WeeklySA_AdminGLITCH:Telkom blames the system for the error
By Thuli Zungu
A class action dubbed “debit order overcharge” has been filed in the Johannesburg High Court against Mutual and Federal and Telkom by clients who allege that they had been erroneously debited higher monthly premiums over certain periods by the two major companies.
The summonses against the two companies were served in June this year. The two financial giants are accused of erroneously debiting higher premiums from their clients contrary to the amounts they signed for when taking insurances for the devices. Five consumers, who are applicants in the matter and who have been their clients for the past few years, discovered that there were overcharged amounts varying from R10 to R40 plus per month since the inception of their device insurance contracts.
They believe that they are not the only ones affected by Telkom’s systems error and it could not be possible that the system only picked out only the five of them, hence they opted to institute a class action instead.
Those who renewed their contracts noticed that the amounts allegedly increased when they took their second contract. These device contracts are applicable for only two years although this is not entirely clear in the contract. The applicants in court papers have questioned the duration of time it had taken Telkom to pick up the systems error. Telkom and Mutual and Federal only took action after the class action was lodged with the Johannesburg High Court.
The relief sought by these consumers from the court is that all Telkom customers be refunded all the money that had been overcharged from inception of their contracts until to date.
Telkom is also requested to cease the overcharging immediately and to adjust debit orders of all the customers affected by their systems error over the past few years.
They are also seeking an order directing Telkom and Mutual and Federal to open their books for an independent auditor to verify the exact number of affected customers as well as the exact overcharged amounts. Mutual and Federal is represented by Bowman’s Attorneys while Telkom is being represented by ENS Africa.
Gareth Miller the litigation funder said ENS Africa had confirmed to Advocate Douglas J Shaw about the refund to customers at the end of August this year and undertook to start the reimbursement process from September 10, 2021 and to finalise the process before the end of September. According to Telkom’s current annual report,
The company entered into a cell captive arrangement with Mutual and Federal and Guardrisk. Both Mutual and Federal underwrite the Telkom device insurance.
The customer is responsible for paying the monthly premium. It further states that the device insurance allows Telkom’s customers to insure their devices against theft, accidental loss and accidental physical damage. The life insurance allows customers to ensure lives with the main product being the death benefit cover.
Telkom is exposed to the risk that should there be insufficient capital available to honour the claims made by the policyholders in the cell captive arrangement, it has to recapitalise the cell captive.
Therefore, Telkom has accepted a sizeable insurance risk from the third parties (policy holders) in a controlled manner by investing in the businesses that is liable to compensate the third party in the event a specified risk occurs, according to the company’s annual report.
Their audited financial statements, shows that premiums earned for 2020 and 2021, combined, equates to R294 million.
Telkom customers who have the same problem have been requested to email Advocate Shaw at insurancerefund21@gmail.com if they have not received their refund before the end of September 2021 or if they have had any other insurance- related problems.
