Act needs ed­u­ca­tion not just en­force­ment

Business Day - Business Law and Tax Review - - BUSINESS LAW & TAX REVIEW - Pa­trick Bracher

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.

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