The Consumer Protection Act (CPA) commenced on 1 April 2011 and will fundamentally change the way business is done in South Africa. It requires businesses to transform the way in which they interact with consumers to ensure that all their dealings with consumers are fair, reasonable and honest. With the Act mechanisms are put in place to enable consumers to enforce their rights.

 

Practical implications for businesses and consumers

The general theme of the CPA is to protect the poor and the vulnerable and, as this Act is implemented, South African consumers will be the most protected consumers in the world.

Here are some of the most important clauses of the CPA and the impacts they may have on businesses and consumers:

    • The CPA demands companies to bill for their goods and services in a way that is fair and transparent. Businesses have to provide clear breakdowns of the cost of any products and services they supply.
    • All agreements with consumers must be in plain and understandable language. Businesses will have to re-draft or amend their terms, sale agreements and advertisements into plain language.
    • Customers will have the right to inspect goods, including shrink-wrapped goods such as software.
    • Businesses will be required to give customers with fixed-term agreements notice prior to the expiry of the fixed term and customers will have to renew contracts in writing.
    • Consumers are to be given various warranties and indemnities, and warranties that are included in agreements are no longer the only warranties that apply.
    • A franchisee will be a consumer and therefore franchise agreements will have to comply with the CPA. Depending on what is contained in the regulations, a lessee may be viewed as a consumer and therefore lease agreements may need to comply with the Act as well.
    • Courts must interpret standard form contracts in favour of consumers and the court will be given the power to redraft contracts, terms of business, terms of sale and other consumer-related terms. The Act does not apply to employment contracts.
    • Promotional competitions will be governed by the CPA rather than the Lotteries Act and competition rules must be prepared in advance – be they online or offline.
    • Marketing campaigns are going to be affected and driven in accordance with the Act. The CPA takes a tough line on direct marketing. Consumers will have the right to privacy and can require companies to stop communicating with them.
    • The CPA also provides for stronger consumer rights around cooling-off periods, the cancellation of advance bookings and orders and the returning of unsatisfactory goods to suppliers.

Large companies will face major challenges to meet the demands for increased transparency in their relationships with customers. One way to meet the provisions of the CPA will be to make increased use of online self-service systems for interaction with consumers through Web or mobile portals.

Our Employee Wellbeing Programme (EAP) is available 24 hours a day if you want to know more about the Consumer Protection Act.