"Stimulate" economy by ending telco abuses
- Ivo Vegter
- 27 Sep 2011 08:22 (South Africa)
My internet service is under strict instructions never to charge me “out-of-bundle” rates for data, but to alert me a few days in advance so I'd have an opportunity to switch to an alternative data account or buy a new data bundle. Despite this, I was notified one morning that I was now paying the exorbitant out-of-bundle rate. Neither of my requests were fulfilled, and I have no recourse.
A complaint on Twitter elicited many responses alleging similar incidents. Two involved amounts exceeding R30,000. Only one person said they'd never had a problem with the operator.
This is not rigorous market research, admittedly, but I've had cause to write for Brainstorm magazine about recurring abuses by network operators before. In each case, they involved different operators. Cancelling contracts is difficult, incorrect defaults get listed on credit bureaux, figuring out what you're paying for is well-nigh impossible, instructions to customer service agents are ignored, and debit order abuse appears to be common.
The Consumer Protection Act (CPA) and National Credit Act (NCA) were supposed to address some of these problems. Sadly, it appears they are failing. In fact, one hears more about their unintended consequences than about their success.
I recently spoke separately to two property developers, both of whom have a 20 year record of success with their buy-fix-sell model, but are now considered by law to be reckless consumers unable to afford their credit. Both are now liquidating their assets and going out of business, because banks – despite knowing better – are no longer permitted to lend to them.
My former gardener over the years acquired a fridge, a bed, a couch, a television and a hi-fi set, all on credit, one after another. Despite a low income, of which half was sent back to his family, he built up such a good record that he qualified for a credit card. Not anymore. To “protect” irresponsible borrowers, he has been punished for his responsible credit management by being told that the NCA deems him unworthy of any further credit.
In the second column linked above, I told the story of someone who had her 20-year relationship with her bank ruined, because a debit order facility had not been terminated, despite the facts that the account had been closed and that the matter had already been brought to their attention.
You have to go far to meet anyone who doesn't have some kind of horror story to tell. I have personally been a victim of all these practices: blacklisting for erroneous amounts, blacklisting when accounts are in dispute, threats about debts that either don't exist or are too old or both, and debit orders that keep coming off months after accounts have been cancelled.
In each case, it took months of bickering to clear up the matter, and in many cases, I doubt I would have succeeded if I only had access to the call centre, like a regular Joe.
In one case, my bank slashed my credit limit while I was overseas, leaving me stranded without money. They apologised and reinstated it, but the damage was done. In another case, the bank told me there was no way to de-authorise a company once debit order authorisation had been given. Unless I could convince them to stop, they had free access to raid my account.
I'm not unique, and my customer-service stories are no more important than anyone else's. The point is that this kind of abuse is rife.
Companies routinely blacklist consumers for amounts in dispute, erroneous amounts, occasional late payments, or petty amounts that result from complicated billing. As a result, access to credit is a pipe dream for many South Africans.
It's no wonder we've had to “pioneer” pre-paid, and that we consider it normal that customers pay more for offering cash upfront than for being billed after the fact.
Thanks to an uncompetitive market, served by protected, licensed cartels, consumers have little recourse. If a customer disputes a bill, a company can easily blacklist them without the expense of bringing a civil suit. Collection agencies, whose “lawyers” should be the first at the bottom of the proverbial sea, routinely harrass, blackmail and extort fees from hapless consumers.
Consumers, to protect their rights, have no option but to resort to lengthy correspondence or initiate costly legal action themselves. Most just suffer the grave consequences of their presumed guilt, or pay disputed amounts because the consequences are often orders of magnitude larger than the amount at issue.
Instead of being able to take companies to task for high-handed rip-off attempts, such as the “out-of-bundle” fraud, customers are always on the defensive, and always trying to prove that they're really not as poor and irresponsible as the government says they are.
The very government itself is in on the act. Lawyers for the SABC threaten people they believe to be television owners with 30 years and a criminal record. The hoops one has to jump through to prove otherwise – how do you prove that you do NOT own something? – are complex, time-consuming and ridiculously bureaucratic. The irony is that the SABC threatens its customers with criminal charges for having been the victim of a robbery.
The same lot harrassed an acquaintance of mine at 8pm on a Friday during his 68th birthday dinner, and demanded that he supply them, right there, over the telephone, with his ID number, home address and bank account number. Presumably they wanted to attach his house for an overdue TV licence. Or commit identity theft and move in.
This is the behaviour of a crime syndicate, not a government protecting citizens, or a law firm enforcing the legitimate claims of its clients.
I take no issue with credit providers who demand that customers pay them. This is only fair, and companies have every right to enforce their claims. However, their methods are slipshod – riddled with errors and outright fraud.
Telecoms operators, coddled in their collusive cartel, are among the worst offenders. At most, they're at risk for a single month's payment, in the case of a contract customer. Yet they ruin lives over this.
The CPA and NCA are well-intended and very helpful in some regards. The plain-language requirements for consumer contracts in particular are a great step forward. However, these laws clearly aren't working. In fact, they're known more for their unintended consequences than for achieving their goals.
I'd like to propose harsh new regulations that ban telcos from reporting defaults, or even doing any credit checks themselves. They should also be banned from using debit order facilities, because they have shown they are not responsible enough for this privilege. While the regulators are at it, they can ban a whole lot of other abusive behaviour, like charging a 1000% premium for out-of-bundle data, or charging exorbitant fees for international roaming. These are only possible because of monopoly or cartel abuses.
More generally, consumer credit providers should not be able to report small defaults – below, say, the minimum wage for a domestic worker – to credit bureaux. Or if they want to retain that right, enforce the requirement that they make multiple attempts to notify the customer, by mail, telephone and email, in case one or other contact detail has changed, and then prohibit credit bureaux from reporting them to enquiring credit providers until there are more than, say, three, which would suggest a pattern of genuine delinquency on the part of the non-paying customer. This would eliminate most of the petty, erroneous and outright fraudulent abuse of credit bureaux.
In addition, penalties for abuses such as failing to cancel debit orders, or automatically charging out-of-bundle rates without notifying customers in advance, should be severe. This constitutes theft.
Telcos will protest loudly, and threaten to raise rates, but this is posturing. Like they do in the US, they can simply offer contracts that terminate when a customer stops paying. If they want even less risk, they can make the main contract fee payable in advance, with only extras being charged to the next month. The risk to telcos will be limited, they will still have legal recourse for bona fide non-payment, and millions of consumers may finally have the clean credit record they always wanted, and always deserved.
If this sounds like heavy-handed regulation, it is. In an ideal world, access to justice would be cheap and easy, and companies that abused their customers would be subject to vigorous competition. In the real world, where the government has created uncompetitive cartels with high barriers to entry, and given them regulations that define exactly to what extent they may legally exploit their customers, the market's ordinary remedies are not available. If the government decides how many operators a market can bear, and creates these monsters as a consequence, the government is responsible for protecting rights that otherwise could have been protected by competition.
It's time to crack down on telecommunications companies in particular, and consumer credit providers in general. Not to limit their lending, or restrict their services, or drive up their costs, but to protect the legitimate rights of the consumers who have little option but to do business with them.
And while the government dithers, unsure of why their attempts to remedy the situation are failing, maybe it's time for a great big kick-ass lawsuit, so everyone who has ever lost R50, R500 or their financial reputation to one of the rapacious and litigious network operators can get their own back.
The cost and hassle is not only justified, but would gain us a nation of credit-worthy consumers and entrepreneurs.
That would be a damn fine bit of “stimulus” for our economy. DM
- Uber permits as protectionist central planning
- Design your own genetically modified freak show
- 13 ways the media tries to scare you
- Star Trek 50 years on: A vision of hegemony
- The toothless climate change agenda
- Apartheid’s censors ride again
- Only Big Tobacco and Big Pharma want e-cig regulation
- Since when do we believe the tobacco industry?
- The blockchain: How Atlas will shrug
- The mafia bosses and the gambling cartel
- The planet is getting greener
- The tinfoil hat loonies were right all along
- ‘The cheque is in the mail’
- WWF report proves the sustainability of growth
- WWF alarmism raises even green eyebrows
- Chernodeal: Shopping for discount nukes
- Star Trek, 50 years on: A study in sexism
- Let me mansplain statistics to you
- Free the hippies! Don’t ban their drugs!
- Which principle: precaution or progress?
- How to kill a baby, naturally!
- Miserere mei, the Ebocalypse is here!
- Advanced technology or magic?
- Tourism: Still doing okay? Let’s fix that!
- Green-left messiah desperately seeking spin-doctor
- The gun genie and its bottle
- On energy, environment, and regulatory independence
- South Africa’s schools of witchcraft and wizardry
- Grab shale gas opportunity, but avoid opportunism
- It’s about who you don’t vote for
- Free markets as a moderate position
- Voting: there’s still time to change your mind
- Green tech is cool, but not because it’s green
- How Mmusi Maimane swindled a vote out of me
- The case to elect Malema to Parliament
- The intellectual gnome, Chomsky
- If Malema isn’t Pol Pot, is he still dangerous?
- Do Malema's followers understand ‘agrarian reform’?
- Look ma, I'm defending Shell's record in Nigeria!
- Any weather is evidence for global warming
- U-turn prof finds his fracking fears are avoidable
- Ramphele et al: The world according to angry feminists
- On HIV/Aids and scary-big numbers
- Cherry-picking ‘grey literature’ on rhino horn
- 350,000 reasons to kill a black rhino
- Eight myths about libertarians
- New Year’s resolutions for other people
- All I want for Christmas is a fire pool
- In defence of Donald Trump
- My old South African flag
- Fearful Fukushima fiction fatigue
- Do we tolerate private sector corruption?
- In defence of a lion killer
- Save the rare wine and endangered craft beer
- Forever blowing bubbles: shale gas economics
- Promotion and Protection of Investment Bill: When “certainty” means “wait and see”
- This land is my land: a revolution
- The launch of SA's Libertarian Party: herding cats in time for 2014
- The African case against the ICC
- The fossil fuel subsidy myth
- Think of the little fishies!
- The hilariously misunderstood libertarian
- The sickly history of sweeteners
- Pants on fire, but they’re not mine
- The obstructionism of shale gas activists
- How mind-numbing numbers whip up fear
- Why pick on Khanyi Dhlomo?
- Half-measures will fail the rhino
- Malema’s righteous anger... and naïve confusion
- Lottery licence to go to one lucky winner
- Vaccinations: when the state stabs the people
- Do reusable shopping bags kill people?
- The long walk to serfdom
- The Karoo desperately needs development
- The trials of Samson Shuttleworth
- The girl who kicked the hornet’s nest
- Raping the discourse about rape
- Who is the reasonable man?
- Fracking: Debating a big deal
- Who needs the Queen’s English?
- Electric cars: Taking from the poor to give to the rich
- Business Licensing Bill: An indefensible defence
- Red-tape tourism
- The Big Business Bribery Bill
- On Thatcher and society, Vavi and the market
- Extinction: Let’s make up numbers and panic!
- Feeding the world is getting easier
- Stop talking shit: Build your own toilet
- Climate change is pseudo-science
- Anti-competitive competition law
- The Department of Less Government
- An open letter to President Zuma
- In defence of Kim Kardashian
- The world’s weirdest wildlife sanctuary
- Boycott calls are simple-minded
- In defence of vegans
- The population explosion implodes
- Environmental backpedalling picks up pace
- How Mangaung can help and hinder entrepreneurs
- The elusive libertarian enclave
- The Gathering: Ivo Vegter
- The hidden overemployment crisis
- The case for constructive environmentalism
- Privatise the Western Cape's shacks
- Tenders: Not open to employees or their families
- Hurricanes fuel climate sensationalism
- Next: Gross-out warnings on food
- No new deal: The failure of Zumanomics
- Benoni has a bright idea
- Was I wrong about acid rain?
- Public food gardens: Where dumb ideas thrive
- Rethinking the costly food label madness
- Give hunting a chance
- Fracking gets green light, but here's the risk
- Socialists, bless 'em, visit Cape Town
- Buy a 1Time ticket now
- Give the ANC credit where credit is due
- The myth of the competent apartheid government
- It's a disaster that 'peak oil' is not a disaster
- No Gravy: a label for sustainable business
- This lightbulb's going to blow
- Smokers? Get 'em up against the wall!
- Inflating the obesity scare
- Bring a Shotgun to School Day
- GMOs: Hacking genes to feed the world
- The hidden dangers of charity
- Fracking: the unread paper debated
- Fracking: The “U-turn” paper nobody has read
- Eco-cronyism is as dangerous as any other
- SKA: Be grateful Karoo residents didn't object
- Energy: Get cracking on fracking
- Fair trade, unfair trade-off
- Casual labour is only bad for Vavi's unions
- 'Externalities', the catch-all justification for regulation
- 'Externalities', the catch-all justification for regulation
- How do we fix our dismal education?
- Barter: the rebirth of sound money
- Rights are not entitlements
- Debunking 'limits to growth' inanities
- Tax: Why align with "most other countries"?
- Newspaper sensationalism doesn't help rhinos
- Rolling Stone reprises Gasland's fracking fantasies
- Cosatu's manipulative march move
- Why do 16 million people not constitute an economy?
- The age of smear politics
- Does fracking cause earthquakes?
- The Chinese model is morbidly obese
- Green tech: doubling down on a losing bet
- Rape, pornography, and hell's grannies
- Petrol taxes won't hurt the poor
- Jailtime mooted for bad weather warnings
- Let's ban bans, and start with CITES
- In defence of overpaid sport stars
- On the death of Kim Jong-Il
- COP17: Let's ban fire
- Cancer gets you when nothing else can
- COP17: The 'party on' agenda
- COP17: The Blue Line of Death
- New seven natural inanities
- Occupiers' anger is all that makes sense
- The Luddites and Technocrats live on
- Malema marches for economic slavery
- Profitable purveyors of pudendal prettiness
- Sense? Us?
- If they want rhino horn, let's sell them some
- "Stimulate" economy by ending telco abuses
- Executive pay makes nobody poorer
- Malema's real persecution
- Mogoeng: Lock up your daughters
- Don't mandate insurance, deregulate healthcare
- I sympathise with Malema's persecution complex
- Short selling: panicked pols ban proof of failure
- Don't blame those who saw it coming
- What's obscene about profit?
- In defence of Bombela
- Dear president Zuma, you are not above the law
- The economics of love
- Treasure the Karoo? Ban the SKA!
- Malema is right, you know
- Gautrain's PPP: political patronage profiteering
- Kumi Naidoo is no hero
- LeadSA fails to lead when it matters
- No logo means carte blanche
- The drug war: dopey but dangerous
- A response to fracking critics
- Don't vote. It's your right.
- Welcome Walmart
- If you're happy and you know it clap your hands
- Buy local, support poverty
- Ubuntu, the free-market way
- Karoo fracking scandal exposed!
- I'm ashamed for my profession
- The bill of bunkum
- Being gay: a brand new concept!
- Who's afraid of the nuclear wolf?
- The nationalisation canard
- Ogilvy should grow a spine
- The new robber barons
- A classy revolution: Why we cared
- Bombastic Bombela balks
- Liberty is more than mere democracy
- Gautrain has a law unto itself
- The irony of 'services for all'
- How to hire a hitman in SA
- Arrive alive and neurotic
- The oppression of taxis
- Protection of Information Bill and why WikiLeaks is so dangerous
- Fifa, Russia and Qatar deserve each other
- One day, we'll all hate WikiLeaks
- The cycling mafia strikes again
- What Julius got for Christmas
- Let's return the beads
- Away with fascist seat belt laws
- Tintin Mbeki in the Sudan
- How the ANC can make everyone happy
- Currency: the race to the bottom.
- Hurrah for national healthcare!
- Give Zimbabweans citizenship
- Carte Blanche has no carte blanche
- That finger-licking, lip-smacking taste
- Bomb the barbaric lot already
- Green tax: another raid is coming
- Do strikers deserve anything?
- The media will lose this battle
- Global warmism needs a fisking
- A glass half-full
- Go ahead, have a baby
- Stop the handouts - end xenophobia
- The right to fire
- FIFA's heart of darkness
- Have some self-respect
- I ordered an orange skirt
- Secretly, Match blames South Africa
- The stupendous Gautrain: a rare marvel!
- The Fifa conquistadors are coming!
- What's wrong with everyone?
- Leave poor BP alone
- The destructive power of government
- The bonsai economy
- The darkness of Africa
- Who is ripping off whom?
- Anatomy of a whitewash
- While FIFA takes over, we fight
- The pointless pretence of Earth Hour
- Ten reasons to reject climate alarmism
- Really, boycott the FIFA farce
- The climate dominoes fall
- Lessons in ethics from Dick Cheney
- Screw the consumer
- In defence of bankers
- Break the banking cartel
- Julius Malema, the walking contradiction
- Boycott FIFA
- Climate clarity
- In defence of Boney M
- Pray Copenhagen fails
- Capitalism is not unkind
- Climate fraud kills people
- Pop goes the hot air balloon
- Peace, love and schadenfreude
- The irony of the left
- Too late to cool it?
- Going cold turkey