The Consumer Protection Act which was signed into law on 29 April 2009, becomes effective between April and October 2010. It affects a broad range of consumers and transactions - for example if you receive a product as a gift from family, you are entitled to protection under the act even though you did not contract with the supplier directly.
The act also affords protection to small businesses whose turnover or asset value is less than a threshold - The National Credit Act uses R1m as a threshold, so expect something similar here.
The implications for you as a provider of products or services are:
Direct marketing
A consumer may either refuse to accept, pre-emptively block, or require you to discontinue any communication which may be seen as direct marketing (includes telephone calls, e-mails, brochures or letters in the mail).
The National Consumer Commission is to setup a register where consumers can record their preferences as to the type of communication they wish to receive. Businesses will have to ensure that they have measures in place to receive and record consumers' specific preferences (at no cost to the consumer), and abide by these expressed preferences. The Minister may prescribe certain times when consumers may not be contacted, for example, on public holidays or after a certain time at night.
Cooling Off
There is a five business day cooling off period for transactions resulting from direct marketing (commencing on the latter of the transaction date or the delivery date)
Product Liability
Producers, importers, distributors and retailers of goods will be liable for damage caused by unsafe or defective goods whether or not the harm resulted from their negligence. This means that the consumer will no longer have to prove that the damages suffered as a result of defected goods was due to the fault of the producer, importer, distributor or retailer.
Contract Renewal
There can be no automatic renewal of the fixed term contract. The consumer (natural persons only) is entitled to cancel the contract when the contract term expires, or at any other time, given that he gave the supplier 20 business days notice in writing.
At the expiry of the term of a fixed term agreement, the contract will automatically continue on a month to month basis, until the consumer either cancels the contract or renews the agreement for another fixed term. The Act requires the supplier to remind the consumer of the expiry date at least forty business days prior to the expiry date of the fixed term.
Customer loyalty programmes
A supplier who sponsors a consumer loyalty programme, or accepts loyalty credits in exchange for goods or services (for example frequent flyer miles), may impose a partial or complete restriction on the availability of the goods or services during specific periods of the year. However, the restriction may not exceed 90 days in a calendar year.
Overselling and overbooking
A supplier may not accept payment for goods or services where it has no reasonable intention to supply the goods or services, or where it intends to supply goods or services that are materially different to the goods or services for which the consumer has paid.
With regard to damages suffered as a result of a supplier's inability to supply goods or services due to overbooking or overselling the Act provides for a refund of the amount paid plus interest, as well as any consequential damages which directly resulted from the breach of contract.
Implied warranty of quality
The producer or importer, the distributor and the retailer each warrant that the goods comply with the requirements and standards contemplated in the Act.
Failed, unsafe or defective goods may be returned to the supplier within six months after the delivery of the goods to a consumer. In such a case the supplier has to either repair or replace the goods, or refund to the consumer the price paid by the consumer. The consumer may choose whether to be refunded, or to have the goods replaced or repaired.
In instances where the supplier repairs the failed or defective goods and within three months after that repair, the failure or defect was not fixed and it recurs, or another failure or defect is discovered, the supplier must replace the goods, or refund the price to the consumer.
The Act provides for a three month warranty on repaired goods.
This article was summarised from an article by Dr Johan Erasmus, BLC, LLB, LLD (a Regulatory Analyst at Deloitte and chairman of the SAICA Legal Compliance Committee) and published on the SAICA website.
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