SME Lifelong Learning Initiatives CONSUMER PROTECTION ACT:

68 of 2008

BANKSETA 2010

Authors: Thabo Khanye and Portia Sekati RUDO

Page 2

Acknowledgements

Authors of the Material 1. Mr. Thabo Khanye - RUDO Consulting

2. Ms. Portia Sekati – RUDO Consulting

References 1. Ms. Magauta Mphahlele – Consumer Protection Specialist

Sources of the Material 1. The Consumer Protection Act, 68 of 2008

2. The National Credit Act, 34 of 2005

3. The Department of Trade and Industry (DTI), Overview of Consumer Protection

Legislation in South Africa: Nonfundo Maseti, June 2009

4. Update: A summary of the Consumer Protection Act 68 of 2008: Cliffe Dekker

Hofmeyr, Winter 2009

5. Summary of the Consumer Protection Act 68 of 2008, Raynique Wright, Trinitas

Consulting

6. The Consumer Protection Bill: A few preliminary comments, Monique du Preez

7. Lecture Notes 2009, Capita Selecta Private Law A: Ms K Kern, University of

Johannesburg

Acknowledgements This material would not have been developed without the assistance of a number of

individuals and organizations who were generous with their time and efforts. We wish to

extend our gratitude to the following:

• The BANKSETA for funding this material and the capacity building workshops

• Mr. Trevor Rrammitlwa and Ms. Sharon Mokgwatlheng and the BANKSETA team,

who developed the initial concept and scope for this project

• Ms. Lynette Mentor and Ms. Sharon Mokgwatlheng who coordinated, managed and

provided helpful insights and comments on the material.

• Mr. Peter Setou and his team from the NCR on his support and constructive

comments on the material.

Page 3

Table of Contents

Content Page no

1. Overall Objectives of the Project 4

2. Abbreviations 6

3. Introduction and Context 7

3.1 Background 8

3.2 Implication for existing legislation 9

3.3 The Structure of the Act 10

4. Purpose and Policy of the Act 12

4.1 The Application of the CPA Section 5(1) 13

5. Transactions which are excluded 5 (2) 14

5.1.Exclusion of Credit Agreements 5(2) (d) 14

5.2 Exclusion of Insurance and FAIS Legislation 14

6. Who is the Consumer according to the CPA 16

7. Industry Wide Exemptions 17

8. Implementation of the CPA 18

9. Fundamental Consumer Rights 21

9.1 Right of Equality in Consumer Markets 22

9.2 Consumer’s Right to Privacy 22

9.3 Consumer’s Right to Choose 23

9.4 Consumer’s Right to Disclosure and Information 24

9.5 Right to Fair and Responsible Marketing 25

9.6 Right to Fair and Honest Dealings 26

9.7 Unfair, Unreasonable or Unjust Contract Dealings 27

9.8 Right to Fair Value, Good Quality and Safety 28

9.9 Suppliers Accountability to Consumers 29

10. Protection of Consumer Rights and Consumer’s Voice 30

11. Realization of Consumer Rights 31

Page 4

Content Page no

12. Dispute Resolution Process as Per the Act 32

12.1 National Consumer Commission (NCC) 32

12.2 National Consumer Tribunal 32

12.3 Administrative Fines 33

12.4 Dispute Resolution Process 34

13. Industry Codes of Conduct 35

14. Glossary Of Terms 37

15. List of Useful Contacts 46

Page 5

Overall Objective of the Project

The aim of this project is to provide workshops aimed at capacitating SMEs / MFI on

what the new Consumer Protection Act means for their businesses and how it is going

to be implemented. The project will deliver learning in line with the training and

development needs of MFI employees in the broader banking and micro-finance sector.

The Consumer Protection Act aims at promoting a fair, accessible and sustainable

marketplace for consumer products and services. The new Act comes with challenges

in the SME/MFI sector and therefore BANKSETA is embarking on Life Long Learning

(LLL) initiatives to enable stakeholders to meet the requirements of the New Consumer

Protection Act

The Learning Outcomes The objective of this initiative is to build capacity in the broader banking and micro-

finance sector as well as to enable and support BANKSETA registered SMEs in

preparing for the implementation of the Consumer Protection Act. This intervention’s

focus is on but not limited to the implications of the Act to the microfinance sector in the

following areas:

• Promotion and protection of the economic interests of consumers;

• Improvement of access to, and the quality of information leading to

Creating an enabling environment for consumers to make informed choices;

• Protection of consumers from hazards to their well-being and safety;

• Effective means of redress for consumers;

• Promotion and provision for consumer education, including education concerning

the social and economic effects of consumer choices;

• Freedom of consumers to associate and form groups to advocate and promote their

common interests;

The expected benefits of this initiative are the transfer of information and experiences

about Consumer Protection Act’s impact in the micro finance environment. Furthermore,

this will provide an opportunity for micro lenders to understand the requirements of the

Bill and to prepare for its implementation.

Page 6

Abbreviations

NCA National Credit Act

CPA Consumer Protection Act

FISOS Financial Services Ombuds Schemes Act

NCC National Consumer Commission

NCR National Credit Regulator

NCT National Consumer Tribunal

The DTI The Department of Trade and Industry

OCP Office of Consumer Protection (DTI)

CAFCOM Consumer Affairs Committee (DTI)

PCC Provincial Consumer Courts

SABS South African Bureau of Standards

ADR Agents Alternative Dispute Resolution Agents

PCAO Provincial Consumer Affairs Offices

EAAB Estate Agency Affairs Board

NGB National Gambling Board

NHBRC National Homebuilders Registration Council

CIPRO Companies and Intellectual Property Registration Office

Page 7

Introduction and Context

The Consumer Protection Act, signed into law on 24 April 2009, will become effective on the 24th October 2010 and places serious obligations and prohibitions on suppliers

and will have a significant impact on the way business is conducted in South Africa. It is

a principle based piece of legislation that applies across the economy and affects all

sectors unless they are specifically exempted.

The primary purpose of the new Act is to prevent exploitation or harm to consumers and address power imbalances between individual consumers and suppliers of goods and

services1

The Act will have far reaching consequences on businesses and the national economic

environment. The law regulates the way businesses relate with consumers and how

they market and sell their products and services. The Act therefore applies not only to

“every transaction occurring within the Republic” (subject to certain exemptions) but also

to the marketing and supply of goods and services. While a threshold will be set in order

to exclude certain transactions, franchisees are explicitly included as consumers under

the Act and are entitled to many of the same rights as individual consumers.

. The Act will achieve these purposes by recognizing and consolidating

consumer rights, establishing effective mechanisms for enforcement of these rights,

prohibiting certain conduct and placing certain obligations on suppliers of goods or

services. It harmonizes consumer legislation by replacing existing provisions from five

other Acts including the Unfair Business Practices Act, 1988, the Trade Practices Act,

1976, the Sales and Service Matters Act, 1964, the Price Control Act, 1964, and the

Merchandise Marks Act, 1941.

The Act touches on many aspects of supply relationships, including warranties, pricing,

standards of service and quality, advertising, labeling, marketing and others. The Act

introduces a bill of rights, granting consumers wide-ranging powers to cancel contracts

within “cooling-off” periods, to refuse to purchase “bundled” products or services, to

cancel fixed-term agreements and to block approaches by direct marketers, amongst

1 Suppliers of goods and services include retailers of goods (i.e. consumables, furniture, clothing, literature, music etc); casinos; motor manufacturers; second-hand car dealers; marketing and advertising agencies; the print media industry; airlines; estate agencies; the tourism and hospitality industry; franchisors and franchisees; service providers in, for example, the healthcare, beauty and hair-care, education, banking and financial services, transportation, funeral and telecommunications sectors, as well as providers of professional services (i.e. medical practitioners, attorneys and accountants). Definition by Raynique Wright, Trinitas Consulting

Page 8

many others. There is also a distinct focus throughout the Act on clear and

understandable language and ensuring that the consumer is not misled by suppliers.

Most controversially, the Act introduces a system of product liability on suppliers for

damage caused by the supply of defective goods. A consumer can therefore claim

damages from producers, distributors or suppliers for any death, injury, loss, damage to

property and economic loss, without having to prove negligence.

In view of the above, it is important that every supplier of goods and services is aware of

the purposes of the Act, the rights accorded to consumers, the conduct that is

prohibited, as well as the enforcement and redress mechanisms provided for in the Act.

The CPA overlaps with various pieces of legislation, which includes the National Credit

Act. While the CPA excludes credit agreements, it does not exclude goods or services

provided in terms of those agreements. It is therefore important for credit providers to

understand the differences between the two pieces of legislation.

B ac k ground

The CPA was preceded by extensive research into the state of consumer protection in

South Africa. The research findings by the DTI showed that consumer protection was

lacking in many sectors of the economy. The main findings that informed the eventual

legislation indicated that:

• Consumers’ most basic rights to information, disclosure, fairness, transparency and

redress are nonexistent;

• Current laws do not adequately address discriminatory and unfair market practices,

proliferation of low quality and unsafe products;

• Consumers generally lack awareness of rights and have limited redress as current

laws emphasize criminal sanctions rather than simple remedies like refunds and

replacements, which consumers prefer;

• Most sector laws that regulate insurance, communication and other financial

services do not provide adequate consumer protection;

• The institutional structures responsible for enforcing consumer protection, like the

Consumer Affairs Committee of the DTI and the Provincial Consumer Affairs Offices

have limited powers and weak enforcement tools to ensure proper protection of

consumer rights;

• The Courts are not positioned to deal with consumer protection issues due to

Page 9

capacity which is focused mainly on criminal rather than civil matters.

The Act codifies a number of fundamental consumer rights, some of which are derived

from the internationally recognized rights, which include the right to access to basic

goods and services, safety, redress, education, information, choice, and representation.

Implications for existing legislation

Under the existing regulatory framework, the Unfair Business Practices Act and various

other sector laws regulate consumer protection. However the biggest shortcoming of

existing laws is that most are more than forty years old and tend to be based on the

“buyer beware” principle which assumes equal bargaining power between a consumer

and a supplier. As a result most are reactive, weak on enforcement and provide very

little redress for aggrieved consumers.

The Consumer Protection Act’s content is largely derived from ‘the repeal, consolidation

and re-enactment of existing legislation.2

• Consumer Affairs (Unfair Business Practices) Act, 1988 (Act No. 71 of 1988), Trade

Practices Act, 1976 (Act No. 76 of 1976),

’ The new Consumer Protection Act will replace

some existing pieces of legislation and some sections of various Acts. Most of the

matters that were regulated in terms of these pieces of legislation have been adopted,

sometimes in modified form in the CPA. There are five Acts/ which will be fully repealed

and two have partial repeals/sections as indicated below from the effective date subject

to the transitional provisions in Schedule 2 of the Act:

• Sales and Service Matters Act, 1964 (Act No. 25 of 1964),

• The Business Names Act, 1960 (Act No. 27 of 1960),

• The Price Control Act, 1964 (Act No. 25 of 1964),

• Sections 2 – 13, and sections 16 – 17 of the Merchandise Marks Act, 1941

• Lotteries Act (Section 54 and regulations only)

2 Nomfundo Maseti; Overview of the Consumer Protection Legislation in South Africa, DTI, 19 June 2009

Page 10

Unlike the National Credit Act (NCA), the CPA does not require suppliers to be licensed

as this is addressed by other pieces of legislation, including the Companies Act.

However section 80 requires the registration of any name3 other than the original name

that is used for trading. This process will be handled through CIPRO. Trading without

having registered your business name is prohibited.4

The Act requires and makes it

mandatory for business names to be registered, and that business in cases of natural

persons has to be carried out in the persons names as per the identification book and in

cases of a juristic, that the business be carried under their registered business names.

The reason is to allow consumers to know the legal entities that they are doing business

with, and to know who to litigate against in terms of disputes. The provisions relating to

the registration of business names only come into effect on a date determined and

gazetted by the Minister as per section 5 of schedule 2 of the Act.

The Structure of the Act

The Act has 7 chapters; 122 sections and 2 schedules and it is presented as

follows:

Chapter 1: Interpretation, purpose, policy & application,

Chapter 2: Fundamental Consumer Rights

Chapter 3: Protection of consumer rights and consumer’s voice

Chapter 4: Business names and Industry Codes of Conduct

Chapter 5: National Consumer Protection Institutions

Chapter 6: Enforcement of the Act

Chapter 7: General Provisions

Schedule 1: Consequential Amendments

Schedule 2: Transitional Provisions

3 “business name” means a name under which a person carries on business, other than the person’s full name; 4 Identification of supplier, A person must not carry on business, advertise, promote, offer to supply or supply any goods or services, or enter into a transaction or agreement with a consumer under any name except –

a) the person’s full name as – i. recorded in an identity document or any other recognised identification

document, in the case of an individual; or ii. registered in terms of a public regulation, in the case of a juristic person; or

b) A business name registered to, and for the use of, that person in terms of section 80, or any other public regulation.

c)

Page 11

Learner activity 1

1. What made the promulgation of the CPA necessary what are the historical

facts that informed the decision?

2. How many Acts are fully repealed by the CPA, and please state them below?

Which Acts are partially repealed by the CPA?

3. How is the Acts structured? How many chapters and sections does it have?

4. Do you think that these findings correspond to how things are (discussion activity)

Page 12

Purpose and policy of Act

The purpose of this Act is to promote and advance the social and economic welfare of

consumers in South Africa by:

a. Establishing a legal framework for the achievement and maintenance of a consumer

market that is fair, accessible, efficient, sustainable and responsible for the benefit

of consumers generally;

b. Reducing and ameliorating any disadvantages experienced in accessing any supply

of goods or services by consumers –

• who are low income persons or persons comprising low income

communities;

• who live in remote, isolated or low density population areas or communities;

• who are minors, seniors or other similarly vulnerable consumers; or

• whose ability to read and comprehend any advertisement, agreement, mark,

instruction, label, warning, notice or other visual representation is limited by

reason of low literacy, vision impairment, or limited fluency in the language in

which the representation is produced, published or presented;

c. Promoting fair business practices;

d. Protecting consumers from –

• unconscionable, unfair, unreasonable, unjust or otherwise improper trade

practices; and

• deceptive, misleading, unfair or fraudulent conduct;

e. Improving consumer awareness and information and encouraging responsible and

informed consumer choice and behavior;

f. Promoting consumer confidence, empowerment, and the development of a culture

of consumer responsibility, through individual and group education, vigilance,

advocacy and activism;

g. Providing for a consistent, accessible and efficient system of consensual resolution

of disputes arising from consumer transactions; and

h. Providing for an accessible, consistent, harmonized, effective and efficient system of

redress for consumers.

The purpose of the Act is mainly to protect the rights of vulnerable by ensuring that the

rights provided by the Act are enforceable and the right type of redress can be provided.

Page 13

The general purpose is therefore to ensure that:

• Discrimination and other barriers to access to goods and services is removed;

• Unethical or unscrupulous conduct is removed;

• Disclosure of information is improved;

• Practices that limit consumer choice are prohibited;

• Customer service is improved and enforceable;

• Only quality, reliable goods and services that are safe for consumer health and life

as well as for the environment are introduced into the market;

• Well resourced, effective and efficient institutions and regulatory tools are provided

to ensure proper enforcement and redress.

The Application of the CPA Section 5(1)

In terms of section 5 (1), the Act will apply to:

• Every transaction within the Republic unless exempted otherwise

• The promotion of any goods or service within the Republic of South Africa

• The supplier of any goods or services

• Goods and services supplied from a transaction exempted from this Act

Suppliers according to the Act include:

a) Any business whether profit or nonprofit that promote or supply goods or

services to consumers across all sectors of the economy unless exempted;

b) Government institutions or any entity contracted by the state to provide goods or

services to consumers;

c) Franchisors;

NOTE: The meaning of the words ‘transaction’, ‘promotion’ , ‘goods’ and ‘services’

are critical to understanding the scope of application of the CPA, and to identifying any

possible overlaps with the NCA.

Page 14

Whic h T rans ac tions are exc luded? S ec tion 5 (2)

Section 5 (2) stipulates the following transactions to which the Act does not apply:

• Where the consumer is the state;

• Where the consumer is a juristic person whose asset value or annual turnover is

equal to or exceeds the threshold value to be set by the Minister;

• Where the Act specifically excludes certain agreements or provides exemptions;

• Goods or services supplied under an employment agreement;

• Collective bargaining agreements; and

• A credit agreement under the National Credit Act (NCA, 34 of 2005)

NOTE: The threshold for determining which small businesses qualify to be

considered consumers for the purposes of the CPA has not yet been determined.

The Minister will publish regulations in this regard

NOTE: Transactions with the state as the consumer will not be exempt from sections

61 and 62 that deal with product safety and liability. All other qualifying transactions

will need to comply with section 61(product liability) irrespective of their exemption

status.

E x c lus ion of C redit A greements ; S ec tion 5 (2) (d)

Section 5(2) (d) of the CPA, excludes any transaction “that constitutes a credit agreement under the National Credit Act, BUT the goods and services that are the

subject of the credit agreement are not excluded from the ambit of this Act”. This

exemption is limited and does not exempt credit providers from the application of the

CPA as far as they are suppliers of goods and services. In simple terms this means that

if a consumer purchases a car on credit, the NCA will apply to the financing part of the

transaction(credit agreement), while the CPA will apply to the “good”, being the car. In

this instance the CPA will address issues like the quality of the product, warranties,

repairs and maintenance. You need to determine which goods and services you provide

and ensure that there is compliance with the CPA. Overlaps between the CPA and NCA

also need to be clarified to ensure overall compliance.

Page 15

Exclusion of Insurance and FAIS Legislation

The definition of ‘service’ is very wide and covers a range of services offered by various

sectors of the economy. Only services that are regulated in terms of the Financial

Advisory and Intermediary Services (“FAIS”) Act, the Long & Short Term Insurance Acts

are excluded. In terms of the definition “Service” includes, but is not limited to:

• Any work or undertaking performed by one person for the direct or indirect benefit of

another;

• The provision of any education, information, advice or consultation, except advice

that is subject to regulation in terms of the Financial Advisory and Intermediary

Services Act, 2002 (Act No. 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:

o Constitutes advice that is subject to regulation in terms of the Financial

Advisory and Intermediary Services Act, 2002 (Act No. 37 of 2002); or

o Is regulated in terms of the Long-term Insurance Act, 1998 (Act No. 52 of

1998), or the Short-term Insurance Act, 1998 (Act No. 53 of 1998);

• The transportation of an individual or any goods;

• The provision of:

o Any accommodation or sustenance;

o Any entertainment or similar intangible product or access to any such

entertainment or intangible product;

o Access to any electronic communication infrastructure;

o Access, or of a right of access, to an event or to any premises, activity or

facility; or

o Access to or use of any premises or other property in terms of a rental;

o A right of occupancy of, or power or privilege over or in connection with, any

land or other immovable property, other than in terms of a rental; and

o Rights of a franchisee in terms of a franchise agreement, to the extent

applicable in terms of section 5 (6) (b) to (e).

NOTE: The exclusion of Long Term and Short Term Insurance Acts is conditional on these two laws being aligned with the CPA within 18months of the commencement of the CPA. If by October 2011 the insurance laws have not been aligned with the CPA, the provisions of the CPA will apply.

Page 16

W ho is the c ons umer ac c ording to the C P A ?

Unlike the common law and the NCA which restricts rights and obligations to contracting

parties, the CPA extends some of the protections of the Act to “users”, “recipients” or

“beneficiaries” of goods and services and franchisees. The Act therefore considers the

following individuals or entities as consumers:

• A person to whom those particular goods or services are marketed in the ordinary

course of the supplier’s business;

• A person who has entered into a transaction with a supplier in the ordinary course of

the supplier’s business, unless the transaction is exempt from the application of this

Act by section 5 (2), or in terms of section 5 (3);

• If the context so requires or permits, a user of those particular goods or a recipient

or beneficiary of those particular services, irrespective whether that user, recipient or

beneficiary was a party to a transaction concerning the supply of those particular

goods or services; and

• A franchisee in terms of a franchise agreement, to the extent applicable in terms of

section 5 (6) (b) to (e). Franchise agreements covered include:

o Solicitation of offers to enter into franchise transactions;

i. Offers to enter into franchise agreements;

ii. A franchise agreement including supplementary agreements; and

iii. The supply of any goods or services in terms of the franchise agreement.

Requirements of franchise agreements: Section 7 (1) 7(1)a franchise agreement must -

• Be in writing and signed by or on behalf of the franchisee;

• Include any prescribed information, or address any prescribed categories of

information; and

• Comply with the requirements of section 22.

(2) A franchisee may cancel a franchise agreement without cost or penalty within 10

business days after signing the agreement, by giving written notice to the franchisor.

(3)The Minister may make regulations with respect to information to be set out in

franchise agreements, generally, or within specific categories or industries.

TIP: Determine very carefully who your consumers are and ensure that your policies and procedures are aligned with the requirements of the Act relating to that specific consumer.

Page 17

Industry Wide Exemptions

Besides the upfront exemptions provided for in the Act, section 5(3) provides for a

process where industry sectors can apply for exemptions to the Minister of Trade and

Industry through the National Consumer Commission. A regulatory authority may apply

to the Minister for an industry-wide exemption from one or more provisions of this Act on

the grounds that those provisions overlap or duplicate a regulatory scheme

administered by that regulatory authority in terms of:

• Any other national legislation; or

• Any treaty, international law, convention or protocol.

The Minister, by notice in the Gazette after receiving the advice of the Commission, may

grant an exemption contemplated in subsection (3):

• Only to the extent that the relevant regulatory scheme ensures the achievement of

the purposes of this Act at least as well as the provisions of this Act; and

• Subject to any limits or conditions necessary to ensure the achievement of the

purposes of this Act.

TIP: Each sector will need to compare the provisions of the CPA against any other

relevant legislation, including the NCA and through the relevant regulatory authority

apply for exemption where there is a clear indication that there is duplication or the other

Act ensures the achievement of the purposes of the NCA.A regulatory Authority is

defined as any organ of state or entity established in terms of provincial or national

legislation, responsible for regulating an industry or sector of an industry. Examples are

the NCR, ICASA, NERSA, SABS, NHBRC, EAAB, NGB etc.

Page 18

Implementation of the C P A

In order to provide time for the establishment of the NCC, the promulgation of the

regulations and ensure the readiness of suppliers to comply, the Act is being

implemented in phases. The Act provides for an “early effective date” and a “general

effective date”. Schedule 2 of the Act defines the two dates and provides for the

following:

Phase

Item

Implementation Date

1 – Early Effective Date Chapter 1 and Chapter 5, section 120 become effective.

24 April 2010

Chapter 1 – Purpose and Policy of the Act

Chapter 5 – Establishment of the Commission, its functions and the role of provinces Section 120 – Power of Minister to make regulations

2 – General Effective Date

All other provisions of the Act become effective

24 October 2010. This date can be deferred by another 6 months by the Minister by publishing a notice in the government gazette 20 days before the 29 October 2010.

The general effective date, which relates to all the other provisions of the Act, can be

postponed for another six months if for example the commission has not yet been

established or the regulations are not finalized. The Minister will have to publish a notice

to this effect 20 business days before the “general effective date” 24 October 2010. The

transitional provisions also provide for small municipalities or organs of state that

administer them to be provided with further grace periods on application by the relevant

Minister.

Page 19

Learner Activity 2 1. What main areas of concern by the legislators are addressed in the purpose of the CPA? 2. Which type of consumers are prioritized in the purpose of the Act and why?

3. In your own words, describe the application of the CPA?

4. Name three agreements that are exempted from the CPA? Why do you think they were exempted

5. What are the most important conditions to note about:

5.1. The exclusion of credit agreements

5.2. The exclusion of insurance laws 6. Why do you think the definition of consumer is extended to users and

beneficiaries, can you provide examples of scenarios where this would apply 7. What happens to the goods of transactions that are exempted from the Act? 8. Looking at how the exclusion of credit agreements is phrased, what in your

view is the difference between the NCA and the CPA

Page 20

. 9. Considering your type of business and the definition of service, what aspect

of the Act do you think will most impact on your business

10. That registration requirements will you need to meet in order to run your

business in terms of the CPA, how do these differ from the requirements of the

NCA

11. As a small business what criteria would you need to meet in order to qualify as

a consumer in terms of the CPA and enjoy the rights in the Act

12. How is a franchisee treated differently from a small business

13. What are the most important sections of the Act that your business would

need to comply with.

Page 21

Fundamental Consumer Rights

The CPA has adopted the internationally recognized set of consumer rights and

encoded them in the new law. South African consumers will enjoy a wide set of rights

that are enforceable. Suppliers therefore have an obligation to ensure that consumers

enjoy these rights by changing how they do business. This would require a complete

review of all the suppliers’ policies and procedures, marketing practices, agreements

and promotions. A major thrust of the legislation is the emphasis on customer freedom,

quality service, safety and redress. These rights are contained in Chapter 2, Part A – I

of the CPA. Below is a summary of all the rights.

The following right are addressed in the Act:

Part A: Right of equality to consumer market

Part B: Right to privacy

Part C: Right to Choose

Part D: Disclosure and information

Part E: Fair and responsible advertising, marketing and promotion:

Part F: Fair and honest dealings

Part G: Right to fair, just and reasonable terms and conditions

Part H: Right to Fair Value, Good Quality and safety:

Part I: Suppliers Accountability to Consumers

SECTION RIGHTS PROTECTED CPA PROVISIONS REQUIRED ACTION & IMPLICATIONS

P art A : R ight of E quality in C ons umer Market Sec 8- 10 Protection against discriminatory marketing

No unfair discrimination on the basis of grounds set in section 9 of the constitution or Chapter 2 of PEPUD Act : • Exclusion from accessing services • Provision of exclusive access • Assignment of priority of supply • Price differentiation per customer type • Prioritization of communities, districts, population or market segments etc Section 9 provides for reasonable grounds on which to discriminate

Review practices to ensure they are not discriminatory. This includes agreements, marketing, promotions, pricing and discounts etc Equality Court has jurisdiction to hear cases of discrimination either on direct application by the consumer, accredited consumer protection group or on referral of a complaint by the NCC

P art B : C ons umer’s R ight T o P rivac y

Sec 11 – 12 Right to restrict unwanted direct marketing

• Supplier who engages in direct marketing must provide system to enable consumer to refuse, request discontinuation or preemptively block unsolicited direct marketing. Consumer must not be charged for exercising this right

Check all forms of contacting consumers (telephone, email, SMS, etc) and ensure that option to “opt out” is always provided. Check the Direct Marketing Association’s opt out register or any other approved register before contacting a customer for purposes of direct marketing

• Suppliers must check the pre-emptive block register if a consumer has registered their names, Registered consumers or those who have requested a discontinuation are not to be contacted for any marketing purposes

• Minister can regulate times, dates, days, public holidays where consumers should not be contacted unless they request

Page 23

P art C : C ons umer’s R ight T o C hoos e Sec 13 – 21 Right to select suppliers, cancel fixed term agreements, preauthorize price for repair and maintenance, cool off , cancel advance reservations, choose and examine goods, deliveries

This section introduces some of the most revolutionary changes in how transactions are conducted. The most far ranging changes include various rights of cancellation which include: a. The right to cancel a fixed term agreement:

• Upon expiry of the fixed term without penalty or charge; and • At any time by giving the supplier 20 business days’ notice.

b. Suppliers has following rights and obligations:

• Can cancel on breach of contract by giving consumer 20 business days’ notice; • Has to notify consumer of impending expiry date and advice of any material changes that would

be effected if the contract is renewed or extended beyond the expiry date; • Cannot automatically renew unless consumer has authorized renewal or extension; • Supplier entitled to reasonable cancellation penalty and any amounts outstanding up to the date

of cancellation; • Automatic renewal can only be on a month by month basis; and • Supplier to provide refunds

Other right s of cancellation include • Consumers have a right to cancel advanced reservations, bookings and orders. Supplier may charge

reasonable deposit and cancellation charge but cannot charge where cancellation is due to hospitalization or death

• Consumer has a right to cancel the agreement without penalty if delivery is not according to agreed timeframes and treat any delivered goods as unsolicited

NOTE: Fixed term agreements are not defined in the Act and the Minister has right to determine length of fixed term agreements, manner and form of providing notices and other relevant issues. Right of cancellation does not apply to business to business transactions. Another major departure from current practice is the consumer’s right to return goods and receive a refund under the following circumstances: • After exercising their right to cool off; • After not being given opportunity to examine the goods and they have rejected them; • After delivery of mixed or incorrect goods; • After delivery of goods that do not fit description or do not satisfy purpose communicated to supplier; • Under certain circumstances supplier can charge penalty for the use of the goods, consumption or

depletion, and restoration.

Review all agreements to ensure compliance. Align notice periods and expiry dates with Act.

Page 24

SECTION RIGHTS PROTECTED CPA PROVISIONS REQUIRED ACTION & IMPLICATIONS

Part D: Right to Disclosure and Information Sec 22 – 28 Plain language, labeling and trade descriptions, reconditioned or grey goods, sales records, intermediaries and identification of deliverers and installers

Documents must be provided in plain and understandable language; Prices must be displayed on all goods and where there is a double display of a

price a consumer must pay the lower price unless the price was unlawfully tampered with;

Product labels and descriptions are not compulsory but where they are used they must not be misleading or deceptive;

Suppliers must disclose if goods have been reconditioned or remade; Consumers must be provided with a sales record of every transaction, which

must contain prescribed information; and Deliverers and installers must identify themselves.

Suppliers will need to review all their contracts for plain language requirements, however the Commission will issue guidelines in this regard Labeling and trade descriptions are already a requirement in terms of other legislation but ensure that claims can be verified and are not misleading Costs may also arise from the requirements of sales records, however these are existing costs as all reputable businesses provide sales records already

Page 25

SECTION RIGHTS PROTECTED CPA PROVISIONS REQUIRED ACTION & IMPLICATIONS

Part E: Right to Fair and Responsible Marketing Sec 29 – 39 General standards, bait marketing, negative option marketing, direct marketing, catalogue marketing, trade coupons, loyalty programs, promotional competitions, illegal contracts

There is a general prohibition against any fraudulent, misleading or deceptive marketing practices; The following specific marketing practices are prohibited:

• • Bait Marketing; • Negative option Marketing ; • Direct Marketing is controlled with the aim of disclosure with regards to

consumer’s right of rescission and prevention of hard selling tactics; • Suppliers who run Customer loyalty programs are required to offer consumers the

benefits of the program as promised in their marketing and are required to make the goods or services available to consumers subject to certain statutory restrictions;

• Promotional competitions are regulated to prevent misleading promises, not offering of promised prizes, luring of consumer into entering into unfair transactions etc;

• Promoters are required to disclose certain information and must provide the rules of the competition on request ;

• Referral selling is prohibited where promise of benefit is conditional on referred consumers acting in a particular way;

• Misleading advertisements relating to alternative work schemes are prohibited

A complete review of all marketing, advertising and promotional competitions required. Overlaps with the NCA possible in relation to negative option marketing. Additional requirements being imposed by CPA

Page 26

SECTION RIGHTS PROTECTED CPA PROVISIONS REQUIRED ACTION & IMPLICATIONS

Part F: Right to Fair and Honest Dealings Sec 40 – 47 Unconscionable conduct, false, misleading, deceptive representations fraudulent schemes and offers, pyramid schemes, changes and deferrals

This section codifies the common law and introduces the concept of overbooking and overselling as well as the very broad concept of unconscionable conduct. The courts will provide direction as to the practical manifestation of unconscionable conduct and the remedies for it. This chapter prohibits: • Unconscionable conduct; • False, deceptive and misleading representations; • Fraudulent schemes and offers; • Pyramid schemes; • Overselling and overbooking where the supplier has no capacity to deliver and

has accepted money, consumer must be refunded with interest and compensated for costs directly related to breach of contract.

Unconscionable conduct

40 (1) A supplier or an agent of the supplier must not use physical force against an individual, coercion, undue influence, pressure or harassment, unfair tactics or any other similar conduct, in connection with any: • marketing of any goods or services; • supply of goods or services to a consumer; • negotiation, conclusion, execution or enforcement of an agreement to supply

any goods or services to a consumer; • demand for, or collection of, payment for goods or services by a

consumer; or • the recovery of goods from a consumer

Unconscionable conduct will possibly impact on credit provider collection practices and must be checked against the requirements of the NCA. The CPA seems to be imposing additional requirements. All claims about products and services and related marketing activities must be reviewed to avoid: • Exaggeration, innuendo,

ambiguity • False claims about sponsorship,

affiliation, or approval • False claims about efficacy of

products, ingredients, standard, quality or model

• False claims about condition of the goods; etc

Page 27

SECTION RIGHTS PROTECTED CPA PROVISIONS REQUIRED ACTION & IMPLICATIONS

Part G: Unfair, Unreasonable or Unjust Contract Terms Sec 48 – 52 Unfair, unreasonable, or unjust contract terms, prohibited transactions, agreements, terms and conditions. Powers of the courts

This is one of the parts of the Act that has far reaching implications for how contracts are negotiated and concluded. It aims to balance power relations between suppliers and consumers. Right to Fair, Just and Reasonable Terms • Introduces Unfair contract terms • Suppliers not allowed to contract out of the requirements of the Act • Where there is a written agreement consumers entitled to one free copy • Courts can interrogate contracts and void them or require that certain unfair

terms be struck out

• An extensive review of all contracts will be required to ensure that the extensive requirements of the Act are met.

• Although NCA agreements are

excluded any other contracting for goods or services subject to the credit agreement will need to be reviewed.

• The courts are given wide powers

to provide remedies to the consumer.

Page 28

SECTION RIGHTS PROTECTED CPA PROVISIONS REQUIRED ACTION & IMPLICATIONS

Part H: Right to Fair Value, Good Quality and Safety Sec 53 – 61 Quality service, safe and good quality goods, implied warranty of quality, warranties on repairs, risks, safe disposal, safety monitoring and recall, liability for damages

This section introduces a controversial reversal of the current product liability regime. The onus to prove fault is shifted from the consumer to the supplier or other players in the value chain. It also introduces a completely new right’, the right to receive quality service. • Consumers have a general right to goods that are fit for purpose,

safe and of goods quality • Implied warranty of service is provided • A minimum warranty of 3 months is imposed on repaired goods • Consumers are required to be warned of risks when accessing any

premises or engaging in any activities • A voluntary system for monitoring the safety of goods and services

is provided but the NCC can order a compulsory recall of unsafe goods if the supplier does not do so voluntarily;

• Suppliers are liable for any illness, death or damage to the property of a natural person arising due to exposure to unsafe goods

Suppliers will have to review their contracts with their suppliers and ensure that goods are safe and meet any required safety, health and quality standards. Liability insurance might need to be increased. Service levels and service standards will need to be beefed up immensely as the Act now provides consumers with the right to be compensated for shoddy and unacceptable service. A safety monitoring, warning and product recall regime will need to be implemented possibly through industry codes.

Page 29

SECTION RIGHTS PROTECTED CPA PROVISIONS REQUIRED ACTION & IMPLICATIONS

Part I: Suppliers Accountability to Consumers

Sec 62 – 67 Lay-bys, prepaid certificates, prepaid services, consumer’s property, deposits, return of parts and materials,

These sections deal with: • Lay Bye’s; • Prepaid certificates expire after five years; • Provides for enforcement of consumers rights through the NCC and

Tribunal; • Provides for ADR; and • Provides for various access points for a consumer to lay a

complaint

New policies relating to lay bys and prepaid certificates will need to be developed. Mechanisms to safeguard the consumer’s unused funds will need to be developed.

Protection of Consumer Rights and Consumer’s Voice

The Act recognizes that providing consumers with rights without providing mechanisms

for consumers to exercise these rights will be futile. A range of measures are provided

for and these include:

• Extending the right to seek redress to other parties other than consumers who

directly transacted with the supplier;

• Preventing suppliers from discriminating, intimidating or penalizing consumers who

seek to enforce their rights;

• Providing for the consumer to enforce their rights as per section 69 by referring

matters to:

o The National Consumer Tribunal;

o An Ombud with jurisdiction;

o An Ombud accredited in terms of section 82(6);

o A provincial consumer court where it exists;

o An ADR agent as per section 70;

o The Consumer Commission as per section 71; or

o A court with jurisdiction where all other available remedies have been

exhausted.

Protection of consumer rights If a consumer has exercised, asserted or sought to uphold any right set out in this Act or

in an agreement with a supplier, the supplier must not, in response:

• Discriminate directly or indirectly against that consumer, compared to the

supplier’s treatment of any other consumer who has not exercised, asserted or

sought to uphold such a right;

• Penalise the consumer;

• Alter, or propose to alter, the terms or conditions of a transaction or agreement

with the consumer, to the detriment of the consumer; or

• Take any action to accelerate, enforce, suspend or terminate an agreement with

the consumer.

Page 31

Realization of consumer rights

Any of the following persons may, in the manner provided in this Act, approach a Court,

the Tribunal, or the National Consumer Commission alleging that a consumer’s rights in

terms of this Act have been infringed, impaired or threatened, or that prohibited conduct

has occurred or is occurring:

• A person acting on their own behalf;

• An authorised person acting on behalf of another person who cannot act in their own

name;

• A person acting as a member of, or in the interest of, a group or class of affected

persons;

• A person acting in the public interest, with leave of the Tribunal or Court, as the case

may be; and

• Association acting in the interest of its members.

A lternative Dis pute R es olution

While, at all times consumers have the right to lodge a formal complaint with the

Commission or the courts, the Act provides for an informal alternative process, which

avoids costly litigation and prolonged court processes. The outcomes of the ADR

process are not binding on the consumer and if not satisfied with the outcome of the

ADR process a consumer has the right to initiate their matter freshly through the

Commission or the Courts. The Act aims to make redress accessible, and to protect

consumers from being victimized if they act to enforce their rights. Section 69 outlines

the available avenues of redress, including the courts, alternative dispute resolution,

and complaint to the NCC.

If the complaint arises in an industry in which a statutory Ombud scheme is in place,

the consumer must pursue a resolution through that scheme before making a complaint

to the NCC. In addition to their jurisdiction to hear a matter initiated directly by a

consumer, the courts have jurisdiction to hear appeals against Tribunal decisions, and

may order suppliers to alter or discontinue certain practices, award damages against

suppliers for collective injury to all or a class of consumers, to be paid to any person on

any terms that the court might decide. The outcome of the ADR process can be

formalized through making the agreement a consent order as per section 70(3) and (4)

Page 32

E nforc ement Ins titutions : The Act converts and recognizes existing institutions to

enforce the legislation:

National Consumer Commission (NCC): The Office of Consumer Protection within

DTI will be converted into the National Consumer Commission. It will have wide ranging

powers and responsibilities which include consumer education, investigation and

prosecution of case, market surveillance and coordination. The National Consumer

Commission is responsible to enforce this Act by:

• Promoting informal resolution of any dispute arising in terms of this Act between a

consumer and a supplier, but is not responsible to intervene in or directly adjudicate

any such dispute;

• Receiving complaints concerning alleged prohibited conduct or offences, and

dealing with those complaints in accordance with Part B of Chapter 3;

• Monitoring the consumer market to ensure that prohibited conduct and offences are

prevented, or detected and prosecuted; and

• The effectiveness of accredited consumer groups, industry codes and alternative

dispute resolution schemes, service delivery to consumers by organs of state, and

any regulatory authority exercising jurisdiction over consumer matters within a

particular industry or sector;

• Investigating and evaluating alleged prohibited conduct and offences;

• Issuing and enforcing compliance notices;

• Negotiating and concluding undertakings and consent orders contemplated in

section 74;

• Referring to the Competition Commission any concerns regarding market share,

anti-competitive behaviour or conduct that may be prohibited in terms of the

Competition Act, 1998 (Act No. 89 of 1998);

• Referring matters to the Tribunal, and appearing before the Tribunal, as permitted or

required by this Act; and

• Referring alleged offences in terms of this Act to the National Prosecuting Authority.

National Consumer Tribunal (NCT): The NCT has already been established in the

National Credit Act. Through consequential amendments through the CPA the existing

mandate of the NCT in terms of the NCA has been extended to include the adjudication

of matters arising from the CPA. In terms of section 149 – 150 of the NCA, the Tribunal

can make the following orders:

• Grant Interim relief;

Page 33

• Declare conduct to be prohibited;

• Issue an interdict in respect of prohibited conduct;

• Impose administrative fines;

• Confirm Consent Orders;

• Condone non-compliance with its rules and procedures;

• Confirm an order against an unregistered person to cease engaging in any

activity that registration with the regulator; Cancel or suspend a registrants’

registration;

• Require repayment to a consumer of any excess amount charged together with

interest set out in the agreement; or

• Any other appropriate order required to give effect to a right as contemplated in the Act.

NOTE: Under the Consumer Protection Act, the Tribunal may make the same

orders above in respect of matters brought to it in terms of 75(4)(b ) of the CPB

Administrative fines may only be imposed for instances expressly provided for in

section 112 of the CPB.

A dminis trative F ines

None compliance with the CPA may lead to serious financial loss for the supplier

concerned. The CPA introduces the same administrative penalties that can be levied by

the Competition Tribunal. In terms of the NCA, the NCT may impose administrative

fines, not exceeding the greater of:

• 10% of annual turnover during the preceding financial year, or

• R1 million (Section 151)

When imposing the fine, the Tribunal is required to take the following into consideration:

• The nature, duration, gravity and extent of the contravention;

• Any loss or damage suffered and the behaviour of the respondent;

• market circumstances in which the contravention took place;

• The level of profit derived from the contravention;

• The level of cooperation by the respondent with the NCR and NCT;

• Previous contraventions (Section 151(3))

Page 34

Dis pute R es olution P roc es s as P er the A c t

Below is a simplified process referring and resolving a complaint. It is important that suppliers fully understand this process in detail and its implications.

Supplier

Fisos or Sec 86 Ombud

C ons umer C ommis s ion

Tribunal/Prov Courts (Sec 75)

Dispute Resolution Agent Provincial Court

Consumer

Court (Section 76 powers)

OR

ALTERNATIVE DISPUTE RESOLUTION Sec 70

Refer to ADR/other authority with jurisdiction or investigate and then follow section 73 process

SEC 70(3) /SEC 74 CONSENT ORDER

Page 35

Indus try C odes of C onduc t

Due to the fact that the CPA is a law of general application that sets broad principles

relating to the conduct of business, it is necessary for specific industry sectors to

translate the broad principles into specific requirements that address the unique industry

practices and needs. The CPA provides for the Commission to develop codes of

practice for specific issues or any other issues to ensure the proper enforcement of the

Act.

Development of codes of practice relating to Act

• 93(1)The National Consumer Commission may develop, and promote the voluntary

use of, codes of practice in respect of:

o Use of plain language in documents;

o A standardized or uniform means of presenting and communicating the

information contemplated in sections 23 to 28;

o Alternative dispute resolution in terms of section 70; or

o Any other matter to better achieve the purposes of this Act.

• Codes developed by the Commission in terms of subsection 1 must be published for

public comment before finalisation.

Section 82 of the Act further provides for the Commission to initiate a process of

developing a code or for industry to propose one to the Commission. “Industry Code”

means a code regulating the interaction between or among persons conducting

business within an industry; or regulating the interaction, or providing for alternative

dispute resolution, between a person contemplated in paragraph (a), and consumers;

and “proposal” or “proposed industry code” includes any existing scheme that has

been voluntarily established within an industry to regulate the conduct of persons

conducting business within that industry.

The section provides for:

• The Minister, on the advice of the Commission to prescribe, approve or withdraw an

industry code;

• Accrediting dispute resolution schemes like Ombudsman. This excludes those

already accredited in terms of the FISOS Act.

Page 36

• Providing the Commission with monitoring and evaluation powers in relation to the

effectiveness of industry dispute resolution schemes and codes of conduct

It is important for each sector to assess the need to have a sector code and if deemed

necessary the sector must ensure that it has the capacity and resources to administer

the code.

C onc lus ion

The CPA is a complex piece of legislation that will revolutionize the manner in which

business is conducted and consumers are treated in South Africa. Each business

enterprise will need to conduct a thorough review of its business practices and

implement a detailed compliance Program that is supported by intensive staff training.

Staff incompetence will cost the business severely as the Act provides for vicarious

liability.5

5 Vicarious liability

113.(1)If an employee or agent of a person is liable in terms of this Act for anything done or omitted in the course of that person’s employment or activities on behalf of their principal, the employer or principal is jointly and severally liable with that person.

(2)This section does not apply in respect of criminal liability.

Page 37

G los s ary of T erms

Below is a selection of the most important definitions from the Act. For an exhaustive list

of definitions please consult the Act.

“Advertisement” means any direct or indirect visual or aural communication

transmitted by any medium, or any representation or reference

written, inscribed, recorded, encoded upon or embedded within

any medium, by means of which a person seeks to:

a. bring to the attention of all or part of the public

b. the existence or identity of a supplier; or

c. the existence, nature, availability, properties, advantages

or uses of any goods or services that are available for

supply, or the conditions on, or prices at, which any goods

or services are available for supply;

d. promote the supply of any goods or services; or

e. promote any cause;

“Agreement” means an arrangement or understanding between or among two

or more parties that purports to establish a relationship in law

between or among them;

“Alternative dispute resolution agent”

means:

a. an ombud with jurisdiction;

b. an industry ombud accredited in terms of section 82 (6);

or

c. a person or entity providing conciliation, mediation or

arbitration services to assist in the resolution of consumer

disputes, other than an ombud with jurisdiction, or an

accredited industry ombud;

“Commission” means the National Consumer Commission established by

section 85;

Page 38

“Complainant” means:

a. a person who has filed a complaint with the Commission

in terms of section 71; or

b. the Commission in respect of a complaint that it has

initiated, either directly or

c. at the direction of the Minister in terms of section 86 (b);

or

d. request of a provincial consumer protection authority, or

other regulatory authority;

“Consideration” means anything of value given and accepted in exchange for

goods or services, including:

a. money, property, a cheque or other negotiable instrument,

a token, a ticket, electronic credit, credit, debit or

electronic chip, or similar object;

b. labour, barter or other goods or services;

c. loyalty credit or award, coupon, or other right to assert a

claim; or

d. any other thing, undertaking, promise, agreement or

assurance,

e. irrespective of its apparent or intrinsic value, or whether it

is transferred directly or indirectly, or involves only the

supplier and consumer, or other parties in addition to the

supplier and consumer;

“Consumer”, in respect of any particular goods or services, means:

a. a person to whom those particular goods or services are

marketed in the ordinary course of the supplier’s

business;

b. a person who has entered into a transaction with a

supplier in the ordinary course of the supplier’s business,

unless the transaction is exempt from the application of

this Act by section 5 (2), or in terms of section 5 (3);

c. if the context so requires or permits, a user of those

particular goods or a recipient or beneficiary of those

particular services, irrespective whether that user,

Page 39

recipient or beneficiary was a party to a transaction

concerning the supply of those particular goods or

services; and

d. a franchisee in terms of a franchise agreement, to the

extent applicable in terms of section 5 (6)(b) to (e);

“Consumer court”

means a body of that name, or a consumer tribunal, that has

been established by or in terms of applicable provincial consumer

legislation;

“Direct marketing”

means to approach a person, either in person, or by mail or

electronic communication, for the direct or indirect purpose of:

a. promoting or offering to supply, in the ordinary course of

business, any goods or services to the person; or b. requesting the person to make a donation of any kind for any

reason;

“Distributor”, with respect to any particular goods, means a person who, in the

ordinary course of business:

a. is supplied with those goods by a producer, importer or other

distributor; and

b. in turn, supplies those goods to either another distributor or to

a retailer;

“Franchise agreement”

means an agreement:

a. in which, for consideration to be paid by one party (the

franchisee) to the other party (the franchisor), the franchisor

grants the franchisee the right to carry on business within all

or part of the Republic under a system or marketing plan

substantially determined or controlled by the franchisor or an

associate of the franchisor; and

b. under which the operation of the business will be substantially

or materially associated with advertising, a trade mark, a

commercial symbol or a logotype owned, used or licensed by

the franchisor or an associate of the franchisor;

Page 40

“Goods” includes:

a. anything marketed for human consumption;

b. any tangible object not otherwise contemplated in

paragraph (a), including any medium on which anything is

or may be written or encoded;

c. any literature, music, photograph, motion picture, game,

information, data, software, code, or other intangible

product written or encoded on any medium, or a licence to

use any such intangible product;

d. a legal interest in land or any other immovable property,

other than an interest that falls within the definition of

‘service’ in this section; and

e. gas, water and electricity;

“Juristic person” includes:

a. a body corporate;

b. a partnership or association; and

c. a trust as defined in the Trust Property Act, 1988 (Act No.

57 of 1988);

“Loyalty credit or award”

means any:

a. benefit accruing to a consumer;

b. right to any goods, service or other benefit granted to a

consumer; or

c. point, credit, token, device or other tangible or intangible

thing which, when accumulated in sufficient quantities,

entitles the holder to seek, request, or assert a claim for

any goods, service or other benefit, allocated to a

consumer

d. in terms of a loyalty programme, irrespective of the name,

nature, form or characterization assigned by that loyalty

programme to any such goods, service or other benefit,

right or thing;

“Loyalty programme”

means any arrangement or scheme in the ordinary course of

business, in terms of which a supplier of goods or services,

Page 41

association of such suppliers, or other person on behalf of or in

association with any such suppliers, offers or grants to a

consumer any loyalty credit or award in connection with a

transaction or an agreement;

“Market” when used as a verb, means to promote or supply any goods or

services;

“Ombud with jurisdiction”,

in respect of any particular dispute arising out of an agreement or

transaction between a consumer and a supplier who is:

a. subject to the jurisdiction of an ‘ombud’, or a ‘statutory

ombud’, in terms of any national legislation, means that

ombud, or statutory ombud; or

b. (b) a ‘financial institution’, as defined in the Financial Services

Ombud Schemes Act, 2004 (Act No. 37 of 2004), means ‘the

ombud’, as determined in accordance with section 13 or 14 of

that Act;

“Person” includes a juristic person;

“Price”, when used in relation to:

a. a representation required to be displayed by section 23,

includes any mark, notice or visual representation that may

reasonably be inferred to indicate or express an association

between any goods or services and the value of the

consideration for which the supplier is willing to sell or supply

those goods or services; or

b. the consideration for any transaction, means the total amount

paid or payable by the consumer to the supplier in terms of

that transaction or agreement, including any amount that the

supplier is required to impose, charge or collect in terms of

any public regulation;

“Producer” with respect to any particular goods, means a person who:

a. grows, nurtures, harvests, mines, generates, refines, creates,

manufactures or otherwise produces the goods within the

Page 42

Republic, or causes any of those things to be done, with the

intention of making them available for supply in the ordinary

course of business; or

b. by applying a personal or business name, trade mark, trade

description or other visual representation on or in relation to

the goods, has created or established a reasonable

expectation that the person is a person contemplated in

paragraph (a);

“Prohibited conduct”

means an act or omission in contravention of this Act;

“Promote” means to:

a. advertise, display or offer to supply any goods or services in

the ordinary course of business, to all or part of the public for

consideration;

b. make any representation in the ordinary course of business

that could reasonably be inferred as expressing a willingness

to supply any goods or services for consideration; or

c. engage in any other conduct in the ordinary course of

business that may reasonably be construed to be an

inducement or attempted inducement to a person to engage

in a transaction;

“Rental” means an agreement for consideration in the ordinary course of

business, in terms of which temporary possession of any

premises or other property is delivered to or at the direction of the

consumer, or the right to use any premises or other property is

granted to or at the direction of the consumer, but does not

include a lease within the meaning of the National Credit Act,

2005 (Act No. 34 of 2005);

“Retailer” with respect to any particular goods, means the person who, in

the ordinary course of business, supplies those goods to a

consumer;

“Service” includes, but is not limited to:

Page 43

a. any work or undertaking performed by one person for the

direct or indirect benefit of another;

b. the provision of any education, information, advice or

consultation, except advice that is subject to regulation in

terms of the Financial Advisory and Intermediary Services

Act, 2002 (Act No. 37 of 2002);

c. 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

d. constitutes advice that is subject to regulation in terms of

the Financial Advisory and Intermediary Services Act,

2002 (Act No. 37 of 2002); or

e. is regulated in terms of the Long-term Insurance Act,

1998 (Act No. 52 of 1998), or the Short-term Insurance Act,

1998 (Act No. 53 of 1998);

f. the transportation of an individual or any goods;

g. the provision of:

a. any accommodation or sustenance;

b. any entertainment or similar intangible product or

access to any such entertainment or intangible

product;

c. access to any electronic communication

infrastructure;

d. access, or of a right of access, to an event or to

any premises, activity or facility; or

e. access to or use of any premises or other property

in terms of a rental;

f. a right of occupancy of, or power or privilege over

or in connection with, any land or other immovable

property, other than in terms of a rental; and

g. rights of a franchisee in terms of a franchise

agreement, to the extent applicable in terms of

section 5 (6)(b) to (e);

h. irrespective whether the person promoting, offering or

providing the services participates in, supervises, or

Page 44

engages directly or indirectly in the service;

“Service provider”

means a person who promotes, supplies or offers to supply any

service;

“Supplier” means a person who markets any goods or services;

“Supply” when used as a verb:

• in relation to goods, includes sell, rent, exchange, hire, and

sell by instalment in the ordinary course of business for

consideration; or

• in relation to services, means to sell the services, or to

perform or cause them to be performed or provided, or to

grant access to any premises, event, activity or facility in the

ordinary course of business for consideration;

“Supply chain”, with respect to any particular goods or services, means the

collectivity of all suppliers who directly or indirectly contribute in

turn to the ultimate supply of those goods or services to a

consumer, whether as a producer, importer, distributor or retailer

of goods, or as a service provider;

“The State” includes an organ of state, or a court;

“Trade description”

means:

a. any description, statement or other direct or indirect

indication, other than a trade mark, as to

b. the number, quantity, measure, weight or gauge of any

goods;

c. the name of the producer or producer of any goods;

d. the ingredients of which any goods consist, or material of

which any goods are made;

e. the place or country of origin of any goods;

f. the mode of manufacturing or producing any goods; or

g. any goods being the subject of any patent, privilege or

copyright; or h. Any figure, work or mark, other than a trade mark, that,

Page 45

according to the custom of the trade, is commonly

understood to be an indication of any matter

contemplated in paragraph (a).

“Trade mark” means:

a. trade mark as defined in section 2 (1) of the Trade Marks

Act, 1993 (Act No. 194 of 1993); or b. A well-known trade mark as contemplated in section 35 of

the Trade Marks Act, 1993.

“Transaction” means-

a. in respect of a person acting in the ordinary course of

business–

b. an agreement between or among that person and one or

more other persons for the supply or potential supply of

any goods or services in exchange for consideration; or

c. the supply by that person of any goods to or at the

direction of a consumer for consideration; or

d. the performance by, or at the direction of, that person of

any services for or at the direction of a consumer for

consideration; or

e. an interaction contemplated in section 5 (6), irrespective

whether it falls within paragraph (a);

“Tribunal” means the National Consumer Tribunal established by section 26

of the National Credit Act 2005 (Act No. 34 of 2005);

Page 46

List of Useful Contacts

1. The National Credit Regulator (NCR) Tel: 11 554 2600

Website; www.ncr.org.za

2. The National Consumer Tribunal (NCT)

3. Department of Trade and Industry (DTI) Tel: 012 394 9500

4. Equality Court Tel: 012 315 1830/1379

Fax: 012 315 1148

5. South African National Consumer Union Tel: 012 428 7122

6. Companies and Intellectual Property Registration Office

(CIPRO)

Tel: 012 394 9500

7. Office of Consumer Protection (DTI) Tel: 086 184 3384