The Consumer Protection Bill

Who can you take recourse against and how?/b>

  • Broadly speaking, the Bill imposes obligations on any person who supplies goods and services in the ordinary course of business, with few exceptions.
  • The definitions under the Bill are widely drafted so as to include, for example, a person who imports, manu­factures, distributes or retails any goods, and any person involved in promoting or supplying a good or service.

  • The Bill allows for enforcement of rights by the consumer in new forms including: the National Consumer Commission, which is yet to be established, and the National Consumer Tribunal created under the National Credit Act.
  • Class actions on behalf of groups of consumers are envisaged in the Bill.

    Strict liability
    Section 61 represents a significant amendment to the existing law, in that it allows for a consumer harmed by unsafe goods, product failure or defect, or even from inadequate instructions or warnings on packaging, to sue almost any person involved in getting that product to market, irrespective of whether that person was negligent.

    For example, where a defective geyser causes loss, currently the buck might stop with the plumber who installed it. But section 61 shifts the burden of proof squarely on to the shoulders of the supplier and you could sue the geyser manufacturer or even the importer.

    Section 61 provides that the producer or importer, distributor or retailer, installer or provider of access in respect of any goods may be liable for any harm, including death, illness or injury to any natural person; loss or physical damage to any property; and certain economic loss.

    The consumer will not need to prove that the producer, importer or distributor was negligent, as is currently the case.

    Who is excluded from the Bill?
    In the latest draft of the Bill it is clear that big business, in its capacity as a consumer, will be excluded from the Bill’s protection.

    In other words, a large business using the services of another company or person will not be able to take recourse against that supplier.

    The relevant threshold will be based on asset value and annual turnover value, and is to be determined by the relevant minister. The clear message seems to be that big business should be able to look after itself.

    Almost every supplier must comply with the Bill, irrespective of whether it is resident in South Africa or not, or operates on a not-for-profit basis. Even foreign producers who merely advertise their goods in South Africa may incur liability under the Bill.

    There are exemptions for areas where consumers already have protection:

  • Advice, and now also intermediary services, provided under the Financial Advisory and Intermediary Services Act;

  • Services regulated under the Long-Term Insurance Act and the Short-Term Insurance Act (provided that these acts are amended to ensure consumer protection within a period of 18 months)—although there is some confusion about when this 18-month period will commence. The department of trade and industry has indicated that its intention that it will be 18 months from the date of signature of the Bill by the president;

  • Credit agreements governed by the National Credit Act (NCA), but not the goods purchased in terms of these agreements. Those businesses that bent over backwards to avoid falling under the NCA may now discover that the NCA is the lesser of two evils; and

  • Any transactions which may in future be exempted by the minister.
  • Franchisees are granted special protections as consumers.

    When will it come into effect?
    Broadly speaking, the Bill will come into force 18 months after it has been signed by the president, although certain aspects of the Bill come into force six months earlier. The trade and industry department has consistently indicated that the Bill will be signed before the end of the year.

    Technically, only contracts concluded after the 18-month period will be affected by the Bill, but certain limited provisions apply to fixed-term contracts entered into before the end of the 18-month period.

    Genetically modified organisms
    All products containing GMOs will have to state this on the packaging. This means that a consumer will be able to choose between products containing GMOs and those that don’t.

    Producers of goods containing GMOs will have to wait until the minister promulgates regulations under the Consumer Protection Act in due course, before they will know which goods are covered by this labelling requirement and how the notice disclosing the presence of GMO ingredients or components must look.

    What about the little guys?
    It is clear that consumers have been handed a very big stick with which to keep suppliers in check.

    On the one hand it is positive for consumer rights, but under these provisions many smaller businesses may not be able to afford the risk of legal action, especially as the consumer will not have to prove negligence.

    When I think of my electrician, for example, I wonder if it is worth his while to carry on in a small business when he could be better protected by joining a large electrical firm. That would drive up my costs dramatically as smaller service providers are often able to undercut larger organisations.

    And what about the geyser manufacturers that will have to take out additional insurance in case the plumber installing the geyser is incompetent?

    Although the DTI appears to have set aside an annual budget of R51,3-million for implementation of this Bill, its full impact will be felt only a year after implementation.

    Government needs to take care that it monitors the impact on smaller businesses.

    Details about how consumers will be able to lodge claims remain unclear.

    There are various institutions that consumers can apply to, from the national consumer tribunal to the soon-to-be-formed provisional consumer courts and national consumer commission.

    Consumers can approach the ombudsman that has jurisdiction over the supplier or an industry ombudsman accredited under the Consumer Protection Bill.

    Trudie Broekmann says although the DTI says consumers will have various options available to them, the Bill states that consumers may use a tribunal only if permitted by the Bill. These are some of the kinks that will need to be ironed out if this Bill is truly to extend consumer rights.—Maya Fisher-French

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