What is the Consumer Protection Act and why is it important for businesses and consumers?

The Consumer Protection Act (“CPA”) provides protection to consumers against suppliers.

The CPA is applicable to agreements that are concluded between a consumer and supplier during the ordinary course of business. A consumer being defined as someone who buys goods or receives services from a supplier. The supplier sells goods, renders services, and/or advertises his/her goods or services to the consumer.

This Act was developed primarily to provide a legal framework that protects the rights of consumers as consumer protection was not adequately regulated before the passing of the CPA in 2009.

Before this, people were not always protected against the suppliers of goods or services. Suppliers could have deceived consumers about the quality of their goods or services. Suppliers could also have offered goods or services on unreasonable terms and conditions, leaving the consumer with little or no solution if a problem occurred.

What are the main objectives of the Act?

 

As stated in the Act, its main goals are to:

• Promote a fair, accessible, and sustainable marketplace for consumer products and services.
• Establish national norms and standards relating to consumer protection.
• Provide for improved standards of consumer information.
• Prohibit certain unfair marketing and business practices.
• Promote responsible consumer behaviour.
• Promote a legislative and enforcement framework relating to consumer transactions and agreements.

 

Which rights do consumers have?

• The right to equality – Businesses may not unfairly discriminate against any person when they provide goods or services.
• The right to choose – this includes the right to return goods, the right to choose or examine goods, the right to select the supplier of your choice, and more.
• The right to fair and honest dealing – this includes the right to protection against fraudulent schemes and offers, the right to protection against pyramid and related schemes, and more.
• The right to privacy – this includes the right to discontinue receipt of direct marketing at any time and the right to restrict unwanted direct marketing.

These are just a few of the rights consumers have under the Act, read the rest of this blog to find out how you can learn more about this act in-depth.

 

Why is the Consumer Protection Act important?

For the business

 

Businesses have to lay emphasis on protecting consumers and satisfying them sufficiently. This is important for numerous reasons.

Consumers are the purpose of business, the main objective of business is to create a big consumer base, to expand on this base and to retain the base. Businesses can only expand their customer base by satisfying their current customers and protecting the interest of these customers. Customers are the foundation of any business.

Protecting and satisfying customers positively affects the business in the long term as satisfied consumers are capable of increasing your customer base by word of mouth, these consumers not only lead to repeating sales, but they also provide positive feedback and reviews to other prospective customers which in turn leads to an increase in your customer base.

Businesses that are known to treat consumers well and fairly will gain a strong reputation and become more sought after in the industry. This will in turn lead to higher profitability and competitiveness which will also lead to economic growth in the long run. Consumer protection policies, laws and regulations guarantee that businesses are kept in check.

The CPA contributes to dynamic and effective markets for businesses to grow. Consumer demand drives innovation and economic development as businesses are required to maintain fair prices and good quality of their products and services in order to be successful.

For the consumer

It allows consumers to understand what is going on – most consumers are well informed about their rights and responsibilities, and they know how and when to take legal action against companies that have wrongfully exploited them.

It ensures that consumers are treated fairly – without the CPA, consumers were exploited in numerous different ways, such as: receiving inferior goods, overpaying for items, receiving products that are unsafe, or have not been tested sufficiently.

It allows consumers to complain – consumers have the right to present their complaints in appropriate courts to ensure that justice is served in favour of the consumer if they have been wrongfully exploited by any business.

Consumers need to be able to obtain the correct, impartial information about the products and services they buy. This enables them to make the best choices based on their interests and prevents them from being mistreated or misled by businesses. The Act helps to increase consumer welfare by ensuring that businesses can be held accountable.

The CPA radically overhauled the manner and form in which business is conducted in South Africa. This is primarily because the Act legislatively establishes which types of business conduct between consumer and business is deemed acceptable or not. The Act now formally entrenches the rights and obligations of both consumers and business.

What should business owners do to ensure they comply?

Businesses most affected by the CPA are those that sell inferior quality or faulty products. Businesses must regularly check what or services they are selling even if it’s supplied by someone else and pay close attention to any consumer complaints.

The act requires businesses to communicate in normal language with their customers. If the information businesses provide is incomplete, incorrect, or even just difficult to understand you could be contravening the CPA. You need to look at every type of communication to ensure there is no misunderstanding. This is particularly relevant to products and services that could endanger someone in any way.

Full knowledge of the Act cannot be held by only one person. All employees who work with the public should be aware of the sections of the act that applies to their specific role. For example, salespersons must understand how to deal with returns and a marketing professional must understand rules around direct marketing to consumers.

What about ‘No warranty, no returns and no refunds signs in businesses?

No warranty, no returns and no refund notices are misleading to consumers.

The CPA allows return of defective products within a period of 6 months after delivery, at the risk and expense of the supplier. The supplier must at the direction of the consumer either, replace or repair defective products whichever option the consumer chooses.

Additionally, the supplier must further provide a statutory warranty of three months on the parts whether new or reconditioned as well as on the repairs done. If the failure or defect has not been remedied, the supplier loses the option to repair again. The only option is to refund or replace.

How can you learn more about the CPA?

The primary purpose of the CPA is to promote and advance the social and economic welfare of consumers. In essence, the Act intends to regulate the marketing of goods and services to consumers as well as the relationships, transactions and agreements between consumers, suppliers, producers, distributors, importers, retail providers and all intermediaries of goods and services.

The IMM has partnered with Commerce Edge to develop a short course that will explain the importance and purpose of the Act and describe the various customer rights that fall under the Act. It will also explain the steps that must be taken to ensure compliance.

This course will help you to make informed decisions when managing relationships, transactions and agreements between consumers, suppliers, producers, distributors, importers, retail providers and all intermediaries of goods and services.

Follow this link to sign up for our Consumer Protection Act short course today. <LINK>