Consumer Protection Act FAQ
1. Who does the CPA apply too?
The Consumer Protection Act applies to:
- every transaction for the supply of goods and services accruing within South Africa unless specifically exempt;
- the promotion of goods in South Africa
- and the goods and services themselves after the transaction is completed.
2. What is the meaning of "Transaction" in terms of the CPA?
In respect of the person acting in the ordinary course of business,
- an agreement between that person and one or more persons for the supply or potential supply of goods or services in exchange for consideration;
- the supply of goods and services by a person to consumers for consideration;
- the performance by, or at the direction of, that person of any services for or at the direction of a consumer for consideration;
- the supply of goods and services in the ordinary course of business of a club, trade union, association, society, whether for consideration or otherwise, regardless whether there is any membership charge.
3. What is the meaning of "Consumer" in terms of the CPA?
A consumer includes:
- any person (natural and juristic persons) to whom goods and services are marketed in the ordinary course of suppliers business (market, means promote or supply goods or services);
- users of goods or services (regardless of whether or not the user was a party to the transaction);
- a person who had entered into a transaction with the suppler in the ordinary course of the suppliers business, and
- a franchisee in terms of a franchise agreement (includes franchise offeree
4. What is the meaning of "Goods" in terms of the CPA?
- anything marketed for human consumption;
- any tangible object, including medium on which anything is written or encoded
- any literature music, photographs, movies, films, games, data, software, codes or any other intangible products written or in coded on any medium or a license to use such product.
- any legal interest in land or any other immovable property (other than an interest that falls within the definition of service, and) gas, water and electricity.
5. What is the meaning of "Services" in terms of the CPA?
Service includes but is not limited to:
- any work or undertaking performed by one person for the direct or indirect benefits of another;
- the provision of any education, information, advice or consultation, accept advice that is subject to regulation in terms of Financial Advisory and Intermediary Services Act, 2002 (Act 37 of 2002);
- any banking services, or related or similar financial services, or the undertaking, underwriting or assumption of any risk by one person on behalf of another, except to the extent that any such service;
- constitutes advice or intermediary services that is subject to regulation in terms of Financial Advisory and Intermediary Services Act 2002;
- is regulated in terms of the Long-term Insurance Act, 1998 (Act 52 of 1998), or the Short-term Insurance Act, 1998 (Act no. 53 of 1998);
- provisions of access to any electronic communication infrastructure,
- transportation of an individual or any goods,
- access, or a right of access, to any event, activity or facility,
- access to or use of any premises or property in terms of a rental agreement,
- the provision of sustenance or accommodation, entertainment or access to entertainment.
6. What are the exemptions where the Act will not apply?
The Act will not apply to transaction:-
- where goods and services are promoted or supplied to the state,
- where consumer is a juristic person whose asset value or annual turnover, at the time of the transaction, equals or exceeds the threshold value to determined the minister (presently indicated threshold is 5 million, this is still to be confirmed),
- credit agreement under the NCA, but goods and services under the agreement are not excluded,
- employment Contracts.
- collective bargaining and collective agreements as defined in the Labour Relations Act and Constitution.
- franchisee Agreements, offers, etc. which fall within the Act regardless of any threshold.
If goods are supplied to a person in terms of a transaction that is exempt from the application of this Act, those goods and the importer, producer, distributor and retailer of those good are nonetheless subject to the product liability provisions in Section 61 and to the Safety monitoring and recall provisions in Section 60.
7. What are the consumer's rights in terms of the CPA?
A Consumer has the right to equality, privacy, right to choose, right to disclosure and information, and the right to fair and responsible marketing.
They also have the right to fair and honest dealings, just and reasonable terms and conditions, fair value, good quality and safety.
8. What is Direct Marketing in terms of the CPA?
In terms of the right to privacy, direct marketing is very widely defined and means to approach a person either in person or by mail or electronic communications for the direct or indirect purpose of promoting or offering to supply, in the ordinary course of business, goods or services or requesting a person to make donation in any kind.
Consumers are afforded protection as direct marketing or advertising can be used in an ambush manner without giving the consumer the opportunity to think about the consequences of his/her purchase. If the supplier initiates the contact, the consumer usually has not taken the first step at his/her choice or discretion to initiate and conclude a transaction.
9. How does the CPA affect agreements:
The Act defines an Agreement as:
"An arrangement or understanding between or among two or more parties that purports to establish a relationship in law between or among them."
10. The Implied Warranty: Defective goods to be refunded/ replaced/ repaired by the Supplier: Section 56 of the CPA:
- The producer, imported, distributor and retailer each warrants that the goods are reasonably suitable for the purpose generally intended, free of defects and in good working order etc (comply with Section 55), except where goods are altered contrary to the instructions or after leaving the control of the party concerned.
- If goods fail to satisfy the requirements and standards set out above, the consumer may within six months after delivery, return the goods to the supplier, at suppliers risk and expense.
- The supplier must then, at the option of the consumer repair or replace the goods or refund the consumer the price paid for the goods.
- If the supplier repairs the goods there is a further three months warranty. If it fails again, the supplier must replace or refund the consumer.
- This warranty is in addition to any other express warranty provided by the party concerned or imposed by any Law.
11. The Consumer's right to goods that are of a fair value, quality and safety (Section 53, 54, 55 of the CPA):
The consumer has the right to:
- goods that are reasonably suited for the purpose generally intended;
- good quality, good working order and free of defeats;
- useable and durable for reasonable period of time;
- comply with standards under the Standards Act or other Public Regulation
12. The affect of the CPA on Fixed term agreements:
A fixed term agreement is any agreement between a consumer and supplier for goods or services which is for a period of at least twenty business days or more.
This, in effect allows a consumer to cancel any fixed term agreements, notwithstanding that it may be for a defined fixed period, at any time , for no cause, provided that the consumer gives the supplier twenty business days notice of his/her intention to terminate the fixed term agreement in question.
In light of the inevitable outcry that this provision incited, an amendment has been made which states that this particular clause may not be acted on, nor will it apply to transactions which have been concluded between a supplier and any consumer who is a juristic person, i.e any company, CC, Trust or association, regardless of their annual turnover or asset value.
It is important to know that while the consumer has the right to terminate a fixed term agreement on twenty days notice, the supplier does not have the same right to cancel the fix term agreement on twenty business days notice for no cause.
When the consumer cancels the consumer agreement for no cause, and provided he provides the twenty day notice of cancelation, the consumer will:
- nonetheless still remain liable to the supplier for any amounts owed to the supplier in terms of that agreement for goods and services already received, up to the date of cancelation; and
- be liable to the supplier for the reasonable cancelation penalty which the Supplier has imposed in consequence of any early termination
13. Information in plain and understandable language: Sec 22 of the CPA:
The consumer has the right to information in a contract or any document that is in plain and understandable language. This applies to all suppliers, businesses, notices, contracts, invoices, Terms and Conditions, quotations, documents or visual representations.
In terms of plain language, an ordinary consumer of the class of persons for whom the notice, document or visual representation is intended, with average literacy skills and minimal experience as a consumer of the relevant goods or services, should understand the content, significance and import of the notice, document or visual representation without undo effect, having regard to:
- the context, comprehensiveness and consistency of the notice, document or visual representation;
- the organisation, form and style of the notice, document or visual representation;
- the vocabulary, usage and sentence structure of the notice, document or visual representation; and
- the use of illustrations, examples, headings, or aids to reading and understanding.
14. Unfair, unreasonable or unjust contract terms: Section 48 of the CPA:
A supplier must not offer to supply, or enter into an agreement to supply, any goods or services at a price that is unfair, unjust or unreasonable.
The supplier must not require a consumer, or other person to whom any goods or services are supplied at the direction of the consumer to:
- Waive any rights;
- Assume any obligations; or
- Waive any liability of the supplier,
on terms that are unfair, unreasonable or unjust or impose any such terms as a condition of entering into a transaction.
15. Notice required for certain terms and conditions: Section 49 of the CPA:
Any notice to a consumers or potential consumers, or provision of a consumer agreement that purports to:
- limit in any way the risk or liability of the supplier,
- constitute an assumption of risk of liability by the consumer
- impose an obligation on a consumer to indemnify the supplier or any other person for any cause; or
- be an acknowledgment of any facts by the consumer
must be drawn to the attention of the consumer in writing in plain language as describe in Section 22.
The Consumer must be given an adequate opportunity in the circumstance to receive and comprehend a notice.
16. Written Consumer Agreements: Section 50 of the CPA:
The supplier must provide the consumer with a free copy or free electronic access to a copy of the terms and conditions of that agreement which must be in plain language and satisfy the requirements of Section 22; and set out and itemised breakdown of the consumers financial obligations under such agreement. If the consumer agreement between a supplier and the consumer is not in writing, a supplier must keep a record of the transaction entered into over the telephone or any other recordable form as prescribed.
17. Legally speaking: What is Strict Liability (Section 61 of the CPA)?
The Consumer Protection Act introduces strict liability in respect of defective products sold into the South African market, this will impact on production and insurance costs for manufactures as well as have an effect on the number of claims brought by consumers seeking a remedy for damages caused by the supplier of defective goods.
The principle of strict liability is that if you cause harm you are liable. It is liability without proof of fault for an injury caused by a product that is both defective and not reasonably safe. In order to establish strict liability, the injured person need only prove that the product was unsafe and therefore defective and the defect caused injury.
In order for any person to sue for damages flowing from the manufactures liability, one will need to prove the elements of delict, which are Wrongfulness and Negligence.
Wrongfulness: The manufacture has a legal duty to prevent defective product for reaching the Market.
Negligence (Fault): Once wrongfulness has been established there must also at least be negligence on the part of the manufacture in order to find liability. The manufacturers conduct must be tested against the care that a reasonable person would have exercised in the particular circumstances and whether the particular conduct/ defect was reasonably foreseeable?
Strict Liability: It is now up to the manufacturers to prove that they are not negligent. Examples of defective products are; harmful ingredients, foreign objects, deterioration before sale, bad design, poor preparation, lack of proper instructions or warnings, bad packaging.
Section 61 (6) of the Consumer Protection Act states that harm for which a person may be held liable in terms of this section include:
- The death of, or injury to, any natural person;
- An illness of any natural person;
- Any loss of, physical damage to, any property, irrespective of whether it is movable or immovable; and
- Any economic loss that result from the harm contemplating in the above paragraphs.
18. What are the consumer's rights in terms of receiving a service?
Section 54 of the Consumer Protection Act states that when a supplier undertakes to perform any services for or on behalf of a consumer, the consumer has the right to:
- the timely performance and the completion of those services, and timely notice of any unavoidable delay in the performance of the services;
- the performance of the services in the manner and quality that persons are generally entitled to expect;
- the use, delivery or installation of goods that are free of defects and of a quality that persons are generally entitled to expect, if any such goods are required for performance of the services; and
- the return of any property or controlled over any property of the Consumer in at least as good condition as it was when the Consumer made it available to the supplier for the purposes of performing such services.
If a supplier fails to perform a service to these standards, the consumer may require the supplier to either remedy any defect in the quality of the services performed or goods supplied; or refund the consumer a reasonable portion of the price paid for the services performed and goods supplied, having regards to the extent of the failure.
19. Notice given by a supplier of any activity/ facility where there is a risk to a consumer:
that a consumer could not reasonably be expected to be aware or which an ordinary alert customer could not reasonably be expected to contemplate;
- that could result in serious injury or death,
- must specially draw the fact, nature and potential effect of that risk to the attention of the consumer in a form and manner set out in Section 49.
20. The National Consumer Commission:
In terms of Section 60 of the Consumer Protection Act a National Consumer Commission is to set up industry wide codes of practise for:
- Receipt of notice of consumer complaints or reports for product failures, defects or hazards;
- Returns of goods because of failure, defects or hazards;
- Personal injury, illness or damage to property caused as a result of a product failure, defect or hazard;
- Monitoring the extent of injury or damage resulting from the use of those goods;
- Analyses of information with the object of detecting or identifying any previously undetected or unrecognized potential risks to the public from the use of/or exposure to those goods;
- Conducting the investigations into the nature, causes, extent and degree of the risk pertaining to those goods;
- Notification to the Consumer of the nature, causes, extent and degree of risk pertaining to those goods, and
- If the goods are unsafe recall those goods to repairs/replacements or refund.