Consumer Protection Act hits a roadblock

The new Consumer Protection Act has been in effect for more than two weeks, yet among those in the motor industry there is uncertainty about what it will mean for anyone who buys or sells a car. Industry experts understood that the Act would apply to private car sales, but the National Consumer Commission has stated the opposite, saying the Act was not drafted to regulate the private dealings of individuals.

‘It is not applicable to the once-off sale of a vehicle between individuals,” the Consumer Commission told the Mail & Guardian. This means that if the sale is private and not made by someone who ‘is in the business of selling cars” the consumer will have to take recourse through the normal legal processes and cannot rely on the Act. The Act is designed to regulate only business practices.

Jeff Osborne, chief executive of the Retail Motor Industry Organisation (RMI), was surprised to hear that the Act did not apply to private sales. RMI had approached the commission for clarity and had warned of the ‘unintended consequences of the Act”.

RMI was then asked by the department of trade and industry to put together codes and practices for the motor trade, which have been submitted to the commission and will be written into the Act. Osborne was under the impression that consumers had a right under the Act, regardless of who sold them a car or where they bought it. ‘Obviously there are certain levels of confusion—it is quite alarming,” he said.

Motor industry economist Tony Twine also thought the Act would apply to private sales. ‘My confusion arises from the fact that the idea of a supplier [in the Act] appears to be anybody or entity who sells a car.”

Gary Ronald, public affairs manager at the Automobile Association, knew under what circumstances the Act would apply in the industry after hearing the commissioner, Mamodupi Mohlala, speak. ‘But nothing is really going to change under the CPA,” he said. The whole Act has been watered down—‘that is not necessarily a bad thing. You don’t want regulation so that it makes it difficult to even sneeze. Over-regulation makes it difficult to do business.”

If a vehicle is sold privately a disgruntled consumer, as was the case before April 1, cannot go to the ombud. And now that consumer is also not protected by the Act. But existing legal structures, Ronald said, are available, as they always have been.

And if private vehicle sales are not protected under the Act, ‘it may be a further encouragement for people to deal through the trade”, Twine said. While there are existing motivations for consumers to go through a dealership, there are disincentives because prices can be keener when trading privately. There is normally a 10% saving because there is no middleman involved.

When selling or purchasing through the motor industry the recourse, Ronald said, will be to go through the internal structures of the given dealership or service centre. Thereafter one could take it to the motor industry ombud. Only as a last resort should such a matter be taken to the consumer commission. ‘You cannot have one structure to deal with all the consumer issues, you are never going to get the work done.” The commission will need to rely on existing structures to lighten its workload.

But whether the Act will have any marked effect on the trade, Twine believed, is yet to be seen. ‘The public is probably blissfully unaware of the uncovered interpretation of the Act.”

Lisa Steyn

Lisa Steyn

Lisa Steyn is a business reporter at the Mail & Guardian. She holds a master's degree in journalism and media studies from Wits University. Her areas of interest range from energy and mining to financial services and telecommunication. When she is not poring over annual reports, Lisa can usually be found pottering about the kitchen. Read more from Lisa Steyn

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