Consumer Protection Act is not the watch dog it set out to be

Both consumers and businesses had concerns about South Africa’s new Consumer Protection Act before it was implemented on 1 April 2010. Businesses worried that they wouldn’t be given enough time to ensure compliance. Consumers were worried that a lot of their expectations wouldn’t be met. As it turns out, both parties’ concerns were valid

It is going to be difficult to ensure compliance because some of the regulations were only finalised a day after the Act was implemented. And, according to Wendy Knowler, some important aspects of the Act have been significantly watered down, such that they might as well not exist.

Knowler refers specifically to the cancellation of lock-in contracts. She says that the initial version of the Act stated that consumers would be able to cancel a contract and only have to pay 10% of the remaining subscription. The final version states that upon the early cancellation of a contract, suppliers have the right to demand payment to the value of any goods which consumers will retain. This is particularly relevant for cell phone contracts that include a snazzy new phone. Furthermore, suppliers can demand a cancellation penalty. The only stipulation is that the penalty has to be “reasonable”.

One of the other areas of contention, mentioned by Lyse Comins, is the exemption of medium- to low-capacity municipalities from the Act. Basically, municipalities (except for the well-to-do ones) will be exempt from complaints about lack of service delivery. Comins cites Clif Johnston, SA National Consumer Union vice-chairman, who said, “This is a clear violation of the intent of the Act … Providing a blanket exemption for all municipalities, except the largest, is a tacit admission not only of local government’s failure to deliver adequate services but also of the state’s intention not to hold the municipalities to account.”

Legal experts and Afriforum are among those calling for the Minister of Trade and Industry, Rob Davies, to reverse the exemption.

Neesa Moodley-Isaacs points out the shortage of operational consumer courts, which are supposed to be where consumers can plead their cases without having to pay for legal counsel. Currently, only four provinces have courts in operation. Then there is the confusion as to whether the Act applies to financial services. On the surface it would appear that the financial and insurance sectors are as bound by the Act as other industries, but the Ombudsman for Short-term insurance, Brian Martin, doesn’t believe this is feasible. Martin says that the financial services industry is too complex to be lumped with retailers. Although he concedes that there are instances where the Act could apply.

Moodley-Isaacs also lists a number of issues that still have to be resolved; you would do well to have a look through to see where you stand.

It’s not all doom and gloom, however. There are still important steps forward for consumers, such as the crack down on alternative work schemes and financial cons like pyramid schemes. There’s also protection for people who buy goods at auctions, not to mention the joy of being able to stop junk mail and the peace from direct marketers who are now limited to certain times of the day.

Fiona Zerbst wrote a what-you-need-to-know guide for navigating the CPA. You might want to read it in conjunction with Moodley-Isaacs’ article.

(Image by coloniera2, stock.xchng)