Brief Introduction – The Consumer Protection Act
Newsletter 1 - April 2011
The Consumer Protection Act 68 of 2008 was signed by the president of South Africa on the 24th April 2009, but became law only as from the 1st April 2011. The Act contains 122 sections or clauses attempting to regulate the affairs of consumers doing business in the private and public sectors.
To understand the Act, the legislator has introduced 77 definitions tot he Act. The purpose of the definitions is simply to be able to read the Act in a clear and unambiguous manner. Besides the definitions, the Act contains a preamble stating the purpose of the Act. In brief, the preamble states that “the people of South Africa recognize that apartheid and discriminatory laws of the past have burdened the nation with high(ly) unacceptable high levels of poverty, illiteracy and other forms of social and economic inequality”.
The preamble continues to explain that the Act is important to recognise disadvantaged persons as lawful consumers of South Africa, to protect their interests as consumers and to avoid any form of exploitation in the market place. What is interesting, though, is the fact that the Act wants to promote disadvantaged consumers to become part of the decision making process concerning the market place – in brief, the effect of their choices on their social and economic well being must be considered by sellers/suppliers in the market place before they can continue with normal business operations.
In the draft Act, the preamble states that the purpose of the Act is to harmonise the laws of South Africa, but in the signed Act, the word ‘harmonisation’ has been ignored. In the reality of the economy and the law, the South African common law has for many years protected consumers against defective goods or market abuse or poor marketing services or advertisements – though few consumers realise this – although the common law does not give consumers the right to decide how they would like to be compensated.
A practical example is that of underwear. Due to hygienic reasons suppliers of underwear would not exchange the underwear after the sale date – for example, if the size of the underwear was misjudged by the consumer – but in terms of the Act, the consumer is allowed to return the underwear to the supplier for a refund. The consumer is allowed to return the underwear within 10 business days.
Another example, where consumers would be allowed to give input regarding the development of products, is that of cell phone contracts, contracts of sale of land, lease agreements, and so forth.
The Act states clearly that any contract or fixed term agreement must be written in plain language, and if the consumer does not understand the terms and conditions of the contract, he or she may terminate the agreement.
This is of course open to abuse. A consumer can purchase a vehicle, and the moment he or she receives the contract that might be unclear in the way in which the interest was calculated, or any term of the agreement that is not written in plain language, he or she can use many of the remedies provided for in the Act to avoid liability in terms of the agreement, for example, a refund. In addition, if the consumer is unsatisfied with the product, he or she has the sole discretion whether he or she wants the product to be repaired or replaced. This applies also to the selling of fixed property in South Africa. The supplier may not argue or try to convince the consumer to have the product repaired instead of receiving a refund.
The latter paragraph also contains meaning with regards to a consumer who might have purchased a product which was disclosed in a brochure or any other form of marketing material. The material may not use the words “terms and conditions apply”. This is prohibited by the Act. Instead the seller must disclose all relevant terms and conditions to the purchaser in the brochure. If it is impossible to do so, then in terms of the Act, such an advertisement would have been misleading, in any event.
In addition, the product to be, or product to be sold, must fit the description used in the advertisement exactly. If not, the consumer has a choice as to whether to terminate the contract.
The penalty imposed by the Act for any breach of fair and honest dealings in the market place equals R1 million or imprisonment not exceeding 10 years or both. The Act regulates all business spheres in South Africa.
There is only one requirement for the Act to be relevant to a business transaction¬– the transaction must be lawful or legal. Drugs are illegal and at this point, so is prostitution; however, since certain people are lobbying for the recognition of prostitution as a lawful occupation, perhaps they will reconsider their lobbying when considering the implications of the Act – refund.
-The End-