Financing - Consumer Protection Act(20100210) - Brief Summary - Powerpoint
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Transcript of Financing - Consumer Protection Act(20100210) - Brief Summary - Powerpoint
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8/7/2019 Financing - Consumer Protection Act(20100210) - Brief Summary - Powerpoint
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BetterGroup
Brief overview of
the Consumer Protection Act
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Introduction
Th e purpose of t h e Act is to protect consumers against exploitation andunfair marketing practices. It will empower t h e consumer to make informedpurc h asing decisions
In th e Acts preamble, it lists t h e following as its aims:
to promote a fair, accessible and sustainable marketplace for consumer productsand services by setting national norms and standards relating to consumer protection;
to provide for improved standards of consumer information; to pro h ibit certain unfair marketing and business practices; to promote responsible consumer be h aviour; to h armonise laws relating to consumer protection; to provide a consistent enforcement framework; and; to establis h a National Consumer Commission.
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When will the Act apply?
By incorporating broad definitions, t h e Act is made applicable to a widerange of transactions.
In essence h owever, t h e Act regulates t h e following:-
(i) every transaction between a supplier and a consumer involving t h esupply of goods and or services in the ordinary course of business with in th e Republic of Sout h Africa and;
(i) th e promotion of such goods and services th at could lead to t h etransaction being entered into; and
(i) to t h e goods and services t h emselves after t h e transaction iscompleted.
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E ight Fundamental Consumer Rights
Ch apter 2 of t h e Act is divided into parts wit h eac h part dealing wit h aparticular consumer rig h t.
Th e rig h ts are as follows:
1. Th e rig h t of equality in t h e consumer market2. Th e rig h t to privacy3. Th e rig h t to c h oose4. Th e rig h t to disclosure and information5. Th e rig h t to fair and responsible marketing6. Th e rig h t to fair and h onest dealing7. Th e rig h t to fair, just and reasonable contract terms8. Th e rig h t to fair value, good quality and safety
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Eq uality in the Consumer Market
A supplier may not, amongst ot h ers, unfairly exclude persons from accessto any goods or services. Th is will be t h e case w h ere, for instance, anexclusive supply agreement is entered into.It is also not allowed to provide goods wit h a different quality, or goods atdifferent prices, to certain persons in a discriminatory manner.It is of course also not allowed to exclude a particular community from t h esupply of goods on t h e basis of a ground of unfair discriminationcontemplated in t h e Constitution or t h e Promotion of Equality andPrevention of Unfair Discrimination Act.
Section 9(1) lists certain grounds on wh
ich
a differentiation can be justified,for instance for a supplier to market goods in a manner t h at implies t h at t h eparticular goods are reasonably intended to satisfy any specific needs t h atare common to, or uniquely c h aracteristic of, t h at particular group of consumers. As long as suc h discrimination is justified in terms of t h eConstitution.
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Privacy in the Consumer Market
Th e Act entrenc h es t h e consumer's rig h t to refuse or accept t h e advancesof direct marketing.
" Direct marketing " means to approac h a person, eit h er in person or by mailor electronic communication, for t h e direct or indirect purpose of promotingor offering to supply, goods or services to t h at person in t h e ordinary courseof business. Direct marketing also includes a request for donation of anykind.Consumers now h ave a rig h t to restrict unwanted direct marketing. Th e rig h tto privacy includes t h e rig h t to refuse to accept any communication for t h epurpose of direct marketing and includes t h e rig h t to require anot h er personto discontinue unwanted direct marketing.A cooling-off period for contracts concluded as a result of direct marketingh as also been introduced. Th e consumer may cancel an agreement wit h infive business days after t h e date on w h ich h e/s h e concluded t h e agreementor on w h ich h e/s h e received t h e goods, w h ich ever date is t h e latest.
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T he Consumers right to choose
Bundling a supplier may not group or bundle goods by requiring, as acondition of entering into an agreement, t h at t h e consumer must buy ot h er goods or services from t h at supplier, or enter into an additional agreementor transaction wit h th e same supplier or designated t h ird party, or agree topurc h ase any specific goods from a t h ird party.
F or bundling to be allowed, t h e supplier must prove t h at: t h e convenience of t h e bundling outweig h s t h e limitation on t h e freedom
of c h oice; or
t h e bundling is to t h e economic benefit of t h e consumer; or t h e supplier also offers t h ese bundled goods separately and at
individual prices
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T he Consumers right to choose (continued)
Also dealt wit h under t h e rig h t to c h oose:
Expiry and renewal of fixed term agreements Pre-aut h orisation and of repair and maintenance services Righ t to cancel advance reservation, booking or order Righ t in respect of delivery of goods or supply of services Righ t to return goods
Unsolicited goods or services
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Right to Disclosure and Information
Th e applicable rig h ts t h at fall under t h is section are:
Th e rig h t to information in plain and understandable language
providing th
at agreements sh
ould be drafted in a way th
at enablesconsumers to make informed c h oices and to understand t h e terms of th e agreement into w h ich th ey are entering.
Disclosure of price of goods or services Retailers are pro h ibited fromdisplaying any goods for sale wit h out s h owing t h e price of t h ese goods
Product labeling and trade description - protects t h e consumer against
any misleading trade descriptions or trade descriptions t h at h ave beentampered wit h
Disclosure or reconditioned and grey-market goods Sales records - a written record of eac h transaction must be given to t h e
consumer Identification of deliverers and installers
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T he Right to Fair & Responsible Marketing
Th e aim of t h is rig h t is, inter alia, to create fair business practices in respectof advertising and selling.
O ne of t h e most important business practices is to be trut h ful in advertisingand selling. Creating fair business practices in t h is regard will ensure t h atreal competition between suppliers is made possible, w h ich in turn leads tolower prices and better products. It will also lead to greater trust byconsumers and better relations h ips between consumers and suppliers inth e supply of goods and services
Th e Act excludes credit agreements in terms of t h e National Credit Act fromits ambit, but does not expressly exclude credit marketing.
Th erefore, t h e National Credit Act and t h e Consumer Protection Act s h ouldapply to credit advertisements and marketing of credit. Th is leads to aduplication of a regulatory sc h eme and one could accept t h at t h e NationalCredit Regulator could apply for t h e credit industry to be exempted from t h emarketing provisions of t h e Consumer Protection Act in terms of Section5(3).
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Fair & Responsible Marketing (continued)
Th e following are dealt wit h in th is section: General standards for marketing of goods or services marketing may
not be misleading, fraudulent or deceptive
Bait marketing proh
ibits suppliers from advertising goods or servicesas being available at a specific price and manner t h at will mislead or deceive in relation to t h e actual availability of t h ose goods and services
Negative option marketing t h e promotion of goods or services toconsumers on t h e basis t h at an agreement automatically comes intoexistence unless t h e consumer declines an inducement or offer
Direct marketing to consumers regulated and introduce cooling-off period
Catalogue marketing T rade coupons and similar promotions Customer loyalty programmes Promotional competitions
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Fair & Honest Dealing
O ne of t h e aims of t h e Consumer Protection Act is to protect consumersfrom unconscionable, unfair, unreasonable, unjust or improper tradepractices and any deceptive, misleading, unfair or fraudulent conductUnconscionable conduct pro h ibits t h e use of p h ysical force againstconsumers; coercion; undue influence; pressure; duress or h arassment;unfair tactics; or any similar conductFalse, misleading or deceptive representationsFraudulent schemes and offersPyramid and related schemes
The consumer's right to assume that a supplier is entitled to sell goodsAuctionsChanges, deferrals, waivers and substitution of goodsOver-selling and over-booking
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Fair, Just & Reasonable Terms &Conditions
F reedom of contract forms t h e basis of t h e Sout h African contract law. Th e reason is t h at t h e parties h ave come to an agreement, and t h e basis of
th e law of contract is t h at t h e law will enforce t h eir agreement. Th
is absolute principle was,h
owever, wh
ittled away by th
e common law,wh ich will not enforce a contract if it is contrary to public policy.Unfair, unreasonable or unjust contract terms supplier must not supply or enter into an agreement to supply goods or
services at a price or on terms t h at are unfair, unreasonable or unjust. a supplier is not allowed to market in a manner t h at is unfair, unjust or
unreasonable. a supplier must not require a consumer to waive any rig h ts, assume any
obligation or waive any liability of t h e supplier on terms t h at are unfair,unreasonable or unjust, or impose any suc h terms as a condition of entering into a transaction.
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Fair, Just & Reasonable Terms & Conditions(continued)
N otice required for certain terms and conditions prevents a consumer from entering into an agreement t h at contains provisions t h at could affecth is/ h er rig h ts or t h at could be unexpected, s h ould t h e consumer not beaware of its existence
Written consumer agreements M inister may prescribe categories of agreements t h at s h ould be in writing
Prohibited transactions, agreements, terms or conditions pro h ibits
agreements or terms t h at h ave t h e purpose of defeating t h e purpose of t h e Act, misleading or deceiving a consumer, or terms t h at subject t h econsumer to fraudulent conduct
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Right to Fair Value, Good Quality & Safety
Th e consumer h as a rig h t to demand quality service w h en a supplier undertakes to perform any services for or on h is/ h er be h alf. Th e consumer h as a rig h t to safe, good quality goods
The implied warranty of quality - Section 56(1) provides t h at t h ere is animplied warranty in every transaction or agreement pertaining to t h e supplyof goods to a consumer, and t h at t h e producer or importer, t h e distributor and t h e retailer eac h warrants t h at t h e goods comply wit h th e requirementsand t h e standards contemplated in Section 55.
S h ould t h e goods fail to comply wit h th e standards and t h erequirements contemplated in Section 55, t h e consumer may return t h egoods to t h e supplier wit h out penalty and at t h e supplier's risk wit h in sixmont h s after t h e delivery of t h e goods.
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Right to Fair Value, Good Quality & Safety(continued)
Concerns over t h e possible application of Section 56 to t h e sale of land andimmovable property.
V oetstoots clauses h ave been used extensively in contracts of sale of landand immovable property prior to t h e commencement of t h e Act, voetstootsclauses mig h t not be effective after t h e commencement of t h e Act.
S h ould t h e implied warranty of quality apply to t h e sale of land andimmovable property, it is important to remember t h at it would not apply to
any transaction in terms of w h ich th e consumer is a juristic person w h oseasset value or annual turnover, at t h e time of t h e transaction, equals or exceeds t h e t h res h old value determined by t h e M inister in terms of Section6 of t h e Act.
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Fair, Just & Reasonable Terms & Conditions
F reedom of contract forms t h e basis of t h e Sout h African contract law. Th e reason is t h at t h e parties h ave come to an agreement, and t h e basis of
th e law of contract is t h at t h e law will enforce t h eir agreement. Th is absolute principle was, h owever, w h ittled away by t h e common law,
wh ich will not enforce a contract if it is contrary to public policy.Unfair, unreasonable or unjust contract terms supplier must not supply or enter into an agreement to supply goods or
services at a price or on terms t h at are unfair, unreasonable or unjust. a supplier is not allowed to market in a manner t h at is unfair, unjust or
unreasonable. a supplier must not require a consumer to waive any rig h ts, assume any
obligation or waive any liability of t h e supplier on terms t h at are unfair,unreasonable or unjust, or impose any suc h terms as a condition of entering into a transaction.
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BetterGroup must comply wit h th e Act and is well positioned to do so, as wegive t h e Consumer a c h oice between different products being offered by t h eBanks
Th e Act also h as significant impact on t h e marketing strategy of BetterGroup, especially on direct marketing of our products.
Contractual terms of our closed-c h annels will need to be reviewed.
Impact on BetterBond
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Conclusion
Th e Act is written in favour of t h e consumer. V arious provisions of t h e Act make inroads into t h e common-law position to
strengt h en t h e position of t h e consumer vis--vis t h e supplier.Undoubtedly, suppliers are facing an onerous task to prepare to comply, andeventually attempt to comply, wit h th e Act.Reviewing current practices and agreements and replacing t h em wit h newones h old a h uge cost implication for suppliers. Add to t h at t h e cost of training staff and employing extra staff to enforce t h e Act, as well as moreextensive liability insurance.
In addition, suppliers' product and service costs would no doubt alsoincrease. Suc h increases would eventually filter t h roug h to t h e consumer. F rom a consumer's point of view, t h e Act is, h owever, to be welcomed, as it
will contribute to t h e eradication of many exploitative practices in t h emarketplace.
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Questions and discussion