Unfair marketing tactics involving customer referrals, bills that were not updated and failure to cancel contracts on request.
These are some of the bad business practices that got Cartrack into hot water with the National Consumer Commission (NCC) recently, resulting in the tracking company being slapped with a R5m administrative fine by the National Consumer Tribunal.
It was also ordered to pay another R5m to settle complaints laid by 167 customers after an initial 210 complainants were received by the NCC.
According to the settlement agreement seen by Sowetan Consumer, the matter started with one complaint in July, and Cartrack made a commitment to resolve it.
However, investigations led to 209 more consumers making various complaints against the company.
NCC’s probe identified six contraventions of the Consumer Protection Act (CPA).
It found Cartrack used unfair marketing tactics by promising consumers a rebate or other benefits for helping the company sell its services to other people. Section 38 of the CPA prohibits "referral selling“, where a supplier induces a consumer to buy goods or services by promising rebates, commissions, or other benefits in exchange for providing the names of other consumers.
The company also failed to update the bills of customers who paid up after skipping a payment. The company was found to have used harassment and coercion tactics; at least 19 customers were subjected to this practice.
“Cartrack was making customers enter into agreement on terms that are excessively one-sided and involve misleading conduct and require customers to waive their rights,” read the settlement. At least 82 clients were affected by this conduct.
The company was also found to have failed to disclose material terms and conditions of the agreement to customers during the marketing of its services. It also refused to cancel contracts on request and imposed excessive penalties on customers who wanted to cancel their contracts. About 66 clients were subjected to this conduct.
Cartrack told Sowetan Consumer that it has since refined its terms and conditions and that the 210 complaints were minor when seen in the context of its two million subscribers.
“The matters raised related solely to certain aspects of the company’s subscriber agreements which, at the request of the NCC, required enhanced clarity,” said the company.
“The 210 complaints lodged with the NCC over a five-year period represent a very small proportion of Cartrack’s South African customer base. Such a volume of complaints is not unexpected for a business of this scale. While Cartrack settled some complaints, other complaints were dismissed by the NCC,” said Cartrack.
