The legality of Expiring Data Bundles

It is no secret that a number of service providers within the South African telecommunications industry offer data bundles packaged according to expiration periods ranging from 1 hour to 30 days. Once that chosen time duration has expired, the user forfeits all the remaining data already purchased at full value without being reimbursed for the unused data.janet-txt-banner

If we simplify the act of purchasing a data bundle, it really is a transaction between a service provider and a consumer. This transaction is regulated by the Consumer Protection Act of 2008, which up until today has not had the practical impact one might have hoped for.

Section 63 of the Consumer Protection Act indicates that a prepaid certificate, voucher or credit only expires if all the value on the certificate, voucher or credit has been used up, or if a period of three years has lapsed.

Wait, what?!

Now, the big service providers may justify (in the public relations sense of the word) their business model in relation to data bundles, presumably based on an economies of scale argument (We sell in bulk to drive prices down and the consumers that do and do not use the entire bundle essentially subsidise each other).

However, the problem for the service providers is that section 63 is not qualified, it does not allow for the service provider to justify its non-compliance with section 63. In other words, there is no “rule of reason” contravention similar to that of the Competition Act. Perhaps one could argue the provision should be interpreted with the purpose of the CPA, yet the business model is not to the outright benefit of consumers as price cannot be the only consideration; particularly when little has been done to advance consumer awareness in relation to expiring and now “disappearing” data. Ironically, those who do give customers timeous notice, use it as a marketing tool to purchase further data bundles at “in-bundle rates.”

Interestingly, ICASA has now announced that there simply is no reason why out-of bundle rates are so much more expensive than in-bundle rates because the cost to the service provider does not differ according to each option. 

You may find comfort in the fact that the National Consumer Commission has since issued a compliance notice against service providers for a contravention of section 63 of the CPA on the basis that they attach an expiration date to unused prepaid data. Unfortunately few have reacted to such notice and withdrawn their expiration dates. It appears that the majority of service providers have elected to challenge the notice.

It appears from this article (News24) that service providers are relying on different technicalities to argue compliance with section 63. The technicality put forward is that the 3 year period applies to unredeemed voucher bundles insofar as the voucher remains valid for three years. You accordingly have three years to activate the data bought but not three years to use the data once activated;

Perhaps an even bigger bombshell is the recent discovery that one particular service provider bills customers for connecting to an LTE network, even when “mobile data” is turned off on the device, despite other networks not doing so. But that is for another day.

(for the full story see http://www.iol.co.za/lifestyle/disappearing-data-mystery-solved-10563126)

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