No more 24 month lock-ins

[deweyzeph]

Professional indemnity insurance is a standard expense for small businesses all over the developed world. I don't see why small businesses operating in South Africa should be any different. If we want to have world-class standards in South Africa then we should be prepared to operate in a world-class way and indemnity insurance is part and parcel of that.

 

[Pitbull]

Professional indemnity insurance is a standard expense for small businesses all over the developed world. I don't see why small businesses operating in South Africa should be any different. If we want to have world-class standards in South Africa then we should be prepared to operate in a world-class way and indemnity insurance is part and parcel of that.

True, but it doesn't cover the court fee's

 

[jetlee]

Professional indemnity insurance is a standard expense for small businesses all over the developed world. I don't see why small businesses operating in South Africa should be any different. If we want to have world-class standards in South Africa then we should be prepared to operate in a world-class way and indemnity insurance is part and parcel of that.

The problem being that you are comparing South Africa to the developed world. Our Telecoms is a mess, our Power Supply is a mess .. running a small business is tough enough without the additional strain of more expenses. We should be trying to encourage small business .. not bog them down in red tape and extra costs, this is a surefire way to put more negatives in running your own small business .. cant see how this helps our economy .. just the legally savvy consumer looking for a loophole to get out of paying for something

 

[Naztyb]

Vendors will need to protect themselves and therefore the penalty fee would be fine however we should see shorter contract periods available...

 

[vodacom3g]

Professional indemnity insurance is a standard expense for small businesses all over the developed world. I don't see why small businesses operating in South Africa should be any different. If we want to have world-class standards in South Africa then we should be prepared to operate in a world-class way and indemnity insurance is part and parcel of that.

Don't disagree. Again it's not about the cost of the insurance but rather the sword that will hang over the head of the small business where suddenly he can be held liable for things that are patently outside of his control. And he might be able to prove his innocence but at what cost?

The example I gave above (lawyer who did not want system anymore), was clearly a case of him needing money. So he used the system and got his money back. And closed a viable business in the process.

SMEs should be the engine behind our economy. But so often legislation (with original good intent) can harm small businesses. Like when the whole 'personal services' issue came up a few years ago. I watched a number of small businesses close down because of that. And their only sin was winning a big contract.

 

[Vegeta]

About the alarm company example you made. If the user did everything right and the system still failed to triggers should the alarm company not be held responsible?

 

[PeterCH]

So as a small business owner of an IT company you will have to either raise prices to cover insurance costs or ask all your customers to sign disclaimers.

Makes running a business very expensive.

Well some businesses will adapt, others will raise prices and in this economy see fewer customers and die. Survival of the fittest is what capitalism is about, market collusion and milking the consumer (as has been the norm in SA) will hopefully see some reduction.

 

[kilps]

Maybe I'm missing the whole point of this article but you can already cancel X period cellphone contracts and pay the penalty and handset clawback fees.

Or are they suggesting that you can cancel the contract and not have to pay the remainder of the monthly subscriptions and only a penalty fee? If that is the case what's stopping the provider in enforcing a 'penalty fee' to the value of the total subscription cost for the remainder period of the contract?? Unless there's some governance in this regard by instituting a maximum fee cap I see no point in this proposed law.

I'm not sure but don't current contracts force you to pay what you would owe if you continued plus a penalty fee? The way I understand this is instead of the full cost of the contract you just have to pay the cost of the device, which should be less.

 

[Getafix]

Vodacom3g you are totally correct with the example you are using.

Please allow me another example to explain the opposite. (Maybe the reason for legislation of this kind?)

Say a big company like Vodacom guarantees a telephone for two years. A small company uses this phone exclusively for it's daily bread. That telephone brakes. This company (Vodacom?) proclaims that is either liquid damage or physical damage and declare it BER and thus has no further obligation.

This new act might just entitle me to give them back their broken handset, cancel my contract and thus end my obligations. Even charge this giant company for losses suffered during negotiations?

Not just a bad act? Or is it giving the normal consumer some clout against these bullies?

 

[pjjdp]

OMG... why do we have to wait so long... should be implemented right away....!

They want you to finish your existing contract first. LOL

 

[PeterCH]

My point exactly!

Maybe now you can CANCEL without "penalty" fees. You repay the cost of the instrument and that's it.

R5000 iPhone spread over 24 months = R208 pm.
You cancel after 10 months you pay 'em = R2917 and end all subscription payments.

 

[vodacom3g]

About the alarm company example you made. If the user did everything right and the system still failed to triggers should the alarm company not be held responsible?

It's not that simple, unfortunately.

You're assuming the user did in fact do everything right (is the end user really going to admit he forgot to close a window, for example? Or never armed the alarm?) as well as the fact that the hardware performed flawlessly (even alarm systems have firmware / hardware bugs, cables get broken, batteries run flat, etc.).

So what typically happens when something goes wrong is that everyone start pointing fingers. And if the law is by default on the side of the consumer, it will get abused.

You might not believe it, but there are many consumers out there who will use any method not to pay or be held responsible.

Another real example (got stacks of them ): Small company completes job. Final invoice: R20K. End users says stuff you, won't pay, sue me. Legal costs more than R20K. Small company rather walks away from final payment (most of the profit on the specific deal). Customer knows this will happen and use system to his advantage. Small company could fight it (and probably win eventually) but need to get on with their lives and actually make money to pay salaries, suppliers, etc.

So I'm not saying consumer protection is wrong, far from it. But I am saying that it will get abused much more than what most people realise. And it could well create an environment that scares the SME away.

 

[rpm]

There may be issues with the implementation of the new Consumer Protection Act, but it is certainly good news for consumers. It may also significantly influence the business models of companies who heavily rely on annuity income for 24 month or 36 month contracts (iBurst springs to mind).

 

[diabolus]

Cancelling a contract will however not be without penalties. The consumer will still owe all outstanding costs to the supplier and there may be a contract termination fee for cancellations. For example when cancelling a cellphone contract the subscriber will have to pay what is owed on the device/phone - if this cost was built into the contract fee – as well as a reasonable cancellation fee.

While that's not defined it might as well be "the full amount outstanding for the remainder of the contract" .

Above quote is no different than we can already do today? Only thing is having to pay the outstanding amount of the full contract, but i see no evidence that this will be changed. I bet they'll come up with some "average" value of a canceled-contract, i.e. R2000 ...and call that a "reasonable cancellation fee" .

 

[vodacom3g]

There may be issues with the implementation of the new Consumer Protection Act, but it is certainly good news for consumers. It may also significantly influence the business models of companies who heavily rely on annuity income for 24 month or 36 month contracts (iBurst springs to mind).

There are two issues being discussed here.

1) The ability to get out of long term contracts. - I don't have a problem with this. Providers must perform to keep customers, although it can be abused.

2) The liability of the whole supply chain. This is where my concern for abuse lays.

 

[StbA]

A viable solution would be is to raise the amount that Small Claims courts decides.
Make it between R50 000 to R 500 000 and both the consumer and small business would be protected from crippling lawyer fee's.

 

[rpm]

2) The liability of the whole supply chain. This is where my concern for abuse lays.

This can have a massive influence on the delivery and support of products, especially in the software industry. And the old contracts stating 'we are not responsible' do not hold any longer. Companies can therefore not limit their liability through contractual agreements - a significant move from the previous regime.

 

[zamicro]

What is revolutionary with this ruling.. one can still cancel a contract today paying any cancellation and outstanding fees

I was thinking the exact same thing.

 

[Nerfherder]

My friend used this law to cancel his ADSL line the other day... they wanted to charge him 3 months cancellation fees.

He said they could choose.... either pay him out for the downtime that he had experienced or accept his one months notice.
They were happy to accept his one months notice after he quoted the law.

 

[Getafix]

This can have a massive influence on the delivery and support of products, especially in the software industry. And the old contracts stating 'we are not responsible' do not hold any longer. Companies can therefore not limit their liability through contractual agreements - a significant move from the previous regime.

Exactly.

Companies can not limit their liability.

That! is the advantage of the new act.

Of course their will be abuse. That is the way of business. Ask any of Telkom, Vodacom et al how long they have abused the present situation.

Acts get made usually because present circumstances demand it.

From a consumer point this is a huge improvement. Fortunately it is already signed into law. No discussions here will change it. However, the customer can now fight back if he is not happy because big business is not performing.

Go customer.