There are many regulations that small to medium-sized enterprises (SMEs) must adhere to. These regulations expand to different elements of business processes, such as legal, tax, business registration and small regulations like operating licences. One of the most important regulations that SMEs must adhere to is the Consumer Protection Act (CPA).
South Africa’s consumer protection landscape centres primarily on the CPA, which grants citizens fundamental rights to fair trade, product safety, and privacy. The framework is enforced by regulatory bodies like the National Consumer Commission (NCC) and alternative dispute channels such as the Consumer Goods and Services Ombud (CGSO).
For SMEs, it’s critical to know and understand this Act. Having it as part of the company’s knowledge base will help businesses avoid costly, consumer-based litigation and remain compliant.
In this article, we look at what the Consumer Protection Act is and the rights it gives to consumers when they purchase goods or services.
What is the Consumer Protection Act?
The Consumer Protection Act (CPA) is a foundational law designed to prevent buyer exploitation, promote a fair marketplace, and safeguard buyer rights when purchasing goods or services. In South Africa, this is governed by the Consumer Protection Act 68 of 2008, which sets national standards, regulates business practices, and establishes the National Consumer Commission for enforcement.
Under the CPA, SMEs are considered consumers when their annual turnover or asset value is below the threshold of R2 million at the time of the transaction.
Where Does the Act Apply?
The CPA applies to the following:
- Every transaction occurring within the Republic of South Africa.
- Promotion or supply of any goods and services occurring within the Republic.
- Goods or services that are supplied or performed in the Republic in terms of transactions mentioned in the Act.
The Act is not applicable in:
- Goods or services promoted or supplied to the state.
- Industry-wide exemption being granted to regulatory authorities.
- Credit agreements, in terms of the National Credit Act, but not goods or services.
- Services under employment contracts.
- Agreements giving effect to collective bargaining agreements.
- Agreements giving effect to bargaining agreements (Section 213 of the Labour Relations Act).
Consumer Rights Within the CPA
The Act outlines eight fundamental consumer rights. These core rights protect consumers when purchasing goods or services in the country. Let’s look at some of them and what they entail.
Consumer Right 1: Right to Equality in the Consumer Market and Protection Against Discriminatory Marketing Practices
For an ordinary consumer, this means you have a right to free and unlimited access to goods and services. This means suppliers/businesses cannot:
- Limit access to goods and services.
- Prioritise any consumer groups over others when marketing, selling or distributing their goods and services.
- Vary the quality of their goods or services in a discriminatory manner.
- Charge unfair prices for the same goods and services.
This consumer right enables buyers to lodge complaints in the following key areas:
- The Equality Court has jurisdiction in respect of alleged contraventions.
- Proceedings may be instituted before an Equality Court.
- Consumer complaints may be filed with the National Consumer Commission, the latter of which is required to refer such complaints to the Equality Court if they appear to be valid.
Consumer Right 2: Right to Privacy
This consumer right gives the following provisions in direct marketing:
- Consumers have the right to protect their privacy and confidentiality in respect of unwanted or unsolicited correspondence.
- The right to refuse unwanted SMS’s, telephone calls, letters or ‘spam’ e-mail.
- The right to opt out of receiving unsolicited direct marketing services by blocking the relevant supplier/marketer.
- Consumers have the right to accept, restrict or refuse unwanted direct marketing.
- Companies and suppliers are not permitted to continue any unsolicited direct marketing of goods and services once consumers have opted out.
Consumer Right 3: Right to Choose
Under the CPA, consumers have the following rights when selecting a supplier:
- The right to shop around for the best prices, goods and services.
- Consumers are not obliged to enter into additional agreements with suppliers from whom they purchased goods or services (bundling).
- Suppliers are not permitted to force consumers to enter into agreements with third parties, unless the suppliers can prove the benefits of these additional goods or services.
- Consumers can cancel fixed-term agreements upon expiry of the contract period without penalty or charge.
- Consumers are obliged to provide suppliers with 20 business days’ notice, in writing or other recorded means, of cancellation of fixed-term agreements. Suppliers may charge reasonable penalties.
- Suppliers must extend fixed-term agreements on a month-to-month basis if the consumers fail to request the cancellation of such agreements.
- Suppliers are entitled to request a reasonable advance deposit for reservations, bookings or orders, depending on the nature of the business and specific circumstances.
- Suppliers have a right to charge consumers for any loss or damage of property/goods if this comes from gross negligence, recklessness or deliberate actions.
- Consumers have the right to return unsafe or defective goods and request a full refund for such goods, provided this is done within a reasonable period.
- Consumers are entitled to retain unsolicited goods or services after 20 business days.
Consumer Right 4: Right to Disclosure of Information
The following provisions are made in the Act when it comes to information:
- Consumers have the right to demand contracts/agreements in easily understandable and plain language.
- Suppliers are required to display the prices of goods and services in full view of consumers.
- Consumers have the right to request the unit cost of goods and services to avoid any hidden costs.
- Suppliers must specify the duration of any promotions in catalogues or brochures.
- Consumers have the right to demand to pay the lower price for goods displaying two varying prices – suppliers cannot charge consumers a higher price for the same goods.
- Suppliers and service providers are required to display labelling and trade descriptions of products which do not mislead consumers about the contents of the packaging or goods attached to the products.
- Suppliers are not allowed to alter, amend, conceal, remove or deface trademarks and other product labelling so as to not mislead consumers.
- Producers/importers of products or goods are required to display the country of origin and any other prescribed information, such as expiry dates.
- Producers, suppliers and importers are required to disclose the presence of any genetically modified ingredients, in compliance with international and South African laws and regulations.
- Suppliers are required to display notice that ‘grey’ market goods have been reconditioned, rebuilt or remade.
- Consumers have the right to demand confirmation of purchases made in the form of receipts or invoices.
Consumer Right 5: Right to Fair and Responsible Marketing
Consumers have the following rights:
- Suppliers are not permitted to mislead consumers in respect of pricing, the nature, properties, advantages or uses of goods or services advertised, if such goods or services are not actually available for purchase or procurement in accordance with these standards.
- Suppliers are obliged to include limitations in respect of the availability of goods or services when advertising such items and honour such agreements.
- Suppliers are not permitted to promote any goods or services or automatically enter consumers into agreements for the supply of the goods or services.
- Suppliers or service providers that directly market any goods or services to consumers must inform them of their right to cancel the agreements within the cooling-off period of five (5) business days.
- Suppliers or service providers, which directly market any unsolicited goods or services to consumers, are not permitted to solicit payment for these items, subject to certain conditions.
The above are just some of the provisions within the Act. As you can see, most of them are there to protect consumers, making it critical for business owners to have a clear understanding of the Act.
Go through the rest of the Act to fully understand what it says. Also, it’s a good idea to train staff on the Act to ensure everyone remains compliant and that customer service is optimised.
