Portfolio Committee on Trade and Industry

Date: 06 September 2012

Presenter :Ebrahim Mohamed Acting Commissioner

National Consumer Commission

1

Presentation is a report prepared in compliance with a request by the Parliamentary Committee on the Department of Trade and Industry

• Complaints status • Matters before the Tribunal

2

COMPLAINTS

3

Overview

The enforcement and investigations division has three Directorates(units)•Investigations , •Complaints Handling •Alternative dispute resolution (ADR )

This report focuses on the Complaints Handling and the Alternative Dispute Resolution Directorates as it provides a status update on the Complaints

4

Complaints Handling Directorate

5

COMPLAINTS HANDLING DIRECTORATE(UNIT)

• Complaints Handling Unit (CHU) is one of the units within the Enforcement and Investigations division of the National Consumer Commission.

• The unit is tasked with the function of ensuring amicable resolution of consumer complaints through facilitating communication between consumers and suppliers

• The Complaints Handling Unit deals with all consumer related complaint

except those excluded by the Act.

• The National Consumer Commission in its efforts to improve the process flow in complaints handling has developed two work streams and the work structure is as follows.

6

Work Stream One – Contact Center - the first interface between the Commission and consumers is

through the contact center. The Commission has a call center, consisting of 5 telephones. Complaints are received through fax, email and by post. The consumers also come in person to the Commissions’ offices. Most of the complaints are received through email and fax.

– Walk-ins - Are complainants come to the National Consumer Commission offices in person to lodge their complaints, query various issues, or request verbal explanations of the written compliance notice.

– Categories-The categorizing of complaints from all sector of the economy, including Motor Industry, Retail and Manufacturing ICT, Time-Share, Fitness centres, Property, Financial Services , Government and Municipality, Medical and Education Sector.

– Referencing - where all the complaints received are registered and provided a reference number. 7

COMPLAINTS CONTINUED

Work Stream One

– The Acknowledgement were all complaints received are acknowledged within twenty-four hours

– Letter to the respondent - The letter attaching the complaint received is sent to the respondent. The respondent is given 7 days to respond .

– Reformulations- This refers to matters received which do not constitute a complaint as defined in the Act. These matters are sent back to complainant and can be dealt with in two ways: either the party can reformulate the complaint as per the guidelines and the matter becomes a complaint as defined, or the party can abandon the matter and the file is closed.

8

Work-Stream-Two  

•Complaints are escalated from work-stream one to work stream two on a weekly basis. The complaints are checked against the accompanying spread sheet. Before the complaints are categorized; they are captured on the work-stream 2 spread sheet for allocation purposes When categorizing complaints, it is when we assess the dominating categories and which are less likely to complaints.

Follow-up Process

After the complaint have been assessed, processed and categorized; they are distributed to the respective individual dealing. Follow-up are then conducted to both respondent and complainant.

9

Work-Stream-Two  

Some complaints get resolved or settled at the level of entry than others, varying with the nature of complaints. Follow-up is conducted in various forms, namely: telephonically, by email and by post (however posting is the last resort if we the consumer cannot be reached through any other form of communication). Consumers updated on the responses received. Where there are settlements after telephonic interventions , a consent agreement is prepared. Where there is no response from the respondent ,a default compliance notice is issued so as to not prejudice the consumer any further with undue delays.

Block MeetingsThe Purpose of the block meetings is to stream line complaints received against one supplier in order to improve on the effectiveness and efficiency of complaints handling .this is done by;-Agreeing with suppliers on the best method of Communication to ensure speedy resolution (personal delivery, email, courier, etc.)

10

Analysis of All complaints per category

currently being dealt with in the complaints Handling Directorate

11

TREND ANALYSIS Category Total Number Type Trends

Motor Vehicle 1367 Misleading information, defective cars, poor service, undisclosed information from dealers and unfair business practice. The majority of complains are against small dealership and large dealership. There is a tendency for dealers to mislead consumers when they take their cars for repairs and service by quote them a specific amount but upon collecting the car they notice that the amount has changed.

Financial Services 424 Misleading information, unfair business practice, unfair terms and conditions and unauthorized debits. Debt Councillors to fail to distribute the money accordingly to credit providers. Financial Institution to continue debiting consumers accounts after the consumers have settled their accounts.

Retail 1198 The majority of complaints received are about request for refunds, Exchanges and Returns, replacements for defective goods, unfair business practice and poor quality goods.

Promotions and Fraudulent Schemes 44 The majority of complains received are about cancellation of contracts, refunds and consumers been unfairly black listed and high instalments.

Computers 85 Defective goods, faulty laptops and computers. Failure to repair goods, misleading information, undisclosed information and failure to repair goods while still under warranty.

Timeshares 240 Contract cancellation, misleading information and unfair terms and conditions. Most of the complainant cancel their contract due to the fact that they cannot afford the high installments and also because they have never used their points. We have received numerous complaints against Holiday Vacation Club, Fexi Club and Easy Holiday Club

Travel & Tourism 230 The majority of complaints are about unfair business practice, refund for cancelled bookings and poor service. Most complainants complain about poor communication from airways.

Fitness Centre 148 Contracts cancellation, unauthorized debits over expired contracts and unfair business practice. Consumers cancel their contracts they are being charged a higher penalty fee of 50% and this practice popular with Planet Fitness but other fitness centres charge a reasonable penalty fee.

Medical Services 120 Medical Service complaints comprise of inability to settle medical bills by medical aid schemes which leads to consumers being unfairly blacklisted.

A lot of consumers complain about the terms and conditions of their medical Aid.

There is also a tendency for Medical Aid Schemes to overcharge consumers and most complaints are against Private Doctors, Private Hospitals and Medical Aid Schemes

12

13

Government & Other Municipalities

73

Most complaints are lodged against Government. Institutions and Municipalities. The majority of complaints are about poor service, failure to reconnect electricity even after settling the account that was in arrears and poor service

Property

700

The majority of complains are against estate agents, body corporate and property agents. Common trends within this category are misleading information, cancellation of contracts, cancellation of lease agreements, poor workmanship, poor service and refunds on deposits.

ICT- Information Communication Technology

862

Matters are about incorrect billing, unfair blacklisting and unfair business practice. The majority of complains are lodged against Multichoice (DSTV), SABC and Telkom.

But the majority of complains are lodged against Telkom and the most common trend are about expired data bundles, slow internet connection, failure to deliver service promptly and also the inability to connect lines after settling accounts that have been in arrears.

Network providers to trick consumers into the idea that they have won cellphone whereas it’s actually a contract phone and as a result the consumer end up being blacklisted and it affects the consumer’s credit record.

Most customers cancel their contracts due to delayed delivery of handsets, delivery of wrong items and poor service.

Reformulations 513 This refers to matters received which do not constitute a complaint as defined in the Act. The ‘A’ files can be resolved in two ways: either the party can reformulate the complaint as per the guidelines and the matter becomes a complaint as defined, or the party can abandon the matter and the file is closed.

14

Complaints Resolution rate in Complaints Handling Directorate (I April to August 2012)

Alternative Dispute Resolution Directorate

15

ALTERNATIVE DISPUTE RESOLUTION DIRECTORATE (UNIT)

• Alternative Dispute Resolution Unit (ADR) is one of the units within the Enforcement and Compliance division of the National Consumer Commission.

• The mandate of the unit is to facilitate an amicable resolution of complaints between disputing parties using alternative Dispute Resolution mechanism mainly conciliation.

• The Unit provides a platform for parties to a complaint to engage in an open negotiation of the complaint with an aim of reaching an amicable agreement.

• The Alternative Dispute resolution unit deals with all consumer related complaint except those excluded by the Act.

THE CONCILIATION PROCESS

• Parties are invited in an attempt to assist the parties with reaching an amicable settlement of the complaint

• Notices of set-down forwarded to complainants and suppliers/ respondent

• Conciliation proceeding done in terms of the guidelines

• All settlement agreements are reduced into consent agreements in terms of section 74 of the act.

• Compliance notices are issued in terms of violation of the provisions of the National Consumer Protection Act

METHODS USED TO CONCILIATE

• Telephonic Conciliation – telephonic conciliation is one method used to conduct conciliation wherein parties deal with the complaint over the telephone. The purpose of telephone conciliation is to yield speedy resolution of the complaints.

• Formal Conciliation – Scheduled matter formal conciliation is another method used to deal with complaints. This process entails inviting both parties to the conciliation by issuing a notice of set down and giving the 14 days and the purpose is to facilitate a process of finding an expeditious resolution to the complaint.

Outcomes Anticipated At Conciliation

• Settlement Agreement – when the parties agreed at conciliation then a settlement agreement is signed by both parties and the conciliator.

• A Non –referral – is when after both submissions have been heard and the complainant`s case is frivolous, then a non-referral is issued.

• Compliance Notice – a compliance notice is issued in terms of section 100, read with the rules of the National Consumer tribunal, in terms of the Consumer Protection Act 68, 2008.

• Compliance notice is a directive from the Commission to the respondent to comply with the Act and address the complaint.

• The supplier has a right in terms of section 101 (1) of the Act to abject within 15 days after the service by way of an application to the National Consumer tribunal.

• The consumer also has the right to approach the National Consumer Tribunal if they do not agree with the decision taken by the Commission of issuing a non- referral.

CATEGORIES OF COMPLAINTS

• The unit receives urgent and non-urgent matters.• All urgent matters are set down within 48 hours and dealt with every

Thursday of the week. • Non urgent complaint follow the normal process of set down• Conciliators are allocated files to deal with on daily basis• Reports are submitted monthly

Analysis of All complaints per category currently being dealt with in the alternative dispute resolution Directorate

ANALYSIS

CATEGORIE ANALYSIS

Motor Vehicle Defective second hand and new motor vehicles, non disclosure of information about accidents, failure to repair the motor vehicle, warranty issues.

Retail Defective products, non delivery on goods on time, payment arrangements, refusal to give refunds especially small companies and poor customer services.

ICT SABC licensing, expired data bundles, slow Internet connection, incorrect billing and poor service. Faulty handsets and Roaming charges.Complaints comprise of defective brand new products that requires repairs.

Suppliers often refuse to repair products still under warranty and blame consumers for negligence.

Government Incorrect billing and poor service delivery. Majority of the complaints are from City of Johannesburg.

Timeshare Misleading advertising and cancelation of a perpetual contract. Most complaints are from Flexi Club, Quality Vacation Club and Global Travel Alliance.

Fitness Centre Cancelation of contract, misleading information.

Financial Services Most complainants are financed by banks for houses, buying cars and personal loans. Banking complaints include assets repossessions and unauthorized deductions. The most common trend in this category is repossession of cars and houses due to failure to repay back the banks.

Education Cancelation of agreements, non delivery of books, refusal to refund after cancelation.

Travel & Tourism Complaints constitute mostly of refunds for cancelled flight a booking which is often led by miscommunication between the consumers and airline companies.

Property Complaints about body corporates and metre readings, lease agreements nonrefundable deposits. Poor workmanship from suppliers and refusal to fix.

Computers

Medical Services Medical services complaints comprise of inability of Medical Aids Schemes to cover or settle medical bills and unfair terms and conditions.

 

ANALYSIS OF CASES FROM APRIL TO DATE

• Cases to be Conciliated 4382• Consent Agreements 1115• Compliance Notices 332• Non Referrals 262• Withdrawals 95

Complaints Resolution rate in Alternative Dispute Resolution Directorate (I April to August 2012)

PERFORMANCE OF THE UNIT

Summary of work output on complaints

April to August 2012

• Complaints Brought forward -8455• Complaints received –5090• Complaints resolved -4949• Complaints Pending -8596

26

Challenges

• Call center personnel• Call center System • Case Management System • Conciliators • Dedicated Fax Machine • Computers

27

LEGAL DIVISION

28

Overview

The focus of this presentation report from the Legal Division is on :

• Matters that have have been referred by the National Consumer Commission to the National Consumer Tribunal,

• The rulings of the Tribunal • and the Commissions view on the judgments.

29

• No matter that has been referred directly by the National Consumer Commission to the National Consumer Tribunal in any of the matters that has been heard before the National Consumer Tribunal.

• This is in line with the view of the Commission on the enforcement procedure as set out or at least implied in the Act.

• In terms of that procedure, the Commission has a duty to investigate and after an investigation, if it is of the view that a prohibited conducted has taken place, to issue a compliance Notice to which an aggrieved party can object in terms of section 101 of the Act.

• In all the matters where the National Consumer Commission has appeared before the Tribunal, it was as a result of the Parties that had been issued with a Compliance Notice objecting in terms of section 101 and as such,

• The Commission was actually a Respondent and not an Applicant in such matters.

30

The National Consumer Commission issued compliance notice on the following matters all of which were objected to and some of which have already been heard before the National Consumer Tribunal:

•City of Johannesburg•Top TV•Telkom Fixed line•Telkom 8ta

•Telkom in re Prinsloo• BMW South Africa •Multi-choice•Mobile Telephone Networks•Vodacom•Cell C•Volkswagen

31

• Citroen• Primi World• Audi• Auction Alliance• Toyota• Mercedes Benz• Tata• ADT Security: • National Home Builders Registration Council • Dynabidz• Old Fashion Chips

32

City of Johannesburg:•For poor quality service in breach of section 54 for failure to attend timeously to consumer complaints and section 48 for failure to render an accurate account

•The National Consumer Tribunal dismissed the Compliance Notice based on the argument that the NCC did not conclude an investigation and that the Commission cannot issue a compliance notice based on the fact that the Coj was frustrating the Commission in implanting agreed dispute resolution procedures.

33

Top TV:

•For consumer subscriber agreements that are in not compliant with the Act especially section 13, 14, 51, 54 and 56. •The National Consumer Commission withdrew the Notice after it was agreed that the judgment in the Multichoice matter, where the issues were identical, would be applicable to the To TV matter.

34

Telkom Fixed line: •For subscriber agreements and or terms and conditions that are none compliance with the Act particularly sections 14, 19, and regulations 5, 120 and 44 of the Act. •This matter has not yet been set on the roll but both parties have since worked on the agreement and it is ready to be approved as compliant.

Telkom 8ta:

•For subscriber agreements that are none compliant with the Act: For violations of sections 14, 19 and regulations 5, 120 and 44. •The parties agreed to continue working together on the agreement after the issuance of a compliance notice and the agreement is ready to be adopted as compliant.

35

Telkom in re Prinsloo: •For failure to account properly and switching consumer electricity off when he complained in violations of section 40, 48. Application in terms of section 114 of the Act issued by the Commission for interim relief.

•The Commission set aside the Commission application on the basis that the Commission does not have the locus standi in a section 114 application.

BMW South Africa in re Bonn and Rogers

•for failure to comply with sections 54 and 55 which deals with defective goods. Both matters have been heard and the Commission is still awaiting judgment. •It needs to be said though that given the expressions that the Tribunal has made in the Nyarra matter, that the Commission cannot issue a compliance notice without making application to declare a conduct prohibited first, it is expected that the compliance Notices would be set aside.

36

Multi-choice: •For subscriber agreements that are not in line with sections 11, 14, 51, 54 and 56 read with regulation 44. This is anti-bundling sections.

•The Compliance Notice was set aside on the basis that the Commission did not consult with Icasa as provided for in section 102. The Commission did consult with Icasa on the 26th August 2011 but the Tribunal agreed with a contention by Multichoice that the consultation was not consultative enough

Mobile Telephone Networks: •For subscriber agreements that are in violations of sections 14, 48, 54 and 65 as well as Regulations 5, 120, read with 44.

•The matter was originally set down to decide if the Commission was correct by issuing a compliance notice against MTN Pty Ltd instead of MTN Service Provider Company Pty Ltd. The Tribunal ruled in favour of the Commission and the matter was set down to determine if the procedure followed by the Commission was correct.•The Tribunal then ruled that the Commission has failed to follow procedure because the consultation required by section 102 was not a proper consultation. The Commission had consulted Icasa on the 26th August 2011.

37

Vodacom: •For subscriber agreement that is in violation of sections 14, 46, 54, 61, and 63 read with regulation 5, 120, and 44. •Like in the MTN matter, Vodacom also took issue with the Commission at the Tribunal that the Commission was not supposed to issue a compliance notice against Vodacom Pty Ltd but Vodacom Service Provider Company Pty Ltd. Unlike in the MTN matter where the facts were identical, the Tribunal ruled that the Commission was not supposed to issue a compliance Notice against Vodacom Pty Ltd.

•The Tribunal also ruled that a consultation that the Commission held with Icasa was not a proper consultation.

38

Cell C: •For violations of sections 14, 63, 48 and 54 of the Act for airtime and data bundles that expire before three years as prescribed by the Act.

•The Tribunal ruled that it has already decided that the Commission did not properly consult with Icasa and agreed with the contention that the compliance Notice was issued on an out-dated agreement.

•The Commission still maintains that even the current agreement is in violation of the Act and argues that the arguments of whether the agreement is compliant or not cannot be made as a procedural argument but only after hearing arguments on substantive issues. Volkswagen: •For defective products in violations of section 55 and 56 and for an unconscionable conduct in terms of section 40

•The matter has not yet been heard.

39

Citroen:

•For defective vehicle in violation of sections 55 and 56 of the Act. The matter has been heard but the judgment is still outstanding.

• Given what the Tribunal has said in the Nyarra matter, the Commission believes that the Tribunal would set it aside on the basis that the issues aroused before the coming into effect on the Act.

Primi World: •For failure to comply with the section and regulations made for franchises.

•The matter has not been set down yet. Audi •For defective engine and refusal to refund or repair in violations of sections 55 and 56.

•The matter has not been set down yet.• 

40

Auction Alliance: •For conducting an auction in violation of section 45 and all regulations made in terms thereof.

•The matter was heard and the Tribunal has ruled that the Commission issued a compliance notice against the wrong party and that is the Liquidators. •The Commission still maintains that the agreement that it reached with the Liquidators in terms of which they were allowed to sell did not mean that they were not in breach of the Act.

• The Tribunal was also aggrieved by the media statements that were made by the Commission leading to the issuance of the Compliance Notice and also the fact that it was said in the judgment that the Commission issued fines which is incorrect as well.

41

 Toyota: •For selling a defective vehicle and refusing to repair or replace•The matter is still to be set down. Mercedes Benz: •For misleading advertising of a vehicle to a disabled person promising that the vehicle has certain qualities for his disabilities.

•The matter has not been set down. The company has not followed a proper procure prescribed for filling an objection.

 Tata •For selling a defective vehicle and refusing to replace and repair the vehicle.

•The matte is still to be set down.

42

ADT Security:

•For refusal to cancel a contract in violations of section 14 after failing to provide a service. •The matter has not yet been set down.    National Home Builders Registration Council  •For refusal to hold provide timeous service to the consumer who was complaining against a Home Builder.•The matter has not yet been set down. Dynabidz:  •For operating a financial scam as an online auction in breach of section 45 and regulations made in terms thereof. •The matter has not yet been set down, but it looks like the person against whom a compliance notice was issued has absconded.  Old Fashion Chips: •This is a franchise matter where there was no full disclosure.•The matter has not been set down. 

43

Thank You !!!

44

45