have their own regulatory body – PSIRA. Their code of conduct requires them to comply with their act and other relevant legislation.”
My next stop was the NCC.
Media liaison officer Phetho Ntaba responded: “Fixed-term contracts are regulated in terms of section 14 of the CPA and are cancellable by a consumer by giving a supplier 20 business days to that effect.
“Any supplier requiring a cancellation notice that is longer than 20 business days is in contravention of the CPA.
“The NCC is looking into De Abreu’s complaint to see if there are contraventions of the act.”
There is nothing in the act that allows the supplier to contract out of the month-to-month time period.
— Magauta Mphahlele, ombud
Armed with that definitive response – or so I thought – I then sent a media query about the issue to Spot Watch Security.
In response I got a very detailed response from their attorneys.
In short, they argue that when a contract moves from its initial period into the month-to-month phase, the CPA does not apply.
Also, the attorney said, his client’s terms and conditions required clients to give a full calendar month’s notice, not 20 business days.
I was gobsmacked.
His opinion is not shared by Mphahlele.
The CPA stipulates that when contracts get to the end of their initial fixed period, they continue on a month-to-month basis – “not three months”, she said.
“I agree with the response of the NCC. The month-to-month is nonnegotiable, but other terms are.
“However, those terms must comply with section 51, which prohibits terms meant to defeat the purpose of the CPA and deprive a consumer of a right in terms of the Act.
“When it comes to fixed-term contracts, the purpose of the act was to limit them to a term of two years, or three years where a financial benefit to the consumer could be proven.
“And it was to prevent contracts from automatically renewing for the full original fixed term if the consumer neglected to cancel on time,” she said.
“If that happens, the contract continues on a month-to-month basis and the CPA continues to apply.
“There is nothing in the act that allows the supplier to contract out of the month-to-month time period.”
Mphahlele said she understood De Abreu’s frustration. “But based on the company’s response, there is a very low probability that the CGSO would successfully mediate the case, due to us having no adjudicative powers.
“Since the attorneys are raising legal points, the NCC is best placed to investigate the case and refer it to the National Consumer Tribunal.”
So now it’s in the hands of the NCC. To be continued ...
Moral of the story: interrogate a company’s Ts and Cs before you sign up!
One more thing: insist on submitting that cancellation via e-mail so that you have proof, because if you do it via phone, if there is a dispute down the line, you are reliant on the company producing the call recording as proof, and that can be a long, tiring process.
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