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Prepaid airtime: use it, or lose it

Nicola Mawson
By Nicola Mawson, Contributor.
Johannesburg, 21 Feb 2014
Operators argue prepaid minutes are redeemed as soon as they are loaded onto phones.
Operators argue prepaid minutes are redeemed as soon as they are loaded onto phones.

The vast majority of South Africans are losing out on mobile minutes, because of the way network operators define when a prepaid voucher is redeemed - barring 55 million South Africans from carrying over spare talk time.

Under the Consumer Protection Act - which has been law for two-and-a-half years - prepaid certificates, credits and vouchers are meant to be valid for three years, unless they are used up before that time.

However, SA's largest mobile operators argue this only applies to the mechanism through which airtime is delivered - a piece of paper or recharge number - and not to the actual minutes. Once the voucher is loaded, the three-year period falls away, they say.

The operators' practice has been slated for relying on semantics to create a loophole so that prepaid minutes and data expire, and the National Consumer Commission (NCC) has yet to resolve the impasse. About 80% of the 68.5 million cellphone connections in SA are prepaid.

No clarity

NCC commissioner Ebrahim Mohamed says, because there has yet to be a case before the National Consumer Tribunal, the NCC has not yet "formed a view on the matter". Previous head Mamodupi Mohlala-Mulaudzi tried unsuccessfully to force operators to roll over unused data and minutes for a full three years.

However, all her attempts fell flat after she lost her bids, due to procedural reasons. As a result, says Mohamed, interpretation issues around the relevant section of the law were never dealt with.

Mohamed says operators argue the three-year period is only applicable to airtime or data before it is redeemed, which, according to them, is before it is loaded onto a device. The courts or tribunal still have to decide on whether redeeming happens when a call is made and the airtime or data is depleted; or whether it happens when the airtime or data is loaded and the consumer has full access to its value, he says.

"This process may still be well ahead and part of long-term plans of the NCC to deal with, as it will have serious implications for both the operators and consumers... The NCC is always concerned about what is in the interest of consumers and must interpret the Act in a manner that gives maximum effect to consumer protection."

Mohamed says the NCC will continue to tackle this issue until there is clarity, but until then, consumers have to use up their data or airtime in accordance with their contracts.

Uniform position

Vodacom, SA's dominant operator, says the airtime is the voucher, so it is valid for three years. Once exchanged for goods, the three-year requirement falls away.

Spokesman Richard Boorman notes contracts do not qualify as "vouchers" so the Act's requirements have no bearing on these deals. "The rule on the Smart and Red contract is that once minutes and data are allocated, they are valid to the end of the following month. They are consumed on a last-in first-out basis."

What the law says

Prepaid certificates, credits and vouchers
63.
(1) This section applies only to a transaction in which a supplier -
(a)accepts consideration from a person in exchange for a prepaid certificate, card, credit, voucher or similar device; and
(b)expressly or implicitly agrees to provide goods or services to any person who subsequently presents that certificate, card, credit, voucher or similar device, up to the value represented by it, but does not apply with respect to such a device, or the value represented by it, after all of the value of the device has been exchanged for goods, services or future access to services.
(2) A prepaid certificate, card, credit, voucher or similar device contemplated in subsection (1) does not expire until the earlier of -
(a)the date on which its full value has been redeemed in exchange for goods or services or future access to services; or
(b)three years after the date on which it was issued, or at the end of a longer or extended period agreed by the supplier at any time.
(3) Any consideration paid by a consumer to a supplier in exchange for a prepaid certificate, card, credit, voucher or similar device contemplated in subsection (1) is the property of the bearer of that certificate, card, credit, voucher or similar device to the extent that the supplier has not redeemed it in exchange for goods or services, or future access to services.

MTN's standpoint mirrors that of Vodacom's position, as it believes once the voucher is loaded, it is considered to have been used for service.

Cell C, SA's smallest operator with about 17% of the market, says a prepaid voucher can be "redeemed" any time within three years of purchase, but once that happens, the relevant section of the Act no longer applies.

"We are not aware of any provision in the CPA which places a prescription period or a timeframe on the products or services that have been purchased with a prepaid voucher. As a result, Cell C has put measures in place to warn consumers about Cell C's data window periods and the fact that consumers may lose unused airtime or data at the expiry date."

Not on

However, commentators argue operators are relying on an ambiguous interpretation of the law, which is discriminating against consumers who have shelled out money for minutes.

World Wide Worx MD Arthur Goldstuck says the operators are using semantics and technical differences to justify what is not a consumer-friendly practice. He accepts there needs to be an activation date if there is a time limit, but not that prepaid minutes are no longer vouchers once loaded.

Using an outlandish example, Goldstuck points out the way this definition can be abused and used as a loophole to make airtime and data expire. He says this is the same as implementing a voucher system to load money onto a debit card and then, once loaded, the three-year rule falls away.

"The bottom line is this is something people have paid for."

Goldstuck expects a lengthy wrangle, especially with the Department of Communications, under the helm of minister Yunus Carrim, which could see the Independent Communications Authority of SA (ICASA) stepping into the fray.

It is incorrect to link airtime to vouchers, says Goldstuck, as this is just a delivery mechanism and consumers are not even buying something physical. He points out that prepaid differs to contracts in that contract customers get discounted airtime because of bundling, and carrying those minutes over would push up the deal price.

Goldstuck says increasing numbers of people are moving to prepaid to have better control over spending, although they would not hoard the physical voucher. "It's very much an ad hoc purchase."

Elizabeth de Stadler, a senior associate with Esselaar Attorneys, says the operators' argument is not incorrect, but is somewhat artificial. "Consumers will definitely not understand the difference between redeeming the voucher and using the credits."

De Stadler says the ambiguous application of the Act must be cleared up by the NCC and the body must either be engaged in talks with the industry or prepare to go to the tribunal again.

ICASA did not respond to a request for comment.

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