The Consumer Protection Act has only been in force for just over a month, yet suppliers of goods and services are expected to already have their staff trained and all the necessary measures in place to ensure compliance, or suffer the consequences.
The Act is expected to bring SA consumer rights in line with other countries such as Australia and America. Local courts will make use of international precedents to interpret local incidents.
“What some companies still don’t realise is that there is no grace period. They also don’t realise that not only their actions, but also their words have to fall in line with the legislation. This means, for example, that overselling won’t be tolerated,” said Ann Coetzee, an independent consultant on the Consumer Protection Act.
Coetzee was speaking at a recent seminar held by global audit, tax and advisory firm Mazars. She warned attendees that the manner in which suppliers present themselves to consumers will be closely monitored and that they will have to account for whatever they promise or face potential penalties.
“Companies need to ensure that staff members who interact with customers in their daily operations are fully-versed on all relevant aspects of the Act, and fast, as they’ll have to take responsibility for every promise staff make, including what the switchboard operator says to a customer.”
She advised companies to do a thorough analysis of all their risks in terms of the Act and to put corrective measures in place sharply.
For instance, the Act requires that warnings on goods are correct and unambiguous, or else suppliers may be sued and ordered to pay a hefty price if customers suffer injury or a loss from misinterpreting the warning. “Safety and other warnings written by overseas manufacturers in poor English, for example, will no longer be tolerated. The Act also requires that consumers be paid consequential losses if the supplier fails to honour its services within certain circumstances. Bundling goods or services together is another transgression unless the convenience to the consumer outweighs the limitation on his or her right to choose, or if there is an economic benefit for the consumer.
“This could apply to adding a service plan as a standard feature on a vehicle, unless the bundled price of the service plan is cheaper than if the consumer were to buy it separately. This will also impact on franchisors who force franchisees to purchase goods from certain suppliers when the franchisee could get those goods cheaper elsewhere.”
Another risk is that suppliers are required to give a customer the opportunity to examine the goods before delivery, or face having the goods returned and receive a refund.
Putting further pressure on suppliers is the fact that there are many avenues of recourse available to consumers that have been set up, including the National Consumer Commission; the National Consumer Tribunal; the appropriate ombudsman; the alternative dispute resolution route (such as mediators and arbitrators); and a provincial consumer affairs court or criminal court. These processes are all in place and available to the consumer and most do not require a financial outlay from the consumer.
To minimise the risks that many businesses face, Coetzee suggests they should ensure that their public and product liability insurance protects their businesses against unforeseen lawsuits.
Wils Raubenheimer, partner at Mazars, says suppliers must protect themselves from exorbitant penalties by putting sound measures in place to ensure smooth and quick compliance with the Act, and shield their businesses from the inherent risks that accompany non-compliance.
“Suppliers might feel the new requirements are excessive and potentially harmful to their businesses, but similar legislation hasn’t resulted in companies closing down elsewhere in the world.”
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