Cellphone, time-share firms scrutinised

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After a year-long investigation into more than 500 consumer complaints, the National Consumer Commission will submit allegations of contraventions of the Consumer Protection Act by three time-share companies which operate holiday clubs to the National Consumer Tribunal next month.

The charges relate to alleged overselling, contracts that last in perpetuity and the failure to inform customers that they have a right to appear in court when cases are brought against them.

The commission will also be engaging with cellphone companies after receiving a host of complaints about their alleged failure to adhere to limits on phone and data usage by their customers.

Members of Parliament's trade and industry committee noted during a meeting this week that cellphone bills could soar through unauthorised data downloads and roaming costs while abroad, which were not explained to consumers.

Deputy Commissioner Thezi Mabuza said in an interview after the committee meeting, during which the issue of holiday clubs was raised, that the reason the investigation had taken so long was that the commission wanted to pull out the cross-cutting issues common to all the complaints so that it could present a solid case to the tribunal.

Mabuza said the alleged violations of the act related not only to the contracts, but affordability. Consumers complained that they were locked into contracts in perpetuity.

They also complained that while they were offered points in the timeshare resorts, these were so oversold that they were not able to obtain the accommodation they wanted.

Another complaint was that the time-share companies apply for court judgments - mostly in Pietermaritzburg - when consumers lived in other parts of the country, and obtain default judgments without informing them of their right to be present during the proceedings.

The time-share companies have rejected the allegations and defended their business models.

Freedom Front Plus MP Anton Alberts, who has received numerous complaints from disgruntled time-share owners, welcomed the pending application to the tribunal as "wonderful news".

Department of Trade and Industry Deputy Director-General Zodwa Ntuli said the fact that there were so many complaints against time-share companies indicated that "unconscionable" practices were taking place. "They take advantage of consumers who are not aware of the nitty gritties of contracts," she said.

With regard to the limits on cellphone usage, Commissioner Ebrahim Mohamed said the commission had recently had to advertise on television and radio that consumers should respond more aggressively and with greater firmness when they received phone and data bills that were higher than they were used to paying. He said cellphone providers no longer set a limit on the amount that could be spent and had not informed consumers.

Mohamed said the contracts themselves were legal but the practice of uncapped spending bordered on the unconscionable.

The commission had urged consumers to ask their service providers to institute limits, but Ntuli said this was not good enough.

Cellphone firms should be instructed to introduce caps. "This cannot be left to individual consumers," she said.

Vodacom spokesman Richard Boorman said the company did protect its contract customers with several spending limit options and was willing to work with the relevant bodies to find the best possible solutions to protect customers.

"It is important to differentiate between prepaid and contract subscribers when it comes to the issue of spend limits and 85% of our customer base is prepaid and this group is automatically protected in that their maximum spend is limited by the amount of airtime loaded."

MTN SA Chief Customer Experience Officer Eddie Moyce said the company offered a number of price plans for its contracts.

Cell C said customers could request a monthly usage limit and were advised when they reached 70% of this limit and were nearing 100% usage.

"We are not aware of any legislation that would require the company to impose any usage limits," Cell C Media Liaison Officer Vinnie Santu said.

The commission will be engaging with cellphone firms after complaints about their alleged failure to adhere to limits on phone and data usage.

Source: Business Day