Top tips for SA retailers to mitigate risk of liability

Simon Colman, Underwriting Executive at SHA.

In light of the implementation of the Consumer Protection Act (CPA), it is imperative that South African retailer owners ensure that they have implemented all precautions that can reasonably be expected of them, not only to protect their customers - especially in the event of alleged liability cases due to negligence - but also to safeguard themselves financially.

Whilst the risk of litigation cannot be eliminated completely, business owners that implement some risk management in their stores will not only demonstrate to their customers that they care about them but will also be able to mitigate the possibility of potentially devastating losses. This is according to Simon Colman, Underwriting Executive at SHA Specialist Underwriters – the largest liability underwriting management agency (UMA) in Southern Africa – who offers the following information:

• Ensure that signage and disclaimers are visible and understandable: Liability relating to in-store injuries or ‘slip and trip’ risks can be minimised by displaying plain language signage to warn consumers of possible hazardous areas. Adequate housekeeping also goes some way to ensure that things like broken tiles and slippery surfaces are attended to before anyone is injured. In addition, store owners should ensure that all products stocked in the store have clear, plain language instructions for use. Clear product instructions are not only the responsibility of the manufacturer, the retailer must ensure that displayed products are labelled accurately and that the language used is easily understandable and jargon-free.

• Implement stringent quality control checks: Retail outlets must step-up their existing quality control checks. It would be a mistake for retailers to assume that the responsibility rests solely with the manufacturer. In such a case, both parties are jointly and severally liable for harm caused by a product. The law does allow for some defences on the part of the retailer, particularly where it is impossible for them to test the safety of every single product - like examining the contents of tinned food for example.

South African retailers that import products are especially at risk as consumers will find it very difficult to take action against a manufacturer based abroad. It is thus very likely that wronged parties will instead focus their attention on the local retailer.

• Train staff on CPA and products: It is vital for retail staff to be regularly trained on the pre-requisites of the CPA to ensure that internal procedures are consistently adhered to. Returns policies and the consumer complaints processes must also be carefully engineered to adhere to specified requirements.

• Consult your insurance broker regarding policy options: For example, the CPA empowers the National Consumer Commission to initiate a product recall if it feels a dangerous product is on a local shelf. The cost of a recall can potentially run into the millions of rands for a retailer within the space of a few days. Traditional policies do not cover these costs and retailers should regularly converse with their brokers to ensure that they have the applicable policies in place.