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Find an Exit Door to Certain Service Agreements

#DebtExit

On the news side of things – many citizens anxiously awaited a new open door for South Africa. With so-called wishes in all probability coming true, aka recent highlights, perhaps the economy has a chance to start gaining momentum for a change. But, putting aside national politics – what exit doors do consumers usually run to – in other words: what challenges do they face when trying to find an escape route for certain service agreements or contracts they find themselves in? Is it at all possible for consumers to get out of a gym membership or phone contract? And, what can they do to be free of their own personal dilemma?

Matthys Potgieter, spokesperson and debt expert at DebtSafe, says that consumers regularly find themselves in unwanted service agreements. This includes things like a 24-month gym membership or cellphone contract.

Potgieter suggests the following questions and answers (Q and A’s) that consumers should take into account to take care of their own particular situation and service agreement:

Cellphone Contract

Questions:

  1. What does a cellphone contract usually entail?
  2. Is there anything specific that a consumer needs to take into account when it comes to cellphone contracts?
  3. What about the cancellation process of a cellphone contract?
  4. What other alternatives can consumers consider?

Answers:

  1. This type of contract refers to a device, airtime, data and SMS. It usually consists of a contract term of 24 months (two years).
  2. Caveat Scriptor – consumers need to note that not all agreements read the same – on cancellation the requirements stipulated in the agreement must be followed by the letter. The time of cancellation will play a major role as the agreement includes the purchase of the device, and the remaining portion of the purchase price that will be influenced by the time of cancellation. Cancellation requires a written notice which generally excludes SMS. Also, take note of the requirements involving the cancellation process, on the grounds if the service provider breached the agreement.
  3. Consumers are allowed to cancel contracts at any time. But, they have to give the company 20 days’ written notice. Do note: they still have to pay anything owed to the supplier (mobile company / service provider) up to the date of cancellation. Most companies might charge the consumer a cancellation fee.
  4. It is always a good thing (especially still early in the year) for consumers to take a look at their current cellphone contract. Consumers can weigh a contract versus pre-paid against each other and consider the package which will suit them (financially) best.

Gym Membership

Questions:

  1. Can consumers ask for a 12-month gym membership contract instead of a 24 month one?
  2. Is automatic contract renewals allowed?
  3. Is a consumer allowed to cancel a gym contract before his/her term ends and how does a consumer go about the cancellation process and what should be taken into account?
  4. What other con’s regarding gym membership that consumers have to know about?

Answers:

  1. Yes, consumers are allowed to ask for a 12-month contract instead of a 24-month membership.
  2. No, gymnasiums have to notify the consumer (in writing) between 40 and 80 business days before their contract’s expiry date. Consumers have the choice to continue their contract, change its terms or cancel it.
  3. Yes, consumers are allowed to cancel contracts at any time. But, they have to give the company 20 days’ written notice. Do note: they still have to pay anything owed to the gym (company) up to the date of cancellation. Most companies might charge the consumer a cancellation fee.
  4. It might happen that the contract does not include a cancellation clause and that the consumer is left to honour the entire contract or agreement. And, another con is: if a consumer does not keep up with payments – the company can list the consumer via a credit bureau as a ‘bad payer’ – which has an effect on the consumer’s credit score.

“Consumers need to ask the right questions before they go into any service-type agreement,” says Potgieter. Finding an exit door out of these type of contracts is not easy, but by taking the above into account, consumers can prevent the uncomfortable journey of legal action, for example. Potgieter furthermore advises consumers to seek legal advice via an accredited lawyer if they find themselves in a problematic situation.

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