MTN, Vodacom mid-contract price hikes spark fairness debate under Consumer Protection Act

South Africans on postpaid cellphone contracts are facing price hikes this year, despite having signed up for fixed monthly fees, a move that’s once again putting contract fine print under the spotlight.

Both MTN and Vodacom have confirmed increases on postpaid contracts, averaging about 5.4% for MTN and 4.7% for Vodacom. Prepaid customers are unaffected.

‘Fixed’ doesn’t always mean fixed

Consumer journalist Wendy Knowler says the issue has been troubling consumers for years.

“Most people assume that if it’s a fixed-term contract, then the price is fixed,” she said. “That assumption clashes with reality because the contracts allow for increases, but only under certain conditions.”

Under the Consumer Protection Act (CPA), suppliers may increase prices mid-contract if the process is transparent, justified, clearly communicated, and paired with what regulators call a ‘genuine right’ to cancel.

The problem with cancelling ‘in protest’

Knowler argues that this right is often more theoretical than real.

“To my mind, a genuine right to terminate means you should be able to cancel without a cancellation penalty,” she said. “You still pay off the handset, but there shouldn’t be the usual penalty. I can’t see that actually working in practice.”

She added that consumers are locked in, while companies retain flexibility. “We don’t get to say, ‘Inflation is hurting my budget, so I’ll pay you 5% less this month.’ We’re locked in, they’re not.”

‘Excessively one-sided’

Knowler says she’s pushing the issue with the National Consumer Commission, pointing to Section 48 of the CPA, which outlaws contract terms that are ‘excessively one-sided’.

“They know inflation exists when they lock you in for two or three years,” she said. “They need to take some risk instead of shifting it all onto the consumer.”

Not just cellphones

The same principle applies to gym contracts, she argues, where consumers are often hit with annual increases despite being locked into long-term agreements.

“They’ve locked you in. To then raise the price mid-contract in no world is that fair, in my view,” Knowler said.

For now, she says, the issue is far from settled. “This is definitely to be continued. They can’t have it all their own way.”

For more information, listen to Knowler using the audio player below: