PROMOTIONAL COMPETITIONS: WHEN IS A PROMOTIONAL COMPETITION REGULATED BY THE CONSUMER PROTECTION ACT, 68 OF 2008 (“THE CPA”)

PROMOTIONAL COMPETITIONS: WHEN IS A PROMOTIONAL COMPETITION REGULATED BY THE CONSUMER PROTECTION ACT, 68 OF 2008 (“THE CPA”)

If you are a promoter of a competition, then chances are that the CPA is likely to apply to that competition. It is important for the promotor to know when a promotional competition is regulated by the CPA and to comply with its requirements in order to avoid the risk of incurring penalties. This article will examine the relevant provisions in the CPA relating to promotional competitions and highlight the most important obligations placed on a promoter when running a promotional competition.

PROMOTIONAL COMPETITIONS IN TERMS OF THE CPA:

Section 36 of the CPA governs promotional competitions and defines a promoter as “a person who directly or indirectly promotes, sponsors, organises or conducts a promotional competition, or for whose benefit such a competition is promoted, sponsored, organised or conducted.”

A promotional competition is further defined in the CPA as “any competition, game, scheme, arrangement, system, plan or device for distributing prizes by lot or chance if:

  • it is conducted in the ordinary course of business for the purpose of promoting a producer, distributor, supplier, or association of any such persons, or the sale of any goods or services; and
  • any prize offered exceeds the threshold prescribed in terms of subsection (11) (currently R1.00),

irrespective of whether a participant is required to demonstrate any skill or ability before being awarded a prize.

Given the rather wide definitions in the CPA and the low value threshold, it is safe to say that the vast majority of competitions conducted in South Africa will be governed by the CPA.

HOW A PROMOTOR CAN COMPLY WITH THE CPA:

Very importantly, a promoter of a promotional competition must not require any consideration to be paid by the participant (e.g. the participant should not be asked to pay for the opportunity to participate in the competition or participation in the competition should not require the purchase of goods and services at a price that is more than what is ordinarily charged without the opportunity of taking part in the competition) other than the reasonable costs for posting  or transmitting an entry form.

For the purposes of ensuring fairness, the CPA also requires that a promoter may not award a prize to any person who is a director, member, partner, employee or agent of, or consultant to, the promoter or to the supplier of any goods or services in respect of that competition.

Before each competition, the promotor must prepare a set of competition rules which should be made available to any participant upon request. Regulation 11(6) of the CPA also requires that a copy of the competition rules (together with certain important information) be retained for a period of at least three years.

A promotor must ensure that an offer to participate in a promotional competition must clearly state the following:

  • the competition or benefit to which the offer relates;
  • the steps required to participate in the competition or accept the offer;
  • the basis on which the results of the competition will be determined;
  • the closing date for the competition;
  • the medium through which the results of the competition will be made known; and
  • the person from whom, the place where and the date / time on which a successful participant may receive the prize.

The promoter must further ensure that an independent accountant, registered auditor, attorney or advocate oversees and certifies the conducting of the competition and must report this through the promoter’s internal audit reporting or other appropriate validation or verification procedures.

The CPA imposes a significant burden on promotors who wish to run a promotional competition, both from an administrative and financial perspective. It is therefore important for a promoter to be aware of and adhere to these requirements as far as possible to prevent non-compliance and possible punitive measures being taken against the promoter.

Let us know if you require any assistance in drafting promotional competition rules or overseeing and certifying the running of the competition.

DISPLAYED PRICES DIFFERING FROM ACTUAL PRICE – WHICH MUST I PAY?

DISPLAYED PRICES DIFFERING FROM ACTUAL PRICE – WHICH MUST I PAY?

Recently we have noticed a few retailers displaying notices in their stores stating that even where shelf prices have not been updated to reflect the updated value added tax (“VAT“) rate on certain products (now being 15%), and the shelf display price still reflects VAT to be 14% on that product, consumers will be charged for those products at the new VAT rate of 15% at the till point. In practice it means that the price on display may be R114 but at till point the price would be R115. From a Consumer Protection Act (“CPA“) point of view, this raised a few concerns, the biggest being whether a consumer can be legally obligated to pay a higher price than the price displayed.

The VAT rate increase

For the first time in many years, the VAT rate was increased from 14% to 15% on all taxable goods or services supplied by VAT registered vendors, effective from 1 April 2018. Although the increase is only 1% (which seems like a negligible amount), this will have a large impact on consumers and businesses alike, and according to estimates, will ultimately bring in an estimated R22,9 billion for government.

The VAT increase started to apply on1 April 2018, and you can expect to pay VAT at the new rate on any invoices issued or payments made from 1 April 2018. However, if goods were supplied or services rendered before 1 April 2018, you will not be required to pay VAT at 15% on those goods or services, even if only paying for them after 1 April. Therefore, where you are paying for services in arrears or purchased goods on credit during the interim period (22 February 2018 – 31 March 2018), make sure that you are paying the correct VAT rate for those goods and services, even if you are only paying for them after 1 April 2018.

The CPA provisions on prices

The CPA, in section 23(3), requires suppliers to display the price in relation to any goods that are displayed for sale. Further on in section 23(6), the CPA states that a supplier must not require a consumer to pay a price that is higher than the displayed price or, where more than one price is displayed for the same good/service, the supplier must not require the consumer to pay the higher of the two (or more) prices.

Therefore, suppliers are required to display the price that the consumer will pay for goods/services when displaying goods/services for sale and must not require consumers to pay more than this displayed price – “the price you see is the price you pay”.

However, section 23(7) states that subsection (6) does not apply where the price of any goods or services are determined by or in accordance with public regulation.

Applicability in practice

When reading the CPA, it is clear that, as a consumer, you should only be required to pay the actual price displayed and the lowest price displayed where there are multiple displayed prices. However, section 23(7) of the CPA “throws a spanner in the works” with the VAT rate increase and the requirement to pay a price that is more than the displayed price.

The VAT Act is “public regulation” for purposes of section 23(7) of the CPA, and where suppliers are VAT vendors, VAT will be added to goods and services and VAT will therefore be a determining factor used to calculate the price of goods and services. So, the rule that the supplier may not charge an amount higher than the price displayed will not apply in the scenario where the displayed price differs to the amount charged due to the VAT increase.

Further to this exception in section 23(7) of the CPA, the commissioner for SARS granted permission, in terms of proviso (iii) of section 65 of the VAT Act, for suppliers to require consumers to pay the increased VAT rate on goods and services despite the displayed price still indicating that VAT is included at 14% PROVIDED that the supplier prominently displays notices at the entrances to the premises and at all points where payments are made (i.e. consumers must be aware of these notices when in the store).

Conclusion

Generally speaking, consumers do not have to pay a higher price than the price displayed and where there are two prices for the same product displayed, the consumer can insist on paying the lower price.

Regarding the VAT increase, this CPA “right” is not available where the supplier has adequately notified consumers that the displayed prices may differ from prices at till point – due to the VAT increase. Suppliers have until 31 May 2018 to ensure that their shelf display prices have been updated to account for the VAT increase and to remove the notices in store that shelf and till prices may differ.

PRODUCT LIABILITY: IS THE SUPPLIER LIABLE FOR HARM SUFFERED BY A CONSUMER?

PRODUCT LIABILITY: IS THE SUPPLIER LIABLE FOR HARM SUFFERED BY A CONSUMER?

In a previous article entitled “The responsibility of a supplier to conduct a consumer product safety recall“, we dealt with various matters around product safety recalls. As a follow-on to that, this article deals with the “product liability” concept which goes hand-in-hand with “product safety recall“.

INTRODUCTION

From as far back as the early days of the Romans, a plethora of claims for damage suffered or loss incurred as a result of defective or unsafe goods or products have been a part of the ever-evolving legal fraternity. These claims ranged from a claim against a horse-drawn coach manufacturer, to a claim against a man who sold a diseased horse which later dies in the possession of the buyer, or anything in between. To date, product liability claims is still a practice in most legal systems around the world – including South Africa.

PRODUCT LIABILITY

In essence, the concept “product liability” refers to a supplier’s liability towards the consumer or third-party for damage suffered or for loss incurred as a result of the supplier’s defective or unsafe goods/products supplied.

Product liability is regulated by the Consumer Protection Act 68 of 2008 (the “CPA“). As the name suggests, the main objective of the CPA is to regulate relations between the supplier and the consumer. In line with that objective, the provisions of the CPA relating to product liability focus on regulation of the relationship between the supplier (i.e. manufacturer, designer, distributor or retailer) and the consumer, rather than between suppliers themselves.

SUPPLIER’S LIABILITY FOR HARM SUFFERED BY A CONSUMER

Until the inception of the CPA, claims arising from damage suffered or loss incurred by a consumer or third party as a result of defective product were regulated by our common (i.e. uncodified) law. As such, liability for such damage or loss could only be determined in terms of the common law of delict. Given the burden an aggrieved party is required to discharge in order to succeed with a delictual claim, it was often difficult for many consumers to successfully prove their claims in this regard.

To plug this gap, the Legislature introduced a different approach with regards to the consumer’s burden of proof through the CPA. In terms of section 61 of the CPA, a supplier may be held liable to a consumer for any damage or loss arising from (i) the supply of a defective/unsafe product or (ii) where damage or loss arises from the supplier’s failure to provide adequate information relating to the risks associated with the use of a product. The main benefit to the consumer lies in the fact that the supplier may be held liable regardless of whether it (the supplier) was negligent or not.

Consideration of whether there is any probability of success in a claim in terms of section 61 hinges on the following three questions:

  • whether goods and/ or services as defined in CPA are involved;
  • if so, whether the person (against whom the claim has been instituted) is in fact the “supplier” as defined in the CPA; and
  • whether the claimant suffered harm as a result of defective goods supplied by the such supplier?

CONCLUSION

The purpose of this article is to provide an insight into the supplier’s liability towards the consumer for damage or loss arising from supply of defective goods/product and should not be considered as advice.

In our last article of this series, we will discuss some aspects around whether the role-players in the supply chain can decide, among each other, who will be liable to the consumer.

OBSERVATIONS ON COMPANY NAMES

OBSERVATIONS ON COMPANY NAMES

Choosing a name for your new company may seem simple, but what may not be clear is that you cannot call your company whatever you want, as South African law regulates what a company name can and cannot be. Section 11 of the Companies Act, 71 of 2008 (“the Companies Act“) sets out the criteria for company names. In essence, the name of your company may comprise of words in any language together with any words or letters / numbers / symbols and / or punctuation marks. However, the name of your company may not be the same (or similar to) the name of another company or close corporation, someone else’s defensive name (a name registered up to two years which is aimed at preventing trade marks from being included in the new company name), business name or registered trademark or a mark on any merchandise. Your company name must not falsely imply that the company is part of any other person / entity, is an organ of state, is owned by a person having any particular educational designation, who is a regulated person or is owned by any government or international organisation. Importantly, your company name must not include anything that may constitute propaganda for war, incitement of imminent violence or advocacy of hatred against any right entrenched in the Bill of Rights.

Registered vs trading names:

The registered name of a company is the name which has been reserved, approved and then registered with the Companies and Intellectual Property Commission (“the CIPC“). In terms of the Companies Act, a company is required to display its registered name (and registration number) on all forms, notices and correspondence with others and failure to do so constitutes an offence.

Despite that, it is common practice for entrepreneurs to acquire shelf companies or to register a company with a non-distinctive name and to simply trade under a different name. Although a trade name does not need to be registered, the assumption is that a reasonable level of investigation would have been conducted to ensure that a trade name is not already in use. In reality, this often leads to the infringement of third party trademarks or causes confusingly similar names to exist.

For the above reason, the Consumer Protection Act 68 of 2008 (“the CPA“) has introduced changes to the way in which “trading as” names (which the CPA calls “business names“) may be used. The provisions relating to business names are contained in sections 79 to 80 of the CPA, and will only come into effect upon a date to be determined by the Minister of Trade and Industry (“the Minister“) and published in the Gazette. This has not happened yet, but it is likely that when it does, the Minister will allow a certain amount of time after the published date for companies to comply with these new provisions.

The intention of the legislature in this regard, is to seek to enforce the consumer’s right to information concerning suppliers. The aim is to prevent a situation where a business would trade under one name but fail to disclose the identity of the actual entity behind the transactions, thereby frustrating the attempts by the consumers to seek redress in pursuing the correct entity.

What you need to know and the CPA’S requirements

In terms of section 79 of the CPA:

A person must not carry on business, advertise, promote, offer to supply or supply any goods or services, or enter into a transaction or agreement with a consumer under any name except:

  • the person’s full name as:
  • recorded in an identity document or any other recognised identification document, in the case of an individual; or
  • registered in terms of a public regulation, in the case of a juristic person; or
  • a business name registered to, and for the use of, that person in terms ofsection 80, or any other public regulation.

What the above means is that an individual or company (as the case may be) may not operate / carry on business with a business name unless it is registered in terms of the CPA. This information will then be publicly available on the business names register as maintained by the CIPC. The implication is that, should any business operate with any other name other than those as set out in section 79, the National Consumer Commission (“the NCC“) can issue a compliance notice and failure to comply will result in a fine or prosecution as a criminal offence.

As some assurance, however, the CPA provides a certain degree of relief for businesses which have been in trade before the business name provisions come into force – the NCC may not enforce the business name requirements against a business if it has been trading under the business name for a period of at least one year.

Procedure

Section 80 of the CPA provides for the procedure in registering the business name of a company. As mentioned before, these provisions are not yet in force since the business names registry and the registration process have not yet been established.

When the provisions come into force, a person may file a notice with the CIPC to register any number of business names currently used by your entities. If the business, under which the business name has been registered does not carry on business for a period exceeding 6 (six) months, the CIPC reserves the right to cancel such business name.

Possible difficulties

These provisions may cause difficulties for franchises because there are normally multiple franchisees trading under the same name as the franchisor. However, the registered name for each franchisee, may be completely different. The new requirements therefore force each separate franchisee to register the same business name leading to multiple entries of the same name being reflected on the records of the CIPC. This could be somewhat counter-intuitive since the confusion that it creates may defeat the purpose of the consumers’ right to information in the first place. Furthermore, franchisors may not be happy allowing each and every franchisee incorporating what is effectively their “trade mark” as the franchisees business names.

Going forward

Although these provisions have not come into effect yet, in the interests of avoiding the rush of changing branding and registering new names at the CIPC, the provisions above should be duly considered when choosing a business name as the criteria will most likely need to be adhered to in the near future.

THE RESPONSIBILITY OF A SUPPLIER TO CONDUCT A CONSUMER PRODUCT SAFETY RECALL

THE RESPONSIBILITY OF A SUPPLIER TO CONDUCT A CONSUMER PRODUCT SAFETY RECALL

Introduction

The Consumer Protection Act 68 of 2008 (“CPA” or “the Act“) establishes certain rights applicable to all consumers when purchasing goods (and services) for their personal use. The Act sets out, amongst others, that consumers have the right to fair value, good quality and safety as well as an implied warranty of quality.

The implied warranty of quality warrants that the goods comply with the requirements of being of good quality, durable, and safe for the use as advertised or designed. Where goods are of inferior quality, unsafe or defective, the consumer may return the product and the supplier is obliged to repair, refund or replace the failed, defective or unsafe product.

Consumers have a further right to have goods monitored for safety and recalled when such goods or components of such goods are hazardous, unsafe or defective. The Consumer Product Safety Recall Guidelines (“Recall Guidelines“) have been drafted in terms of the CPA to provide further detail for such instances and set out the procedure to be followed where products are to be recalled.

Hazardous products

Whilst suppliers would take necessary steps to ensure that their product is manufactured or produced in line with the required design and/or material specification, the reality is that there may be some unforeseen occurrences where manufacturing/production lines may deviate from such design or material specifications. In such cases, a product may be identified as unsafe where it presents health or safety hazards to the public. However, in some instances, a consumer product may also be identified as unsafe to consumers irrespective of whether there was a manufacturing or production error. The deciding factor is whether the product poses health or safety hazards to the public.

The CPA doesn’t clearly unpack the term “hazard”, but generally, a supplier’s product may be identified as presenting health or safety hazard where such product has the potential to cause the following:

  • injury;
  • illness;
  • death;
  • loss of, or physical damage to, any property; or
  • any economic loss as a result of any of the above.

Product safety recalls

In terms of the CPA and the Recall Guidelines, a supplier is required to, among other things, conduct a consumer product safety recall where a product poses a health or safety hazard. In essence, a consumer product safety recall is a process whereby a supplier is required to remove all affected product(s) from production, supply chain and any point of sale.  In terms of section 5(5) of the CPA, these Recall Guidelines apply to all goods supplied in South Africa, regardless of whether the transaction for the supply of such goods is subject to the CPA or not.

In 2012, the National Consumer Commission (“NCC“) published the Recall Guidelines detailing, among other things, procedural steps required to be followed by suppliers when conducting a product recall. In terms of the Recall Guidelines, a supplier may voluntarily initiate a safety recall. Where a supplier fails to voluntarily conduct a safety recall, the NCC may issue a written notice to the relevant supplier ordering it to conduct such safety recall.

Irrespective of whether a supplier voluntarily conducts the safety recall or is ordered to do so, a supplier is required to ensure that the procedural steps, as briefly set out below, are followed:

  • assess the risk;
  • cease distribution of the product;
  • notify the NCC;
  • notify consumers;
  • facilitate returns; and
  • facilitate returns.

In order to comply with the above mentioned procedural steps and to avoid any penal sanctions, a supplier may be required to prepare and put in place some form of a policy document(s) in anticipation of a product recall becoming necessary in the future.

Conclusion

Like with non-compliance with the provisions of the CPA in general, non-compliance with sections 60 and 61 of the CPA and the Recall Guidelines may have dire consequences. Suppliers may be declared to have engaged in prohibited conduct and an administrative fine of up to R1 million or 10% of its annual turn-over for the preceding financial year may be imposed.

Closely linked to the topic of safety recall, our next article on the CPA will be dealing with a discussion around the concept of “product liability”. For any further details on this topic, please do not hesitate to contact us.

Customers returning goods – what should you know as a supplier?

Customers returning goods – what should you know as a supplier?

You are a supplier of goods to customers – whether through a retail outlet at your business premises or online. The customer wants to return the goods purchased. Do you have an obligation in law to always allow the customer to return goods or are there exceptions? And what about the refund – should it be in full or can you deduct a “handling fee”? For defective goods, are you allowed to rather replace the goods? Can a customer return goods several months after the purchase date? These are all frequently asked questions in the industry which every new (or established) business should consider.

 The Consumer Protection Act 68 of 2008 (“CPA”) provides for a right to return goods only in specific circumstances. There is no such thing as an unlimited or “blanket” return right, even though customers often may think this is the case. Be careful though – the situation changes when it comes to online purchases.

The first thing to remember is that customers indeed have a “cooling off” right, but only in the following circumstances:

  • If not an online sale, a 5 day cooling off period for sales resulting from direct marketing applies (this means that the supplier directly approached the customer to sell him/her the goods and the customer bought the goods as a result of the marketing) – cooling off right in terms of the CPA.
  • If an online sale, a 7 day cooling off period applies in general (no marketing requirement as per the CPA) but note that some exceptions apply and not all goods can be returned in terms of this right – cooling off right in terms of the Electronic Communications and Transactions Act 25 of 2002 (“ECTA”).

During the cooling off period, the customer has the right to a full refund when returning the goods and does not need to give a reason why the goods have been returned. However, the customer will have to pay the costs associated with returning the goods to the supplier. With all the other return rights in terms of the CPA discussed below, the cost of the return will be on the supplier.

In addition to the cooling-off periods, customers may return defective goods in accordance with the so-called CPA implied warranty of quality (the “CPA warranty”). This means, that if there are any defects in the goods within the first 6 months after purchase or delivery (the later date), the customer can return the goods based on the CPA warranty. Whether a customer can return goods within the 6 month period or not will, however, have to be assessed on a case by case basis and there are certain exceptions that could apply. The supplier is entitled to first investigate the complaint and run tests to determine whether a defect is indeed present. If the customer caused the damage to the goods, it goes without saying that the supplier should not be liable and the customer should not be able to rely on the CPA warranty.

In the case of a return of defective goods, the CPA does not give a supplier a first right to repair or replace and provides the customer with the right to return the goods that does not meet the quality requirements for a (i) refund, (ii) replacement or (iii) repair – at the customer’s choice, not the supplier’s. However, the customer’s right to return goods in terms of the CPA warranty will not apply where the goods have been altered, contrary to the instructions of the supplier.

Customers may also return goods if the customer indicated the purpose for which it wanted to use the goods at the time of purchase and the supplier confirmed that the goods will be suitable for that purpose, but it then turns out that the goods cannot be used for the purpose initially intended.

Make sure you know your rights as a supplier and exercise all options when a customer cries “Consumer Protection Act”!

Lastly, suppliers often offer more return rights than the rights afforded to customers in terms of the law. These are regulated through “Returns Policies”. Next time we will do a post on “What should your Returns Policy look like?”.

POPI: First meeting for the Information Regulator

POPI: First meeting for the Information Regulator

In our blog post on 7 November 2016 we referred you to the appointment of the members of the Information Regulator – which is an independent juristic person in terms of the Protection of Personal Information Act – commonly referred to as “POPI”. The Information Regulator will be responsible for monitoring and enforcing compliance with both POPI and the Promotion of Access to Information Act 2000 (PAIA).

The 5 members of the Information Regulator (Chairperson, 2 full-time and 2 part-time) have been appointed for a 5 year period that commenced the beginning of the month and according to a media statement issued by Adv. Tlakula (the Chairperson) on 2 December 2016, the Information Regulator held a meeting on 1 December 2016 to commence their function and duties. It has been confirmed that the full time member responsible for PAIA is Adv. Stroom-Nzama and the full time member responsible for POPI is Adv. Weapond.

The POPI commencement date has not been confirmed yet, but the general view in the industry is that 24 May 2017 is the likely day – as this will mean that compliance with POPI will be required as from the 25th of May 2018, which is also the date for compliance with the European Union’s General Data Protection Regulation.

In practice we are starting to see more clients focussing on POPI requirements and starting to create POPI awareness through training sessions and implementation of amended policies and practices. It would probably be unrealistic to think that POPI will mean a “quick fix” for all data concerns, but POPI will certainly play a big role to regulate the way in which companies manage data in future.

Are Consumers Protected?

Are Consumers Protected?

Introduction

In recent years we have seen quite a few new pieces of legislation specifically aimed at providing consumers with certain rights in their relationships with suppliers. This is a new concept to our law in that historically the position was mainly that the contracting party with the most bargaining power – usually the supplier – was the one that could call the shots. Litigation is expensive and consumers who wanted to take on suppliers had to think twice before incurring those kind of costs.

Consumer legislation in general

Examples of legislation that aim to provide protection to consumers include the Electronic Communications and Transactions Act (ECTA), the National Credit Act (NCA), the Consumer Protection Act (CPA) and most recently the new Protection of Personal Information Act (POPI).

Whilst the NCA and POPI have more specific application, in that they specifically regulate rights when it comes to credit agreements (in the case of the NCA) or rights when it comes to the handling of a consumer’s personal information (in the case of POPI), both ECTA and the CPA apply more generally to regulate all electronic communications and transactions (ECTA generally regulates online contracting and electronic transactions) and consumer rights when it comes to goods and services provided by suppliers (the CPA provides for various rights to consumers in their relationships with suppliers).

What does ECTA and CPA mean for suppliers of goods?

Suppliers need to carefully consider the provisions of both ECTA and CPA in their supply of goods and services and also when drafting their contracts and specifically their returns policies. Even though the CPA is seen to be the “general law” that provides for consumer rights and supplier obligations, it is important to understand that a number of sections in the CPA will in actual fact not apply when contracting online or through any electronic means. In these cases some ECTA provisions may take preference and the CPA rights may not apply.

Summary of ECTA v CPA rights and obligations

Certain sections of the CPA will not apply to electronic transactions if ECTA applies to them or if the CPA specifically refers to ECTA.

Section 16 of the CPA addresses the cooling-off period after direct marketing, however, the CPA will not apply if section 44 of ECTA applies to the transaction. ECTA will apply where the transaction is electronic (as determined by section 42 of ECTA).

Section 19 of the CPA will not apply to a transaction when section 46 of ECTA applies to the transaction. These sections refer to the delivery of goods and supply of services to the consumer within a reasonable time. ECTA gives the supplier 30 days in which to effect delivery or supply where the CPA requires delivery or supply within a reasonable time.

The price of goods and services must be disclosed in accordance with section 23 of the CPA unless the transaction is electronic in which case the disclosure of the price must be in accordance with section 43 of ECTA. ECTA is more stringent regarding the information to be disclosed and provides a comprehensive list in the Act.

Catalogue marketing is regulated by section 33 of the CPA. However, where a transaction is entered into through catalogue marketing but the transaction is not concluded in person, then chapter 7 of ECTA applies. Chapter 7’s sections are the following: section 42 Scope of application, section 43 Information to be provided, section 44 Cooling-off period, section 45 Unsolicited goods, services or communications, section 46 Performance, section 47 Applicability of foreign law, section 48 Non-exclusion, and section 49 Complaints to Consumer Affairs Committee.

Direct marketing is regulated by BOTH the CPA and ECTA. Section 11 of the CPA applies in conjunction with section 45 of ECTA. These sections provide the consumer with the right to restrict unwanted direct marketing.

Conclusion

Consumers have a vast arsenal of rights which can be relied on for protection when concluding a variety of agreements, whether face-to-face, telephonically or online. Gone are the days where the supplier has all the power. Suppliers should therefore consider carefully which legislation will apply to their business operations and ensure that they adhere to the applicable Acts in order to avoid the serious consequences that come with contravening the acts.

Automotive Industry Code Of Conduct In Terms Of The Consumer Protection Act

For the first time ever in South African legal history the status of a “private” document is being elevated and given the status of law. The Consumer Protection Act 68 of 2008 (CPA) makes this possible by providing for “Industry Codes of Conduct” to regulate the application of the Act within a specific industry once so published as an Industry Code of Conduct. After a number of drafts, the legislature finally published the South African Automotive Code of Conduct (the Code) in the government gazette. The Code will have the same legal effect as the CPA itself or its accompanying Regulations.

The main objective of this Code is to give effect to the Consumer Protection Act, regulate the relationships between the role players conducting business within the Automotive Industry and, most importantly, to provide for a scheme of alternative dispute resolution between consumers and industry role players. The Automotive Industry will include importers, distributors, manufacturers, retailers, franchisors, franchisees; suppliers, and intermediaries who import, distribute, produce, retail or supply any of the goods listed in the Code. These goods include, for example, passenger -, recreational -, agricultural -, industrial -, or commercial vehicles. It furthermore includes trucks, motor cycles, quad cycles, and many more.

In broad terms, the Code will bring significant changes to the manner in which the Automotive Industry handled consumer complaints in the past. The Motor Industry Ombudsman of South Africa (MIOSA) has been established to assist in resolving disputes that arise in terms of the CPA when it comes to any goods or services provided by a role player within the Automotive Industry. MIOSA is an independent non-statutory body that has been afforded recognition under section 82 (6) of the CPA, meaning that MIOSA is an “accredited industry ombud” for the Automotive Industry. The objective is for MIOSA to consider and dispose of complaints in a manner that is procedurally fair, informal, and economical.

Once a complaint has been successfully lodged with MIOSA, MIOSA would first play a passive role mediating between the two parties in an attempt to facilitate resolution of the dispute.

Cutting to the chase, all suppliers will be obliged to establish internal complaints handling processes (including an internal complaints handling department, as well as the procedure a consumer could follow when lodging a complaint with the Ombud) coupled with the training of, or at the very least informing, their entire staff about the Act, its Regulations and the Code. Suppliers will also have to adhere to other requirements such as notices that need to be displayed at their premises.

For more information on how this industry code may affect you in your business operations, you can contact Jandré Robbertze at jandre@dommisseattorneys.co.za.

Consumer rights in terms of the CPA

The Consumer Protection Act 68 of 2008 (CPA) provides for extensive protection of consumer rights. In preceding legislation we have seen provisions that also relate to consumer rights – these include for example the National Credit Act 38 of 2005 (NCA) and the Electronic Communications and Transactions Act 25 of 2002 (ECT Act).

The big difference however is that the consumer protection provisions of the NCA and ECT Act only apply in very specific instances – for example the NCA only applies to credit transactions and the ECT Act only applies to electronic transactions. The CPA on the other hand is different: the default position is that the CPA will apply (allowing consumers to rely on the CPA rights), unless an applicable exception exists. These exceptions are limited.

Generally speaking consumers have the following rights in terms of the CPA:

1. Right to equality
This right provides that consumers cannot be discriminated against on one of the discrimination grounds listed in the Constitution.

2. Right to privacy
The Constitution makes provision for the right to privacy in section 14 of the Constitution. The CPA gives effect to this right by providing for some privacy protection when it comes to direct marketing.

3. Right to choose
The CPA provision of the consumer’s right to choose extends to the consumer’s right to return goods.

4. Right to disclosure of information
The CPA aims to assist consumers by forcing suppliers to provide consumers with adequate information in order for them to make informed decisions.

5. Right to fair and responsible marketing
The CPA places a lot of emphasize on marketing activities. Suppliers must be fair in their marketing material and may not mislead consumers.

6. Right to fair and honest dealing
In terms of the CPA, a consumer can expected to be treated fairly and honestly.

7. Right to fair, just and reasonable terms and conditions
Similar to the NCA, the CPA provides for a list of terms that

8. Right to fair value, good quality and safety
Consumers are entitled to receive goods or services that are of good quality, in good working order and free of any defects.

Consumer rights will not mean much if they cannot be enforced. The CPA therefore makes provision for various forums through which the consumer can address alleged breach of the CPA – without necessarily going to court. Not all of these forums are operative as yet, however the National Consumer Commissioner has been appointed and the National Consumer Commission have received complaints from unsatisfied consumers as from 1 April 2011.

Be sure that you know your consumers’ rights. And be sure that you know when an opportunistic consumer is using the CPA to try to enforce rights that he or she does not have in terms of the CPA.