ABOUT THE ACT

The Consumer Protection Act will fundamentally change the way business is done in South Africa. It requires businesses to transform the way in which they interact with consumers and to ensure that all their dealings with consumers are fair, reasonable and honest. 

The challenge that the suppliers of goods or services will face is that it is not just a matter of simple compliance.  Whilst many organisations may have the in-house skills to interpret the Act in the context of their business, they will find it difficult to implement, as it is cross-cutting and will require behaviour changes across the organisation.

 Effective risk management will require, firstly, that everyone across the organisation is attuned to how he or she could place the organisation at risk and, secondly, that a sustainable change to functional behaviour is instituted. The penalties are severe - a supplier who is found by the Tribunal to have contravened the Act may face:  

· An administrative fine up to 10% of annual turnover or

· A fine of R1 Million, whichever is the greatest.

The implemetation of the Act has been postponed until the end of March 2011.  An important exception is the harsh Section 61, which holds suppliers liable for damages caused by defective goods even if the suppliers were not negligent. This section applies in respect of any goods that were first supplied to a consumer on or after 25 April 2010.

South Africa’s mercantile law has often in the past been criticised for favouring powerful businesses and organisations over the ‘little man’, with the general approach applied being ‘let the buyer beware.’   Previously, it was virtually impossible for consumers who had suffered losses as a result of defective goods purchased from merchants to sue those merchants for damages.

Under the new Consumer Protection Act, consumers enjoy an array of protections, which include the legal right to demand quality service and safe, good quality goods. Consumers are now entitled to cancel agreements and bookings under certain circumstances.

A consumer no longer needs to prove fault on the part of an importer, producer, importer, distributor or retailer of goods in order to succeed in a legal claim in connection with any harm or loss suffered by a consumer that was caused by a defect in the goods supplied to the consumer. 

This has opened the way for massive American style liability suits.  Apart from this exposure to civil liability, a business that fails to comply with the Act could face a fine of R1 000 000 or 10% of its annual turnover, whichever is the greater.

Tick box compliance with the provisions of the Act will not be sufficient− the organisations covered by the Act will need to change the way they do business.

PURPOSE AND POLICY

 3. (1) The purposes of this Act are to promote and advance the social and economic welfare of consumers in South Africa by—

(a) establishing a legal framework for the achievement and maintenance of a consumer market that is fair, accessible, efficient, sustainable and responsible for the benefit of consumers generally;

(b) reducing and ameliorating any disadvantages experienced in accessing any supply of goods or services by consumers—

(i) who are low-income persons or persons comprising low-income communities;

(ii) who live in remote, isolated or low-density population areas or communities;

(iii) who are minors, seniors or other similarly vulnerable consumers; or

(iv) whose ability to read and comprehend any advertisement, agreement, mark, instruction, label, warning, notice or other visual representation is limited by reason of low literacy, vision impairment or limited fluency in the language in which the representation is produced, published or presented;

(c) promoting fair business practices;

(d) protecting consumers from—

(i) unconscionable, unfair, unreasonable, unjust or otherwise improper trade practices; and

(ii) deceptive, misleading, unfair or fraudulent conduct;

(e) improving consumer awareness and information and encouraging responsible and informed consumer choice and behaviour;

(f) promoting consumer confidence, empowerment, and the development of a culture of consumer responsibility, through individual and group education, vigilance, advocacy and activism;

(g) providing for a consistent, accessible and efficient system of consensual resolution of disputes arising from consumer transactions; and

(h) providing for an accessible, consistent, harmonised, effective and efficient system of redress for consumers.

FUNDAMENTAL CONSUMER RIGHTS

• Right of equality in consumer market
• Protection against discriminatory marketing
• Reasonable grounds for differential treatment in specific circumstances
• Equality court jurisdiction over this Part
• Consumer’s right to privacy
• Right to restrict unwanted direct marketing
• Regulation of time for contacting consumers
• Consumer’s right to choose
• Consumer’s right to select suppliers
• Expiry and renewal of fixed-term agreements
• Pre-authorisation of repair or maintenance service
• Consumer’s right to cooling-off period after direct marketing
• Consumer’s right to cancel advance reservation, booking or order
• Consumer’s right to choose or examine goods
• Consumer’s rights with respect to delivery of goods or supply of service
• Consumer’s right to return goods
• Unsolicited goods or services
• Right to disclosure and information
• Right to information in plain and understandable language
• Disclosure of price of goods or services
• Product labelling and trade descriptions
• Disclosure of reconditioned or grey market goods
• Sales records
• Disclosure by intermediaries
• Identification of deliverers, installers and others
• Right to fair and responsible marketing
• General standards for marketing of goods or services
• Bait marketing
• Negative option marketing
• Direct marketing to consumers
• Catalogue marketing
• Trade coupons and similar promotions
• Customer loyalty programmes
• Promotional competitions
• Alternative work schemes
• Referral selling
• Agreements with persons lacking legal capacity
• Right to fair and honest dealing
• Unconscionable conduct
• False, misleading or deceptive representations
• Fraudulent schemes and offers
• Pyramid and related schemes
• Consumer’s right to assume supplier is entitled to sell goods
• Auctions
• Changes, deferrals, and waivers and substitution of goods
• Over-selling and over-booking
• Right to fair, just and reasonable terms and conditions
• Unfair, unreasonable or unjust contract terms
• Notice required for certain terms and conditions
• Written consumer agreements
• Prohibited transactions, agreements, terms or conditions
• Powers of court to ensure fair and just conduct, terms and conditions
• Right to fair value, good quality and safety
• Definitions applicable to this Part
• Consumer’s rights to demand quality service
• Consumer’s rights to safe, good quality goods
• Implied warranty of quality
• Warranty on repaired goods
• Warning concerning fact and nature of risks
• Recovery and safe disposal of designated products or components
• Safety monitoring and recall
• Liability for damage caused by goods
• Supplier’s accountability to consumers
• Lay-by’s
• Prepaid certificates, credits and vouchers
• Prepaid services and access to service facilities
• Supplier to hold and account for consumer’s property
• Deposits in respect of containers, pallets or similar objects
• Return of parts and materials

PROTECTION OF CONSUMER RIGHTS AND CONSUMER’S VOICE

• Consumer’s rights
• Protection of consumer rights
• Enforcement of rights by consumer
• Alternative dispute resolution
• Initiating complaint to Commission

GET A COPY OF THE ACT

Advocate N J Melville has written a book which interprets the Act and gives practical examples as illustrations.