The Consumer Protection Act for the Business Owner

The new Consumer Protection Act is going to have a huge impact on virtually every business in South Africa. We therefore thought that we would give you a heads up on some of the practical implications of this Act for you.

Adapted from an article published by Michalsons.

Download the full Consumer Protection Act here.

The practical implications

So what does the Consumer Protection Act mean for you? Here are some of the most important things:

South African consumers are the most protected consumers in the world. If you are consumer facing, this is not good news. However, as with many challenges it can also be seen as an opportunity. You are required to comply with the law, so why not do so and use the marketing opportunity to tell your customers how much you protect them. The businesses that comply first might well be viewed favourably by consumers.
If your goods are shrink-wrapped (such as shrink-wrapped software) you might run into problems with regards the consumer’s right to inspect goods. The definition of goods includes intangible goods such as software.
If you have fixed term agreements with your customers you may be required to give them notice prior to the expiry of the fixed term. This could place an administrative burden on you.
All agreements with consumers must be in plain and understandable language. You are probably going to have to re-draft or amend your terms, your sale agreements and your advertisements into plain language. If you don’t, then your customers might be able to get out of the agreements, you might be guilty of unconscionable conduct, or you might be sued.
The general theme of the Act is to protect the poor and the vulnerable and is in a way the Bill of Rights for the consumer.
The Act alters the common law to be more favourable to consumers. By default, you give the consumer various warranties and indemnities. The warranties that you give in your agreements are no longer the only warranties that apply.
The Act also applies to legal services provided by attorneys so it impacts on attorneys directly too. The ambit of the Act is very wide. Depending on what is contained in the regulations, a lessee may be viewed as a consumer and therefore lease agreements may need to comply with the Act. The Act does not apply to employment contracts. A franchisee will be a consumer and therefore franchise agreements will have to comply.
The court will be given the power to redraft (well order you to change them actually) your contracts, terms of business, terms of sale and other consumer related terms.
Courts must interpret standard form contracts in favour of consumers.
Promotional competitions will be governed by this Act, rather than the Lotteries Act. You must prepare competition rules before you run a competition – be they online or offline.
The consumer protection provisions in the ECT Act are not repealed and therefore there is a potential overlap.
You are going to have to revisit your refund policy.
Your marketing campaigns are going to be affected and conducted in accordance with the Act.
Mechanisms are put in place to enable consumers to enforce their rights.