The CPA heralds the era of the consumer. It repeals outdated consumer legislation and forms part of a new suite of new consumer legislation such as the National Credit Act (NCA) and amended Companies Act.
The need for reform due to:
- Discriminatory and unfair market practices;
- Proliferation of low quality and unsafe products;
- Lack of awareness of rights;
- Limited redress for consumers;
- Inadequate protection for consumers; and
- Weak enforcement capacity
Purpose of the Act is “to protect the consumer the most”
What does the CPA apply to?
- Most transactions in South Africa concerning the supply of goods and services. The Act also specifically mentions the supply of goods or services by a club or trade union to its members and franchise agreements;
- The promotion of goods and services or of the supply of such in South Africa. This includes foreign suppliers who do business in South Africa; and
- To the goods and services supplied or performed in terms of the transaction.
- A person to whom goods and services are marketed to;
- A person who has entered into a transaction with a supplier;
- A user of the goods or a recipient or beneficiary of the services; and/or
- A franchisee in terms of a franchise agreement.
- Anything marketed for human consumption;
- Any other tangible object;
- Any literature, music, photograph, motion picture, game, information, data, software, code or other intangible product written or encoded on any medium, or a licence to use any such intangible product;
- Land ownership; and/or
- Gas, water and electricity
Any work or undertaking performed by one person for the direct or indirect benefit of another;
The provision of any education, information, advice or consultation, except advice that is subject to regulation in terms of the FAIS Act. Please note that schools and universities are not exempt from the CPA; Any banking services, or related or similar financial services, lor the undertaking, underwriting or assumption of any risk by one person on behalf of another, but not advice or intermediary services that is subject to regulation in terms of the FAIS Act or a service regulated by the Long Term Insurance Act or Short Term Insurance Act;
- The transportation of an individual or any goods;
- The provision of accommodation or sustenance;
- The provision of entertainment, access to an event, premises, activity or facility;
- The provision of access to or use of any premises or other property in terms of rental;
- A right of occupancy of, or power or privilege over or in connection with any land or other immovable property, other than in terms of rental; and
- Rights of a franchisee in terms of a franchise agreement
- A person who:
- Promotes; or
- Any goods or services.
Exemptions from application of CPA
The CPA does not apply to:
- Transactions with juristic persons with an asset value or annual turnover of R2million or more as a consumer. This exemption does not cover franchise agreements irrespective of asset value or annual turnover;
- Transactions with the State as consumer;
- Credit agreements that fall under the NCA. However goods and services supplied on credit are still governed by the CPA;
- Advise or intermediary services regulated by the FAIS Act; and
- Services regulated in terms of the Long Term Insurance Act and Short Term Insurance Act.
Enforcement of the CPA
Enforcement by Commission:
- Receives and deals with companies;
- Refers matters to Competition Commission;
- Refers matters to Tribunal;
- Refers matters to NPA;
- Compliance notices may be issued.
Failure to comply with Compliance notice, Commissioner may either:
- Apply to Tribunal for the imposition of an administrative fine; or
- Refer the matter to the NPA for prosecution
For contravention of breach of confidence (Section 107(1)):
- Fine; or
- Imprisonment not exceeding 10 years; or
- Both of the above.
Any other case:
- Fine; or
- Imprisonment not exceeding 12 months; or
- Both of the above.
Magistrate’s Court has the jurisdiction to impose these penalties.
It may not exceed the greater of:
- 10% of the respondent’s annual turnover during the preceding financial year; or
- R1 000 000
- The Tribunal may impose an administrative fine. The fine must be paid to the National Revenue Fund.
Examples of how the CPA will affect you as a consumer
Returns and refunds:
It’s all about the consumer in the new act, especially when it comes to returning goods or asking for refunds. Consumers will now have up to six months to return faulty or unsafe goods. If the product fails again within the next three months, the supplier is again obliged to replace it or refund you.
Ordering online? Goods will have to be delivered at an agreed date, time and place. If not, you will be free to accept or cancel the agreement. Companies are also obliged to deliver goods that match the sample or description of the product.
As of 31st of March, companies will not be allowed to charge you an exorbitant R5 or R10 to enter an SMS or MMS competition, but will have to stick to the usual rates.
Companies will have to provide you with an estimate for the work, which you must approve, and cannot charge you more than that. If more work is required above and beyond the estimate, they first have to get the go-ahead from you.
Gone are the dreaded telemarketer calls and junk mail flyers. According to the new act, sales people cannot bombard you with calls and leaflets at certain times of the day and certain days of the year.
According to this clause, you will have five business days to change your mind about that mid-life-crisis Harley or the seaside cottage you fell in love with and now are not so much in love with any more. Notify the company in writing, and they will have 15 days to pay you back in full.
Automatic contract renewals will be no more. Companies will have to contact you in writing, between 40 and 80 business days before your contract expires.
From 31st of March, suppliers, particularly in the car industry, will have to let you know of all defects of your purchase and you have to agree to buying the product in that condition.
This one is still on you. Cancel a booking or reservation, and the supplier is entitled to charge you a “reasonable” cancellation fee. The “reasonableness” depends on how early you cancel and if the supplier can fill your spot.