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Consumer law worries cellular industry

Paul Vecchiatto
By Paul Vecchiatto, ITWeb Cape Town correspondent
Johannesburg, 20 Sept 2006

A proposed consumer protection law will have serious consequences for the cellular industry as the basis of South African contract law will change, Virgin Mobile and legal firm Cliffe Dekker say.

Virgin Mobile has also come out stating its concerns with the proposed National Consumer Protection Bill, which is being driven by the Department of Trade and Industry (DTI). The Bill will only go before parliament next year for deliberations.

Janet MacKenzie, a Cliffe Dekker director, says the Bill is wide-ranging in its aims and follows from United Nations guidelines for consumer protection that were broadened in 1999 and require governments to develop and maintain strict consumer protection policy and protection from contractual abuses, such as one-sided contracts and unconscionable conditions of credit.

MacKenzie says the Bill "draws on a number of pieces of existing legislation, forming a consumer matrix that will ultimately be policed by a national consumer regulator."

She says should the Bill be enacted, SA`s common law will be replaced by the codified principles detailed in it.

Disharmony

"Established ways of conducting everyday commercial transactions will be altered and, in a number of respects, the proposed changes will remove the protections afforded to suppliers when dealing with unscrupulous customers," MacKenzie says.

In its submission to the DTI on the proposed law, Virgin Mobile, advised by law firm Edward Nathan, says this Bill goes no further in harmonising the fragmented and complex set of laws that are in existence.

"SA is, in Virgin Mobile`s view, becoming a highly regulated society, but has inadequate resources to enforce and implement the laws - this law will add to that regulatory burden and the drain on resources," Virgin Mobile`s submission says.

Albrecht Herholdt, Virgin Mobile`s chief legal advisor, says the restrictions on loyalty programmes and special offers as value-adds are likely to restrict customer choice and service innovation. He also says the Bill is likely to have a detrimental effect on the prepaid market as it requires suppliers to hold monies from subscribers "in trust".

No bundling

Bundling of goods and services is either outlawed by the proposed Bill, or the suppliers have to give a complete financial breakdown of what the relative values of the goods and services are.

"The customer should be allowed to choose whether to take bundled services or not; the Bill ought not to prohibit bundling altogether," Virgin Mobile`s submission says.

Virgin Mobile`s submission also states the National Consumer Protection Bill runs counter to the Electronic Communications and Transaction (ECT) Act and the Corporate Laws Amendment Bill, because it now requires a customer`s physical signature on a contract.

The other two laws have promoted the use of electronic signatures. In fact, President Thabo Mbeki signed the ECT Act into law using a digital signature in 2001.

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