CPA – many small businesses still not compliant

It may be over four months since the Consumer Protection Act became effective, but many small companies, close corporations and other enterprises selling prepaid certificates, credit, cards and vouchers are still not complying with the Act, says the Compliance Institute of South Africa.

The Act compels suppliers to retain any and all value in a consumer’s prepaid gift or other voucher for three years in certain instances, and indefinitely in others, from a minimum of 30 days in many prepaid vouchers.

It states that a prepaid certificate, card, credit, or voucher does not expire until the earlier of the date on which its full value has been redeemed in exchange for goods or services or future access to services, or three years after the date on which it was issued, or at the end of a longer or extended period agreed by the supplier at any time.

“Many service providers still have terms and conditions which oblige consumers to forfeit value remaining from their prepaid vouchers if they are unused within much shorter periods, sometimes as short as 30 days,” says Julie Methven, CEO of the Institute.

Most suppliers still continue to include as ‘profits’ the money made from unredeemed value into their financial statements, as soon as 30 days lapse, and in essence they are in breach of the Act without knowing it, says Methven.

She says the time has come for companies to be compliant and for small businesses in particular to educate themselves and their client-facing staff about the new Act as soon as possible, as many employees on the floor still don’t know that, as of April 2011, vouchers are now valid for three years.

“Four months into the Consumer Protection Act era, people are still buying vouchers with a 30-day expiry date, which is not acceptable. Companies need to build a culture of compliance, and this starts with adhering to the basics of regulations such as those in the CPA,” Methven says.

In this regard the Compliance Institute has developed a compliance risk management plan for the Consumer Protection Act and its regulations, to assist product suppliers and service providers to manage their interaction with this law. The CRMP is designed to guide the user through the minimum compliance requirements and to understand the risk of non-compliance. The first set of CRMPs will be launched at the Compliance institute’s annual conference 17 august 2011, and thereafter be available be available for purchase directly from the Compliance Institute.