THE CONSUMER PROTECTION ACT
“The Consumer Protection Act, signed into law on 29 April 2009, places onerous
obligations and prohibitions on suppliers and will have a significant impact on the way
business is conducted in South Africa. The planned date of implementation of the Act is
24 October 2010.
According to the Department of Trade and Industry, the primary purpose of the new Act
is to prevent exploitation or harm to consumers. The Act aims to recognise and
consolidate consumer rights, establish effective mechanisms for enforcement of these
rights, prohibit certain conduct and place certain obligations on suppliers of goods or
services. It harmonises consumer legislation by replacing existing provisions from five
other Acts including the Unfair Business Practices Act, 1988, the Trade Practices Act,
1976, the Sales and Service Matters Act, 1964, the Price Control Act, 1964, and the
Merchandise Marks Act, 1941.
The Act will have far reaching consequences on both the consumer and the national
economic environment. The law regulates the way businesses relate with consumers and
how they market their products and services. The Act therefore applies not only to “every
transaction occurring within the Republic” (subject to certain exemptions) but also to the
marketing and supply of goods and services. While a threshold will be set in order to
exclude certain transactions, franchisees are explicitly included as consumers under the
Act and are entitled to many of the same rights as individual consumers.
The Act touches on many aspects of supply relationships, including warranties, pricing,
standards of service and quality, advertising, labelling, marketing and others. The Act
introduces a bill of rights, granting consumers wide-ranging powers to cancel contracts
within “cooling-off” periods, to refuse to purchase “bundled” products or services, to
cancel fixed-term agreements if not satisfied with their terms and to block approaches by
direct marketers, amongst many others. There is also a distinct focus throughout the Act
on clear and understandable language and ensuring that the consumer is not misled by
suppliers.
Most controversially, the Act introduces a system of product liability on suppliers for
damage caused by the supply of defective goods. A consumer can therefore claim
damages from producers, distributors or suppliers for any death, injury, loss, damage to
property and economic loss, without having to prove negligence.
The Act will be introduced in two parts in order to afford business reasonable time to
align their trading practices and systems to ensure compliance with the new Act. The
sections governing the establishment of the National Consumer Commission – an
enforcement and investigative body –will come into operation on 24 April 2010 as will
the regulations to be promulgated in terms of the Act. This will ensure that businesses
will be in a position to know exactly what they need to do in order to comply, before the
implementation of the rest of the Act. The remainder of the Act will come into force on
24 October 2010. The Minister is also given the discretion to defer the effect of any
specific provision for a further 6 months if it is required. When reviewing and renewing
agreements, firms should be aware that some provisions of the Act will apply to
particular long-term and fixed agreements even before the Act is in effect.
Contraventions of the Act will not be treated lightly and there is provision for hefty
penalties for non-compliance. It is essential that firms consider their practices and
agreements in light of the changes brought about by this Act and make the necessary
adjustments to ensure compliance.”