CRAN slaps MTC on wrists for consumer exploitation

Home Business CRAN slaps MTC on wrists for consumer exploitation

Staff Reporter

The communication regulator, Communications Regulatory Authority of Namibia (CRAN), has slapped MTC on the wrists over the manner in which it charges post-paid contract consumers. This comes after a complaint by an MTC customer, who realised that the standard subscription service agreement with MTC has a provision that allows MTC to continue renewing the contract and charge subscription fees, plus costs of a new cellphone for an indefinite period.

CRAN ruled in favour of the customer, one Tironnen Kauluma. In its ruling, the regulator asked MTC to change its post-paid contract wording to ensure that consumers who had not renewed their contracts are not charged exorbitant amounts of money for services they do not get.

Currently, when customers sign up for MTC post-paid package, which includes a cellphone, they are made to sign a contract that allows MTC to deduct monthly subscription fees, which also include the cost of the cellphone, for a period of 24 months.

However, at the end of the 24 months, the consumers are given an option to renew their subscription. However, if they do not do so, MTC would automatically renew the contract for another period during which the consumer would continue to pay the subscription fees, and the cost of a new cellphone, even though no new cellphone is issued.

The contested contract wording, which CRAN found to be exploiting consumers, reads: “Agreement shall commence on the commencement date and shall endure for the contract period, subject to the provisions of Section 12. Where after, it shall continue indefinitely unless substituted by another subscriber service agreement in respect of the services or terminated by either party giving to the other not less than 30 (thirty) days written notice of termination…”

CRAN found that such a clause “obliges consumers to continue paying the subscription fee after the contract is renewed for an indefinite period without the consumer having received a new handset even though the subsidised portion of the price of the handset is included in the subscription fee.”

As such, CRAN has resolved that MTC “must in writing, 30 days before the expiry of the duration of the Agreement, notify the Subscriber that his/her contract is lapsing on [specific] date and that he or she is entitled to extend the agreement by a further contract period, in which event the subscriber would be entitled to an offer for a new handset.

“The extension of the subscription agreement, in accordance with this clause, shall be in writing and shall be signed by or on behalf of both parties. In the event of such an extension, the remaining provisions of the subscription agreement will apply,” CRAN has resolved.

Where the Agreement is not extended, in accordance with the new provisions as resolved by CRAN, then MTC must automatically transfer the subscriber to a standard package with a reduced subscription fee and no handset.

MTC was asked that the principle addressed in the amendments “must be applied to all new and existing contracts that lapse after date on which this decision is communicated to MTC”.

MTC was also tasked to “submit the standard packages to CRAN for approval in terms of Section 53 of the Communications Act, within 30 days from date on which this decision is communicated to it.”

Further, during the first 12 months after implementation of this decision, MTC must provide CRAN with quarterly reports indicating the consumers whose contracts have lapsed and how such consumer’s contracts were managed in line with this decision.

“The above-mentioned amendment is applicable to contracts currently in existence (as at date of this decision). This decision is not applicable to contracts that have already lapsed. Aggrieved and affected consumers are encouraged to manage their cases with MTC directly. If they feel their cases have not been addressed within 14 days from the date in which it was formally reported to MTC, then only should they follow our consumer complaint procedures,” said CRAN’ Chief Executive Officer, Festus Mbandeka.

Mbandeka says although the complaint came from an individual, and the regulator ruled in favour of the complainant, CRAN “resolved to treat this as a matter of public policy and in the best interest of the consumer”.