How the new Act will improve the consumer's situation when dealing with retailers:
The following demonstrates some of the practical protection measures afforded to consumers by the Act:
In addition, the Regulations of the Act now stipulates the times and days during which consumers may be contacted for direct marketing. This will ensure that a direct marketer will only be allowed to make contact with consumers during certain periods. Also, the Act now prescribes that a salesperson visiting a consumer must now wear an identification device (badge, etc) that authenticates his/her identity. However, one of the most important provisions as far as direct marketing is concerned, is the right of a consumer to cancel any direct marketing agreement entered into, within 5 business days. This will ensure that a consumer will now have the right to "change his/her mind" about a direct marketing purchase within 5 business days. This is a real improvement as often consumers have signed up for a service or product without having thought about the purchase carefully and the possible effects it would have on their budget and other financial commitments. In some cases it has been found that consumers are subjected to pressure to the extent that they enter into an agreement merely to end a sales pitch. It would thereafter be difficult to cancel the agreement as the business would rely on the contract that was signed. The Act now ensures that a consumer that has entered into a contract after a direct marketing engagement may cancel such agreement within 5 business days. The cancellation will however have to be done in the correct manner i.e. either in writing or any other recordable manner. This provision therefore offers substantial relief to consumers that may have "second thoughts" after entering into a contract that was facilitated through direct marketing.
A practical example would be the following : You purchase a kettle for use in your home and the kettle can no longer boil water. The kettle is therefore no longer suitable for the purpose for which it was bought. If this has happened within 6 months of you taking delivery of the kettle you will now be within your rights to take the kettle back to the store and request a refund, repair or replacement. Importantly, the choice is the consumers and not the business. As such, the consumer has the power to decide whether he/she wants a refund, repair or replacement. Remember, the 6 month warranty mentioned above is in addition to any other warranty provided by the supplier. So, if a product has a 12 month warranty provided by the supplier then this 12 month warranty is still valid.
Cancellations of an advance reservation, booking or order: Complaints are often received from consumers when they are charged a cancellation fee by a business. For example, a consumer reserves accommodation at a hotel for 2 nights. On the day of the reservation, the consumer changes his/her mind as the hotel around the corner is offering a cheaper rate. The hotel then charges a 100% cancellation fee and the consumer is unhappy with the fee charged. In terms of the Act, a consumer does have the right to cancel a reservation. However, the business will similarly have the right to charge a cancellation fee. The Act however introduces the concept of a "reasonable cancellation fee" and what will constitute a reasonable fee will depend on:
As such, what constitutes a reasonable cancellation fee will depend on the merits of each case and the percentage of a cancellation fee that will be levied must be carefully considered by a business. The above are only a few examples of how the Act will alter the manner in which business transactions are concluded in our country.
The Main differences between the old legislation governing consumer and retailer relations and the new Consumer Protection Act
In the last decade our country has seen a general upturn with regards to its economic performance. Despite the economic challenges that we may face in the future all factors point towards the positive enhancement of our economic growth trend. This general upturn in economic growth has been good for our country but at the same time a number of challenges have resulted due to this growth. In the context of consumer protection one of the key challenges that consumers have experienced due to this growth relates to the issue of exploitation and abuse that is often perpetrated against the most vulnerable members of our society.
Unfortunately, the arena of Consumer Protection has lagged behind in terms of the legislative enhancements that were required to prohibit such abuse and exploitation and which also statutorily acknowledged the rights of consumers. In addition, the legislative measures that were in place to address such issues were often fragmented and administered across a broad cross section of sectors. This fragmentation lead to uncertainty in a number of sectors and the result was that often many consumer protection issues were not effectively enforced. A number of these fragmented pieces of legislation were also outdated as it had not kept trend with the changing circumstances experienced within our economy. For example the changes in technology that we have experienced over the past decade have in some sectors drastically altered the way in which ordinary business was conducted. One of the more important challenges created by the sets of fragmented legislation was the fact that it had not kept pace with the changing Constitutional environment that had been created by the advent of democracy.
Our Constitution enshrines the principles of human rights, respect, dignity and transparency. Many provisions of the legislation, especially those that pre-dated our Constitution, failed to acknowledge and adhere to these basic democratic principles. One of the important elements introduced by the Act is the acknowledgement of the rights that all of us as consumers enjoy. Previous legislation ignored these principles and for the first time we have statutory recognition of our right to confidentiality, information, disclosure, fairness, transparency, choice, safety and redress. This legislation will therefore create an environment within which both consumers and business will be able to adequately respect the rights and obligations that the law vests in each party.
The legislation will furthermore create a far better environment within which the various consumer protection authorities, both at national and provincial level, will be able to effectively regulate and enforce the various provisions aimed at enhancing the relationship between consumers and business. Enforcement of consumer protection has always been an area of debate as often consumers felt that consumer protection authorities lacked "the teeth" to enforce protection measures. This argument will now be settled as the Act introduces a number of enforcement powers both at the national and provincial level of government. The establishment of the National Consumer Commission (NCC) and the National Consumer Tribunal (NCT) will ensure that the legislation will be effectively administered and enforced. The NCC will be a so called "public entity" that will have specific powers in terms of the Act to ensure that transgressions are attended to.
The National Consumer Tribunal will act as an adjudicating body and will have the power to grant certain orders after it has conducted a hearing. The aforementioned institutions, together with the Provincial Consumer Protector offices will therefore play an important role in ensuring that errant businesses will be addressed should they transgress the law. For example, the NCC and the provincial consumer protection offices will now be entitled to investigate transgressions of the Act and issue so called "compliance notices" should the allegations be proved. The compliance notice will be an instruction to a business to comply with the specific provision of the Act e.g. process a refund. If a business does not comply with the notice the NCC may then request the National Consumer Tribunal to impose a fine against the business or the matter may be referred to the National Prosecuting Authority for formal prosecution of the business. As can be seen, the provisions of the Act will be adequately enforced by the institutions mentioned above and this will ensure that real protection is afforded to consumers that may be exploited by errant businesses.
What companies will have to do in order to comply with the new regulations.
It is imperative for companies to take the first step to determine the extent to which the Act applies to them so that the new business risks can be determined and mitigated. The solution will have to be organisation wide, working through each of the company's functional areas so as to standardise compliance while optimising business productivity and the operational requirements of the organisation.