Consumer Protection Act No 68 of 2008

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"The Act will operate from 31 March 2011 (New Date) so it is extremely important to understand it's impact on your business"

The President of South African signed the Consumer Protection Act on 24 April 2009 and it was published in the government gazette on 29 April 2009.  The official statement made by the Department of Trade and Industry is worth reading.

I attended a presentation on the Consumer Protection Act recently.  It was a very good presentation and it certainly made me realise that the Act is going to have a huge impact on virtually every business in South Africa  in 2009 and beyond.  A lot bigger impact than I had anticipated.  I therefore thought that I would give you a heads up on some of the practical implications of this Act for you.

I’m going to refer to it as the Consumer Protection Act or just the Act.  Many people still incorrectly refer to it as the Consumer Protection Bill rather than as the Consumer Protection Act.  A Bill is a draft Act that has not yet been enacted.

The Act has become law, but there are two things to bear in mind:

1. However, there are currently no regulations (not even in draft form) for the Act.  It is very difficult to consider the implications of the Act without the regulations.  So it might be some time yet until you can establish with certainty what your obligations will be under the Act.

2. The Act will only operate from 24 October 2010 (18 months from the date it was signed by the President), so everyone has lots of time to prepare to comply with the Act.  There is no need for panic.  Read schedule 2 of the Act for more information.

What the Labour Relations Act did for employees, the Customer Protection Act will do for consumers

So what does the Consumer Protection Act mean for you?   Here are some of the things that stood out:

1. South African consumers are the most protected consumers in the world.  If you are consumer facing, this is not good news.  However, as with many challenges it can also be seen as an opportunity.  You are required to comply with the law, so why not do so and use the marketing  opportunity to tell your customers how much you protect them.  The businesses that comply first might well be viewed favourably by consumers.

2. If your goods are shrink-wrapped (such as shrink-wrapped software) you might run into problems with regards the consumer’s right to inspect goods.  The definition of goods includes intangible goods such as software.

3. If you have fixed term agreements with your customers you may be required to give them notice prior to the expiry of the fixed term.  This could place an administrative burden on you.

4. All agreements with consumers must be in plain and understandable language.  You are probably going to have to re-draft or amend your terms, your sale agreements and your advertisements into plain language.  If you don’t, then your customers might be able to get out of the agreements, you might be guilty of unconscionable conduct, or you might be sued.

5. The general theme of the Act is to protect the poor and the vulnerable and is in a way the Bill of Rights for the consumer.

6. The Act alters the common law to be more favourable to consumers.  By default, you give the consumer various warranties and indemnities.  The warranties that you give in your agreements are no longer the only warranties that apply.

7. The Act also applies to legal services provided by attorneys so it impacts on attorneys directly too.  The ambit of the Act is very wide.    Depending on what is contained in the regulations, a lessee may be viewed as a consumer and therefore lease agreements may need to comply with the Act.  The Act does not apply to employment contracts.  A franchisee will be a consumer and therefore franchise agreements will have to comply.

8. The court will be given the power to redraft (well order you to change them actually) your contracts, terms of business, terms of sale and other consumer related terms.  Radical I know - it took me a while to get my head around this.

9. Courts must interpret standard form contracts in favour of consumers.

10. Promotional competitions will be governed by this Act, rather than the Lotteries Act.  The way in which promotional competitions was dealt with in the Lotteries Act was (with respect) a mess and it is a good thing that those provisions are being repealed.  At least now we will have more certainty.  You must prepare competition rules before you run in competition - be they online or offline.

11. If you are currently ABC (Pty) Ltd, trading as XYZ, you will have to register the business name XYZ.

12. The consumer protection provisions in the ECT Act are not repealed and therefore there is a potential overlap.

13. You are going to have to revisit your refund policy.

14. Your marketing  campaigns are going to be affected and conducted in accordance with the Act.

15. Mechanisms are put in place to enable consumers to enforce their rights.

Source: Online Legal: http://www.michalsons.com/the-consumer-protection-act-a-heads-up/1382

Buy eBook (PDF) from Kalahari - Consumer protection Act Made Easy - NJ Melville