‘Product liability is now on a no-fault basis...’
A law too far?
IT’S JUST A MATTER of months before the new Consumer Protection Act (CPA) comes into effect. And while Government is yet to put in place regulations, anxiety appears to be on the rise from business amid the anticipation of a flurry of complaints and product recalls when the CPA fully becomes law on 24 October. Described as some sort of a “bill of rights” for consumers, the CPA has also been frowned upon in some quarters, with some businesses expressing concerns the new law stretches too far and doesn’t encourage free enterprise.
Areas of concern include the powers of the yet to be established National Consumer Commission, which have been described as “far-reaching”. These include the power to investigate and prosecute companies on behalf of consumers. Another element is product liability, which now includes the supply chain as a whole.
“Product liability is now on a no-fault basis – that is, a consumer will need only to prove he suffered harm due to a product defect and not negligence,” says advocate Neville Melville, who recently published a book called The Consumer Act Made Easy, and who has been running workshops for concerned groups.
Insurance group Chartis recently cautioned retailers to take out protection insurance as product recalls are expected to rise when the CPA comes into effect. Retailers are more exposed to consumer complaints than suppliers and the CPA includes them in its liability clauses.
“The CPA will be difficult to implement. I’ve looked at it myself from the point of view of being a supplier of goods and services and the only area of concern for me in my position is the ability of consumers to cancel bookings and in some circumstances receive a full refund. As with any legislation, some aspects are unclear and will need to be clarified by the [consumer] tribunal and the courts in practice,” says Melville.
As with any legislation, he says, the difficulties in practice will be in proving claims. “One area of difficulty I anticipate is where a consumer has communicated the specific intended use they have for a particular product to a sales person. The consumer will be entitled to return the item if it isn’t suitable for that purpose – so there’s a need for proper training and record keeping.”
Then there’s the arduous question of product labelling. The CPA requires products to be labelled in plain language that buyers will understand without having to make an effort. What’s not clear is whether a multiplicity of languages will have to be used.
Melville says though he hasn’t looked at it in detail, the power of the National Consumer Commissioner will be similar to that of other statutory bodies, such as the Public Protector, in respect of investigation and obtaining information. But the CPA is in any event subject to the safeguards of SA’s Constitution.
While the burden of enforcement will be shared by the National Consumer Commission and the Consumer Tribunal, consumer groups have also been empowered. “The enforcement of the Act will also be managed by consumers themselves through areas such as bringing class actions in the assistance of consumer groups (ie, the Consumer Commission),” says Melville.
In preparation for the CPA, the Consumer Goods Council of South Africa (CGCSA) – an industry association representing more than 11 000 member companies in the retail, wholesale and consumer goods manufacturing sectors – recently tabled plans to set up an industry ombudsman who would be an alternative dispute resolution, as provided for by the Act. This would minimise the number of consumer complaints escalated to the National Consumer Commission.
The Department of Trade & Industry was expected to have issued regulations by 29 April but it hasn’t yet done so.