Is your cellphone contract upgrade covered under the CPA?

On 1 April 2011 the Consumer Protection Act (CPA) came into effect in South Africa with the aim to protect South African consumers from unscrupulous business practices.

One of the sections of the CPA governs “fixed term” contracts, which Nicholas Hall from Michalsons Attorneys confirmed applies to cellphone contracts.

Under this section consumers are entitled to cancel any fixed term contract on 20 business days notice to the supplier, though the company is allowed to charge a “reasonable fee” for such cancellation.

Hall highlighted that consumers may cancel a contract free of charge, provided they entered into as a result of direct marketing and cancel within 5 days after entering into it.

However, at a basic level the CPA does not apply to contracts entered into before 1 April 2011 unless the contract’s termination date is after 1 April 2013, Hall said.

He added that if a contract terminates after the 2013 milestone the CPA applies in a limited capacity, which includes the section governing cancellations.

So does the CPA apply to contract upgrades?

When you “upgrade” your cellular contract it raises the question of whether you’re entering into a new agreement or extending the termination date of the original contract, Hall said.

To answer the question you would need to look at the actual words of the contract, but Hall argued that the question is irrelevant in the case of cancellations:

  1. If you’re entering into a new contract then the CPA will apply.
  2. If the date of termination is being extended for a typical 2-year cellphone contract it will push it past the 1 April 2013 milestone in which case the sections on fixed term contract cancellation will apply.

Hall also added that the National Consumer Commissioner (NCC) has stated that they regard all cellphone contracts, even those entered into before 1 April 2011, to have CPA protection.

Should you cancel your contract or let it expire instead of renewing?

On the question of whether to renew a contract or simply cancel and enter into a new one, Hall said that to get full protection from the CPA one should cancel and then renew, or let your old contract expire and then enter into a new one.

Given the statements of the NCC, however, Hall said it would appear that you will get full protection even on old contracts.

“So if the hassle of entering into a new contract is too much, you could definitely try your luck and get the NCC rule in your favour.”

Hall also said that it’s worth bearing in mind that the NCC has told all the major telecom companies that none of their contracts are CPA compliant, and they will have to be re-drafted.

If people are having problems with any supplier and would like to enforce their rights under the CPA they need to lodge a complaint with the National Consumer Commissioner by calling 0860 266 786, Hall said.

“The NCC will advise you on the procedure to lay a complaint and how best to get the matter resolved.”

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Is your cellphone contract upgrade covered under the CPA?