Consumer Protection Act

SOCAP PresentationA Business Perspective

Janusz F Luterek, Pr.Eng

Attorney and Patent Attorney

Partner at Hahn & Hahn Attorneys

www.hahnlaw.co.za

janusz@hahnlaw.co.za

This presentation is prepared and presented by J F Luterek in whom all copyright therein vests. No part of this presentation may be reproduced or used for any purpose whatsoever without the express written permission of J F Luterek – © November 2010

Consumer Protection Act

The purpose of this Act is to promote and advance the social and economic welfare of consumers in South Africa by 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, and in particular the previously disadvantaged.

The Act grants consumers a number of rights and sets a number of obligations on the supplier.

Consumer Education

Consumer Protection ActApplies to

All transactions exceptState is consumer - but where state then supplies the

public it is includedConsumer has turnover or net asset value above a

threshold (to be determined)Exempted class of transactions at discretion of

Minister

Identifying Applicable TransactionsPrivate individualSmall business such as hairdresser or pharmacyOther Business to Business transactions excluded

but Strict Liability (S61) still applies

I KNOW MY RIGHTS.

DO YOU KNOW YOURS?

You have rights as a consumer.

Understand them.

Enforce them.

Consumer Protection Act

1. Right to equality in the consumer market and protection against discriminatory marketing practices

Free and unlimited access to goods and services

Right to high quality goods and services

Right to fair pricing of goods and services

Right to lodge complaints.

Consumer Rights

2. Right to privacy *

Right to restrict unwanted direct marketing

Right to discontinue receipt of direct marketing at any time

* New Protection of Personal Information Act due shortly!

Consumer Rights

3. Right to choose

Right to select the supplier of your choice

Right to cancel or renew a fixed-term agreement

Right to request pre-authorisation for repairs or maintenance services

Right to cancel direct marketing contracts within the cooling-off period

Right to cancel advance reservations, bookings or orders

Consumer Rights

3. Right to choose cont.

Choose or examine goods, even after purchase and delivery *

Right to return goods and seek redress for unsatisfactory services**

Right to retain and not pay for unsolicited goods or services

FYI: a consumer has right to return goods for full refund within 10 days if they are unsuitable

Consumer Rights

4. Right to disclosure of information

Right to information in plain and understandable language*

Right to disclosure of prices of goods and services

Right to product labelling and trade description

Right to clear disclosure of reconditioned or grey market goods

Right to sales records

Right to disclosure of intermediaries

Right to identification of deliverers, installers and others

Consumer Rights

Consumer Rights Information in Plain and Understandable Language

Plain language is required on packaging and insertsOrdinary person of the class of intended consumer with

average literacy skills, but no special skills as a consumer, must understand its significance and importance

Layout, use of vocabulary, use of images, etc all considered

Guidelines will be published for determining the aboveEspecially important for manuals, warnings on boxes, etc

5. Right to fair and responsible marketing

Right to protection against bait marketing

Right to protection against negative option marketing

Right to protection against direct marketing

Right to protection in catalogue marketing

Right to protection in terms of trade coupons and similar promotions

Right to protection in customer loyalty programmes

Consumer Rights

6. Right to fair and honest dealing

Right to protection against unconscionable conduct

Right to protection against false, misleading or deceptive representations

Right to protection against fraudulent schemes and offers

Right to protection against pyramid and related schemes

Right to assume that suppliers are entitled to sell goods

Procedure for sales by auction

Right to changes, deferrals and waivers, and substitution of goods

Right to protection against over-selling and over-booking

Consumer Rights

7. Right to fair, just and reasonable terms and conditions

Right to protection against unfair, unreasonable or unjust contract terms

Right to obtain notice for certain terms and conditions

Right to obtain free copies of agreements/contracts

Right to refuse prohibited transactions, agreements and terms or conditions

Right to approach the Court to ensure fair and just conduct, terms and conditions.

Consumer Rights

8. Right to fair value, good quality and safety **

Right to demand quality service

Right to safe, good quality goods

Right to implied warranty of quality

Right to a warranty on repaired goods

Right to receive warnings on the fact and nature of risks

Right to recovery and safe disposal of designated products or components

Right to have products monitored for safety and/or recalled

Right to claim damages for injuries caused by unsafe/defective goods

Consumer Rights

Consumer RightsConsumer’s rights to demand quality service

timely performance of services, and timely notice of any unavoidable delay in the performance of the services

the performance of the services in a manner and quality that persons are generally entitled to expect

Consumer may require the supplier to either remedy any defect in the quality or refund to the consumer a reasonable portion of the price paid

Return calls when promised

Consumer’s rights to safe, good quality goodsevery consumer has aright to receive goods that are fit

for purpose, good quality, in good working order and free of any defects,know packaging, know safety warnings, know company standards.

Consumer RightsFit for Purpose

The packaging and circumstances surrounding the marketing of a product are used to interpret what the intended purpose isEg product sold to hairdressers, marked

“professional use only”Fitness equipment advertised as gym quality or

for professional athletesPower tools sold as “heavy duty” – picture on box,

text… If goods not fit for purpose then can be returned for

a refund within 6 months of sale – at sellers risk!Regardless, a consumer has right to return goods for

full refund within 10 days if they are unsuitable

Consumer Rights Warning concerning fact and nature of risks

Notice that meets the plain language requirements of this Act or any other applicable standards, providing the consumer with adequate instructions for the safe handling and use of those goods

Use of hair relaxers, hair colours, and the like where if used incorrectly there is a risk of chemical interaction or allergic reaction etc

Allergens in foodstuffs and beverages

Consumer Rights

Misrepresentations by call centrePay careful attention not to misrepresent facts to

consumer by labeling or marketing or on the phoneDo not tell a consumer you are at the offices of a

company when you are not – if asked a direct questionBe clear that you are not investigator or technical

person and merely note the complaint and route it to relevant person whoch will then resolve it as they see fit

Correct any misconception by the consumer of which you are awareQuality of productUse of productONLY IF YOU KNOW!

9. Right to accountability from suppliers

Right to protection in lay-bye agreements

Right to protection with regard to prepaid certificates, credits and vouchers, and access to prepaid services and service facilities

Consumer Rights

Consumer Protection Act Strict Liability S 61

Producer, importer, distributor, or retailer liable for any harm caused wholly or partly -supplying any unsafe goods;a product failure, defect or hazard in any goods; or inadequate instructions or warnings provided to the

consumer irrespective whether the harm resulted from any

negligence on the part of the producer, importer, distributor or retailer, as the case may be.

Supplier of services using goods, such as electrician or caterer, is also liable as if they had supplied the goods/service

CPA - Defences to Liability

unsafe product characteristic, failure, defect or hazard wholly attributable to compliance with any public

regulation; did not exist in the goods at the time it was

supplied by that person to another person alleged to be liable

wholly attributable to compliance by that person with instructions provided by the person who supplied the goods to that person

unreasonable to expect the distributor or retailer to have discovered the unsafe product characteristic, failure, defect or hazard, having regard to that person’s role in marketing the goods to consumers; or

the claim for damages has prescribed (expired) (3 years from date when damage discovered.)

CPA – Strict LiabilityLiability for Economic Loss

Indeterminable riskConsequential losses, even those very remote and

unforseable e.g. computer crash loss of data

Call centres and returns counters – DO NOT MAKE ADMISSIONS OF LIABILITY as these will bind the company and be very difficult to argue against later leading to claims against company being successful, damages being paid and potentially fines being imposed.

CPA – Penalties and Administrative fines

Consumer Commission may issue “compliance notice” and set deadline for compliance

Non-compliance can be referred to Tribunal

Fine greater of R 1,000,000 or 10% of turnover

Offences in terms of the Act Disclosure of confidential information by inspector,

complainant, or any party to proceedings can lead to a 10 year prison sentence

Any other offence can lead to a 12 month prison sentence e.g. ignore compliance notice

COMPLAINT OPTIONS

Where can the consumer complain?

Supplier

Manufacturer

Accredited ADR

Industry Ombud

Consumer Tribunal

INDUSTRY CODES Industry associations such as CGCSA will have codes

which are accredited by the Minister and creates an Industry Ombud

Industry ombudsman will have the power to resolve customer complaints in terms of the Act and to avoid more complicated measures

Investigative powers

Consumer can choose not to accept the outcome but then would need to convince the Commission to take on the matter despite ombudsman ruling

CALL CENTRE INFO, DO’S, DON’TS Consumer recommended to first take up complaint with the

retailer where product purchased

Call centre number - consumer does not have to call the number

Consumer can choose to go to industry ombud if retailer does not resolve complaint

Admissions of liability by Call Centre when fielding calls will cause liability for Company

Rapid complaint handling to prevent escalation of complaints through system is essential

Training in both procedures and technical matters required for Call Centre Consultant s – understand top line aspects of Act, understand procedure for handling complaints under CPA, and with Liability

DO’S AND DON’TS Let consumer explain story in full in own words – note

information

Delays on product testing, careful on delays

Irrelevant empathy statements. Careful on apologies

Importance of getting product back, establish if consumer has product and how it is being stored etc BUT do not advise how it should be done

Going to someone else? Ask if they are complaining elsewhere as well, for example, the retailer

Ensure consumer happy with outcome BUT do not concede liability

Handling on behalf of retailer - have you had other similar complaints – can’t disclose, not aware, not permitted to discuss other complaints -

Conclusion Awareness of Act is important

Don’t panic. Handle cases as normal

Stick to script!!

Follow up as promised vital

Procedures more critical – important to know these and to follow them

Note information in consumer’s own words

Escalation is important

Cases handled well by the Call Centre less likely to escalate to demands for liability payouts

This presentation is prepared and presented by J F Luterek in whom all copyright therein vests. No part of this presentation may be reproduced or used for any purpose whatsoever without the express written permission of J F Luterek – © November 2010