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Overview of CPA “THE LAW OF UNINTENDED CONSEQUENCES? ” BY JOHAN BARNARD
WHAT IS THE CONSUMER PROTECTION ACT?
INTRODUCTION • • Past, Consumer law lived on edge of contract law and common law. Consumer law has a great history even before the National Credit Act was signed on 24 April 2009. (consequences of this date) Substantive law – come into effect 18 Months after this date. Political reasons? Significance of Soccer World Cup 2010 and Section 47. Looking at the CPA itself: • It is very dense and complicated • Comprises of 122 sections, running over 100 pages • Joins other legislation – similarly complex (like ECT, NCA) CPA Act in broad deals with: • Unfair contract terms, warranties, liability for damaged or defective goods and advertising and product labelling. • Also deals with 21 st century problems like Customer loyalty programs (ebucks) and pyramid schemes.
Overarching purpose of the Act • • The promotion and advancement of the social and economic welfare of consumers in South Africa; To Promote a fair, accessible and sustainable marketplace for consumer products and services. Establish national norms and standards to ensure consumer protection. The promotion and protection of the economic interest of consumers; The establishment of a legal framework for the achievement and maintenance of a consumer market (including the regulation of unfair or deceptive practices and control of unfairness in contracts); The enhancement of consumer choice and confidence The provision of a system of consensual resolution of disputes arising from consumer transactions and a system of redress for consumers, Promotion of consumer education.
OUTLINE AND ARRANGEMENT OF CPA q In addition to the customary chapters on q q interpretation, purpose and application (Chapter 1), enforcement (Chapter 6) and general provisions (Chapter 7) additional chapters incl. Fundamental consumer rights(Chapter 2) Protection of consumer rights (Chapter 3) Business names and industry codes and conduct (Chapter 4) National Consumer Protection Institutions ( Chapter 5)
Who may lodge consumer complaints: Ø An individual Ø An authorised person acting on behalf of another; Ø A person acting as a member or in the interest of an affected group or class; or Ø A person acting in the public interest (amicus curiae/leave of tribunal or court association, acting on the interests of its members).
The Consumer Protection Act applies to the following: o Every transaction occurring within the Republic of South Africa; o Promotion or supply of any goods and services occurring within the Republic; and o Goods or services that are supplied or performed, in the Republic, in terms of transactions mentioned in the Act.
The Act is NOT applicable in respect of: q Goods or services promoted or supplied to the state q Industry-wide exemption being granted to regulatory q q authorities Credit agreements, in terms of the National Credit Act, but not goods or services Services under employment contracts Agreements giving effect to collective bargaining agreements; and Agreements giving effect to bargaining agreements (Section 213 of the Labour Relations Act).
The Consumer Protection Act has two (2) implementation dates: 1. Early effective date: Twelve (12) months after signature (April 2010) – Chapters 1 and 5, Section 120 (regulations) will become operational; and 2. General effective date: Eighteen (18) months after signature (October 2010) – date on which all provisions of the Act will be applicable.
WHO IS A ‘CONSUMER’? q Consumers are persons (people) to whom goods or services are marketed, who have entered into transactions with suppliers, users of particular goods or recipients/beneficiaries of services.
WHAT ARE CONSUMER RIGHTS? q The Bill of Rights enshrines the rights of South Africans - including consumer rights. The Consumer Protection Act further outlines these key consumer rights, of which all South African consumers should be aware. These include the following: 1. 2. 3. 4. 5. 6. 7. 8. 9. Rights to Equality in the Consumer Market and Protection Against Discriminatory Marketing Practices; Right to Privacy Right to Choose Right to Disclosure of Information Right to Fair and Responsible Marketing Right to Fair and Honest Dealing Right to Fair, Just and Reasonable Terms and Conditions Right to Fair Value, Good Quality and Safety, and Right to Accountability by Suppliers
CONSUMER RIGHT NO. 1 RIGHT TO EQUALITY IN THE CONSUMER MARKET AND PROTECTION AGAINST DISRIMINATORY MARKETING PRACTICES
RIGHT NO 1: EQUALITY IN THE CONSUMER MARKET q What does this mean for the ordinary consumer? • • Your right to free and unlimited access to goods and services Your right to high-quality goods and services Your right to fair pricing of goods and services Your right to lodge complaints
CONSUMER RIGHT NO 2 RIGHT TO PRIVACY
RIGHT NO 2: PRIVACY q What does this mean for the ordinary consumer? o o o Your right to restrict unwanted direct marketing Your right to discontinue receipt of direct marketing at any time S 12 – time for contacting consumers
CONSUMER RIGHT NO 3 RIGHT TO CHOOSE
RIGHT NO 3: RIGHT TO CHOOSE q What does this mean for the ordinary consumer? - Your right to select the supplier of your choice (s 13) Your right to cancel or renew a fixed-term agreement (What about lease agreements? ) Your right to request pre-authorisation for repairs or maintenance services Your right to cancel direct marketing contracts within the cooling-off period
RIGHT NO 3 CONTINUED - Your right to cancel advance reservations, bookings or orders Your right to choose or examine goods, even after purchase and delivery Your right to return goods and seek redress for unsatisfactory services Your right to retain and not pay for unsolicited (unrequested) goods or services
CONSUMER RIGHT NO 4 RIGHT TO DISCLOSURE OF INFORMATION
RIGHT NO 4: DISCLOSURE OF INFORMATION q What does this mean for the ordinary consumer? Your right to information in plain and understandable language v Your right to disclosure of prices of goods and services v Your right to product labelling and trade description v
RIGHT NO 4 continued. . . Your right to clear disclosure of reconditioned or grey market goods v Your right to sales records (receipts) v Your right to disclosure by intermediaries v Your right to identification of deliverers, installers and others v
CONSUMER RIGHT NO 5 RIGHT TO FAIR AND RESPONSIBLE MARKETING
RIGHT NO 5: FAIR AND RESPONSIBLE MARKETING q What does this mean for the ordinary consumer? • • • Your right to protection against bait marketing Your right to protection against negative option marketing Your right to protection against direct marketing Your right to protection in catalogue marketing Your right to protection in terms of trade coupons and similar promotions Your right to protection in customer loyalty programmes
CONSUMER RIGHT NO 6 RIGHT TO FAIR AND HONEST DEALING
RIGHT NO 6: FAIR AND HONEST DEALING q What does this mean for the ordinary consumer? § § § Your right to protection against unconscionable conduct Your right to protection against false, misleading or deceptive representations Your right to protection against fraudulent schemes and offers
RIGHT NO 6 continued. . . § § § Your right to protection against pyramid and related schemes Your right to assume that suppliers are entitled to sell goods Procedure of sales by auction Your right to changes, deferrals and waivers, and substitution of goods Your right to protection against over-selling and over-booking
CONSUMER RIGHT NO 7 RIGHT TO FAIR, JUST AND REASONABLE TERMS AND CONDITIONS
RIGHT NO 7: FAIR, JUST AND REASONABLE TERMS & CONDITIONS q What does this mean for the ordinary consumer? - Your right to protection against unfair, unreasonable or unjust contract terms Your right to obtain notice for certain terms and conditions Your right to obtain free copies of agreements/contracts
RIGHT NO 7 continued. . . - - Your right to refuse prohibited transactions, agreements, and terms or conditions Your right to approach the Court to ensure fair and just conduct, terms and conditions
CONSUMER RIGHT NO 8 RIGHT TO FAIR VALUE, GOOD QUALITY AND SAFETY
RIGHT NO 8: FAIR VALUE, GOOD QUALITY & SAFETY q What does this mean for the ordinary consumer? Your right to demand quality service v Your right to safe, good quality goods v Your right to implied warranty of quality v Your right to a warranty on repaired goods v Your right to receive warnings on the fact and nature of risks v
RIGHT NO 8 continued. . . Your right to recovery and safe disposal of designated products or components v Your right to have products monitored for safety and/or recalled v Your right to claim damages for injuries caused by unsafe/defective goods v
CONSUMER RIGHT NO 9 RIGHT TO ACCOUNTABILITY FROM SUPPLIERS
RIGHT NO 9: ACCOUNTABILITY FROM SUPPLIERS q What does this mean for the ordinary consumer? Ø Ø Your right to protection in lay-bye agreements Your right to protection with regard to prepaid certificates, credits and vouchers, and access to prepaid services and service facilities
Positive Aspects of CPA q Well-intended and long-overdue q Large portion of consumer sector in SA is poor and q q q illiterate Noble aims and reflect an international trend Promote and advance social and economic welfare or all consumers in SA Act aims to have a unifying effect. Easy to find law now and to just implement it. Overall seems that Act is a step in the right direction. Act comes at a cost though.
Negative aspects of CPA – Potential Pitfalls. q No Regulations as yet so we don’t have a full picture of Act. q Scope is far-reaching –Designed to cover virtually every form of q q q transaction one could imagine involving a consumer of goods or services “occurring” in South Africa. Definition of “Services” Cancelling fixed term leases? Regulatory Scheme to Back Act up. Which forum to use? Most controversially, the Act introduces a system of product liability on suppliers for damage caused by the supply of defective goods.
Negative aspects of CPA – Potential Pitfalls cont. . q The Act applies to any goods or services promoted or supplied q q in South Africa in the ordinary course of the suppliers business. Its reach is incredibly broad. Contracting out of liability in certain circumstances will be a contravention which could lead to penalties in the form of administrative fines. Suppliers should be advised to get to grips with the provisions of the Act or they may be heavily fined for non-compliance. What does this mean for the consumer? This will in turn place a heavy burden on the general legal practitioner.
WHERE TO COMPLAIN? o The Consumer Protection Act aims to promote consumer activism, by making provision for the accreditation of consumer groups tasked with lodging complaints on behalf of consumers, as well as making available support for activities, such as consumer advice, education, publications, research and alternative dispute resolution through mediation or conciliation. o As such, the Act gives rise to the establishment of the National Consumer Commission, a body assigned to investigate consumer complaints, as well as the National Consumer Tribunal, the latter of which was created by the National Credit Act in September 2006, and is responsible for the adjudication of violations and transgressions of the National Credit Act and the Consumer Protection Act.
How complaints work? q If the Commission finds that there has been prohibited conduct it q q may issue a compliance notice. (ex. Failure to disclose) If the requirements of the compliance notice are satisfied, the Commission will issue a compliance certificate. Should the compliance notice not be satisfied, the Commission will be entitled to impose an administrative fine, which it will do through the Tribunal. The Tribunal can impose a fine of 10% of the annual turnover of the business in the preceding year or R 1 million whichever is greater. NOTE: Although these provisions under the Act are severe, a business will first be given an opportunity to comply with or to challenge the compliance notice.
IMPORTANT CONTACT NUMBERS • • Consumer Help Line, via the dti Customer Contact Centre: 0861 843 384 the dti Office of Consumer Protection (OCP): 021 394 1436/1558/1076 the dti E-mail: [email protected] gov. za the dti Website: www. thedti. gov. za National Consumer Tribunal (NCT): (012) 663 5615 NCT E-mail: [email protected] org. za NCT Website: www. thenct. org. za
CONCLUSION q q q complexities that will be associated with coming to terms with the Act’s requirements in practice. The onerous duties the Act imposes upon suppliers will mean that these people and organisations will have to develop expertise in this area. successful implementation of this Act is going to come at a great cost. The reality is that there is only one way of recouping these costs: it will be added to the price of the goods or services, and will hit us where we (and especially the poor) will feel it most ― our pockets. So much for consumer benefit. Somali or Bangladeshi-run stores. lot of hard work to do FOR SUPPLIERS.