Act needs education not just enforcement
The Consumer Protection Act is supposed to protect consumers but instead it has been used to target certain industries, threaten massive fines and encourage the whingers
IT IS six months since the Consumer Protection Act came into effect on April 1 and it is time for an interim stocktaking. The act has noble aims but has had less noble implementation. The legislation should be about creating a culture of the supply of better service and goods for consumers by willing suppliers who see the benefits of having happy customers.
The act is supposed to create a fair, efficient and responsible consumer market with fair business practices to protect consumers from unfair and deceptive conduct and to provide a consistent and efficient system of consensual resolution of disputes. Instead it has been used to target certain industries, threaten massive fines and encourage the whingers.
When the act was about to come into force and the final regulations had not yet seen the light of day, the Department of Trade and Industry (DTI) promised the commercial world that there would be a period in which we all eased into the new world of consumer protection. As it happened, the act came into force on March 31 and the regulations were published a day later on April 1. That made it literally impossible to comply with the act on the date of commencement. This is a constitutionally illegal act, but everyone decided to get on with it and try to make the new law work. Unfortunately the National Consumer Commission turned its back on the DTI and has proceeded with threats of targeting certain industries and imposing massive fines.
In the context of the Competition Act, the Competition Appeal Court has recently urged those authorities to have regard to the outcome of cartel behaviour when fixing fines and not to seek at every turn to impose the maximum penalty. While we are all irritated, and some people have been severely prejudiced, by the billing mess in the Johannesburg Municipality it is hard to see what purpose would be served by imposing an administrative fine of R15m on the City of Johannesburg as the National Consumer Commission has threatened to do.
How will it help any consumer to take R15m out of the coffers of the Johannesburg Municipality and put it back into the National Treasury except for a feeling of selfsatisfaction? Clearly some gesture of disfavour is needed but there has to be a balance. Recently, BMW was threatened with a R500 000 fine because one of its vehicles (sold before the act came into force) allegedly has a defective armrest. Not surprisingly it is reported that BMW SA are contesting this matter before the National Consumer Tribunal. We must all hope that some rationality is brought into the situation by the tribunal. But shouldn’t the commission be doing something more sensible with its limited resources? It has been suggested that the big players are using their financial muscle to frustrate the efforts of the commission. The bigger the player the bigger the threatened fine at 10% of turnover. It is hardly surprising that they would wish to protect themselves. More emphasis needs to be placed on effective dispute resolution than on compliance notices, admissions of guilt and major fines.
A recently published consumer handbook on the new legislation suggests that consumers who are dining out at a restaurant should complain if “the dish you order has not been cooked properly”. If you do not get a replacement meal or a refund, the book suggests you refer the matter to the Consumer Commission. If everyone with mushy peas or cold coffee is going to rush off to the Consumer Commission it is hardly surprising that there have been about 10 000 complaints or queries already of which only 1 000 formal complaints have been dealt with. The call centre receives an average of 8 000 calls a month.
Suppliers of goods and services also need to embrace the spirit of the act. The first thing they need to do is to understand what their obligations are. Someone recently showed me a delivery document for a motor vehicle. The buyer was asked to sign a document to say they are aware that the motor vehicle could be dangerous and hazardous if it is not used correctly.
It is hard to see what possible use that statement has under the Consumer Protection Act. The motor industry has clearly not embraced the full import of the implied warranties of quality that have to accompany every vehicle sold or the extreme limits placed on the “voetstoots” clause. But this needs education not just enforcement.
The National Consumer Commission is doing a lot of good work. Consent orders have been signed by the retail sector, the motor industry, the mobile phone sector, municipalities and other industries and many disputes have been amicably settled. These settlements, including publishing the details, will help us all to appreciate how farreaching the act is. They will encourage suppliers to put in place proper complaints procedures so that consumers with rights can be dealt with. Well publicised compliance rather than fines is likely to create an atmosphere of willing compliance that will do the consumer market a great deal of good.
However, if you try to use a carrot as a stick, you may find it will break.
Patrick Bracher is a senior partner at Norton Rose.