Consumer Protection Act now on a roll

Posted 11 April 2013 Written by Ciaran Ryan

Let’s face it, the National Consumer Commission (NCC) didn’t get off to a good start.

Last year former commissioner Mamodupi Mohlala-Mulaudzi suffered the public indignity of being replaced by acting commissioner Ebrahim Mohamed after Trade and Industry minister Rob Davies decided not to renew her contract.

It took its appointed role as consumer protector a little too enthusiastically, it seems, machine gunning compliance notices to all and sundry. According to Moneyweb, at least eight high-profile compliance notices issued against entities including Auction Alliance, the City of Johannesburg and Vodacom, were subsequently set aside by the National Consumer Tribunal (NCT), which was set up to oversee the actions of the NCC and ensure it remains within the confines of the Consumer Protection Act (NCA).  “Thus far no major appeals heard by the NCT have gone in favour of the NCC,” according to Moneyweb.

Then there was an internal report, quoting extensively from the NCT, that further sullied the NCC’s reputation, accusing it of at least one case of perjury in hearings involving Vodacom, and a lack of fairness in its investigations against certain businesses.

“There seems to be a lack of understanding on the part of the Commission that it is obliged to follow the procedures set out in the CPA,” said the report.

Mohlala-Mulaudzi fired back with accusations of her own, charging the NCT of misunderstanding the law and its process. She also made the point that until a court challenge was launched, no-one could presume to know which interpretation of the law was correct, which is surely a valid point.

Now, a recent report by legal firm Norton Rose suggests the NCC under Ebrahim Mohamed is at last moving in the right direction.

“The Commission is moving away from the conciliation role it had adopted over the last two years. Individual complaints are being referred on to regulators, ombuds and provincial authorities, and this is what the CPA intended,” says the report.

“The Commission has been interacting with business and industry on a greater scale and is focusing its resources on handling large complaints such as the meat labelling investigation. It is essential to have an effective body that can look after consumer interests on a national scale.

“The Commission is also in the process of negotiating the withdrawal of all the defective compliance notices issued under the authority of the previous commissioner to avoid lengthy and expensive review applications at the Tribunal.

“Essentially the Consumer Commission is starting afresh and so far it is off to a good start.”

Consumer rights

The CPA introduces cooling off periods for consumers who may have a change of heart, prohibits misleading marketing and advertising, and introduces a set of consumer rights. These are:
  1. The right to Equality in the Consumer Market and Protection Against Discriminatory Marketing Practices;
  2. Right to Privacy;
  3. Right to Choose;
  4. Right to Disclosure of Information;
  5. Right to Fair and Responsible Marketing;
  6. Right to Fair and Honest Dealing;
  7. Right to Fair, Just and Reasonable Terms and Conditions;
  8. Right to Fair Value, Good Quality and Safety; and
  9. Right to Accountability by Suppliers. 
The next phase of the enforcement of the NCA involves self-regulation by specific industries through the formulation of industry codes and the establishment of industry ombuds. While these industry codes cannot supersede the rights of consumers in terms of the Act, they should provide guidance to the specific industry on standards and complaints handling, to improve adherence to consumer protection requirements. Once an industry code is approved by the Department of Trade and Industry and the Consumer Commission, it becomes binding on suppliers in that industry and contravening a code will carry the same penalties as contravening the CPA.

The motor vehicle industry has already published its code for comment, while the retail sector industry code has been submitted to the Commission for public comment and approval. These two industries are particularly significant because the largest number of complaints received by the Consumer Commission relate to motor vehicles and to fast-moving consumer goods, according to Norton Rose. The Advertising Standards Authority, vacation ownership and auction industries are also at various stages of developing their industry codes.

“The Consumer Goods Council has been trialling their consumer complaints line for the last year and deals with 450 complaints on average per month. 90% of the complaints have been resolved before reaching the mediation stage. Year on year, the Council is receiving less complaints. This is encouraging and indicates a greater level of awareness of consumer protection in the retail sector. Furniture and electronics are still the biggest causes of complaints in that sector,” says the Norton Rose report.

Many municipalities lose exemption from CPA

In February, human rights group AfriForum was successful in a High Court application to have blanket exemption from the Consumer Protection Act for certain municipalities withdrawn. Until now medium and low capacity municipalities have not been required to comply fully with the terms of the CPA. Now all municipalities, regardless of capacity, must adhere to the CPA and consumers will have a mechanism with which to demand proper and quality service delivery from their municipalities. The exemption for insurance and other financial services ended in October 2012. The finalisation of the financial services bill is still awaited but it is accepted that the Financial Services Board will handle consumer protection in that sector.

Class action suits

The Supreme Court of Appeal recently clarified certain aspects of the law relating to class actions in South Africa. The SCA set out the requirements for when a class action may be brought and this is likely to pave the way for further actions of this sort.

The Consumer Protection Act specifically allows class actions for damages claims. Damages may be awarded to all or a class of consumers on terms and conditions that the court sees as reasonable and just in the circumstances.

Given the number of class actions brought globally based on consumer protection law infringements, such as misleading advertising, misleading labelling, unfair contract terms and product liability, it is likely that South Africa is not far behind in using class actions in order to achieve what cannot be achieved by one consumer alone. Depending on the outcome of the Commission’s investigation into meat product labelling, this is an area where a class action is a real possibility, according to the Norton Rose report.

One could argue that websites such as do as much for consumer protection as the law, in that consumers can voice their complaints instantly and share their experiences with others.

Consumer protection has long been a cherished function of the press, and shady selling practices are quickly exposed in this age of internet information sharing. This makes it harder for pyramid and Ponzi schemes to get much of a foothold, but the CPA provides a number of statutory tools to redress the inevitable failures of the market place to satisfy the rights of consumers.
Relevant Legislation:
Consumer Protection Act

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