Articles

Act aims to take consumer protection to the next level

Business Law & Tax Review May 2009
By Simone Monty

The Consumer Protection Act is a piece of legislation to create and promote an economic environment that supports and strengthens the culture of consumer rights and responsibilities.

After much research, it was found that the environment surrounding the supply of goods and services in SA is currently characterised by:

• Discriminatory and unfair market practices;
• A proliferation of low quality and unsafe products;
• A lack of awareness of consumer rights;
• Limited redress;
• Inadequate protection for consumers; and
• Weak enforcement capacity.

To achieve its goal, the act proposes to repeal several laws, each dealing with aspects of consumer law and replacing them with a single Consumer Protection Act that will give priority to its own procedures for enforcement.

It is important that all retail sector players are aware of whether they are bound by the provisions of the new law.
Unless a transaction is exempt, the act will apply to every transaction involving the supply of goods or services in the ordinary course of business within the SA, to the promotion of such goods and services that could lead to such transactions, and to the goods and services themselves after the transaction is completed.

The following transactions are considered exempt:

• Transactions in terms of which goods or services are promoted to the state or are supplied to or at the direction of the state;

• Transactions where the consumer is a juristic person whose asset value or annual turnover at the time the transaction is entered into, equals to or exceeds a certain threshold (until the thresholds are set one cannot make any definitive pronouncement as to the application of the act to juristic persons);

• A transaction in terms of which the agreement entered into pursuant to such transaction constitutes a credit agreement for the purposes of the National Credit, 2005;

• Transactions in terms of which services are supplied under an employment contract or which give effect to a collective bargaining agreement or collective agreement as defined in the Labour Relations, 1995; and

• Transactions that fall within an industry wide exemption, for example the exemptions that have already been granted – where the service constitutes advice that is subject to regulation in terms of the Financial Advisory and Intermediary Services, 2003 or insurers subject to the Short-Term Insurance, 1998, or the Long-Term Insurance, 1998.

If any goods are supplied within SA to any person in terms of a transaction that is exempt from the application of the act, those goods, and the importer or producer, distributor and retailer, respectively, are nevertheless subject to the provisions of the law in respect of product recall and strict liability.

For purposes of clarity, the following arrangements are also regarded as transactions between the supplier and consumer:

• Memberships of associations for example a club membership; and

• Any franchise arrangement between the franchisor and a franchisee.

In addition, the act extends to a transaction irrespective of whether the supplier:

• Resides or has its principal office within or outside SA;

• Operates on a "for profit" basis or otherwise;

• Is an individual, juristic person, partnership, trust, organ of state, an entity owned or directed by an organ of state, a person contracted or licensed by an organ of state to offer or supply any goods or services, or is a public–private partnership; or

• Is required or licensed in terms of any public regulation to make the supply of the particular goods or services available to all or part of SA.

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