‘Prod­uct li­a­bil­ity is now on a no-fault ba­sis...’

A law too far?

Finweek English Edition - - Insight - ANDILE MAKHOLWA

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.

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