Beware of suppliers who don't subscribe to ombuds
The consumer goods and services ombudsman might have no coercive powers, but consumers should steer clear of suppliers that don’t subscribe to the scheme
‘NO RETURNS, no refunds” store policies, high-pressure sales and other abuses are rife in the retail space, but consumers are becoming increasingly savvy about their rights, thanks largely to the work of the consumer goods and services ombudsman.
Since its formation in 2015, the ombud’s office, which sits within the Consumer Goods and Services Council of SA, has endeavoured to ensure consumers get a fair deal by acting as an independent arbiter in disputes.
The scheme’s ambit is broad because it was set up in terms of the Consumer Protection Act, which applies to all goods and services provided in the country, and there’s plenty of overlap too. Which is why, for example, cellular phone providers might be regulated by the Independent Communications Authority of SA (Icasa) in terms of network issues but the contracts and devices should fall within the scheme. Curiously, MTN is the only network provider that has signed up; the others fall under Icasa.
The ombud’s office has released its annual report and acting ombudsman Magauta Mphahlele notes a 60% spike in cases received by the ombud’s office in the year under review.
Most of the complaints were about cellphones (no surprises there); clothing and furniture retailers; services; and gyms.
But the ombud’s office receives a wide range of complaints, including timeshare, jewellery, hardware suppliers, computer accessories and even tobacco products.
“In 2015/2016, we received 3 495 cases – in the past financial year that shot up by 5 595. In the previous financial year, we closed 2 192 cases,” Mphahlele says.
“Last year that increased to 173%, or 5 974. The increase might be attributed to the fact that our participants have increased from 189 to 650.”
It’s an impressive increase, but 650 is still a fraction of the goods and services businesses in the country.
Global marketing researcher Nielsen estimates there are around 134 000 small and independent retail outlets, 4 500 supermarkets and 2 758 convenience stores across the country.
And more than 10 000 suppliers have refused to register with the ombud scheme.
Mphahlele says that in the past financial year a large number of cases – 45% – were referrals from the National Consumer Commission, which has said it would rather have the ombuds deal with the day-to-day cases while it focuses on broader investigations, such as timeshare and recalls, as well as legislative changes.
Earlier this year, former ombudsman Neville Melville was forced to approach the high court to apply for an order declaring its code of conduct makes it compulsory for eligible businesses to sign up. Under severe financial pressure, the ombud has the support of most of the major retailers‚ but the refusal of thousands of other businesses to sign up has put the organisation in an “untenable” situation‚ he says. It simply doesn’t have the capacity to deal with the workload.
However, greater industry participation has meant three more staff members could be hired and the office would soon be in a position to build reserves and consider reductions in fees.
Mphahlele says the focus should be on businesses that don’t participate. It’s not about making money: the ombud operates on a non-profit basis but to be truly effective, it needs greater industry clout.
“About 17.8% of the cases we received we had to close because of non-participating, non-co-operative entities. The pressure, by consumers and the media, should be on those entities. If they fall within our jurisdiction, they should participate because it will give consumers confidence that if things go wrong, there’s an independent party that can look at that complaint.
“This past financial year, we collected more than R15 million (in fees), so we are currently sustainable and in a position to start building reserves. We are seeking a court declaratory to give that certainty that we have the right to levy fees because the act doesn’t give specific provision for that. But there is no way you can establish an ombud that isn’t funded.”
In the annual report, Melville notes that a “favourable outcome will make it easier for the ombud to proceed against resisting businesses in the lower courts. It will also free it up to focus its attention on its primary mandate, the resolution of consumer complaints”.
For now, the ombud’s decisions are not binding – it’s one of the board’s bugbears and it has recommended amendments to the code. If a supplier does not abide by its recommendations, it can refer cases to the commission.
Melville says his office is particularly concerned about a growing number of cases that have had to be closed because suppliers failed to co-operate.
“Although this behaviour is in breach of the Consumer Protection Act, which makes the code legally binding on participants, the consumer goods and services ombudsman has no power to sanction wrongdoers.”
Mphahlele adds: “We sent a list of 298 names to the National Consumer Commission of entities that they should be looking at. Entities are expected to resolve complaints within 15 business days after the ombud’s sent complaints to them.
“So, if they are too slow, they take too long, they don’t respond on time they might need help to meet the target. Then there are those that completely ignore the office or don’t respond. Others simply cannot be found.
“We encourage consumers to do business with entities that subscribe to the code so we know who they are.”
Knowing who you’re dealing with – a business that’s answerable to an independent arbiter – is more assuring than taking chances with unregulated businesses that might openly flout the law.
● Contact the consumer goods and services
ombudsman at www.cgso.org.za/, e-mail info@cgso.org.za, call 0860 000 272 or visit its offices at Association House, Bond Street Business Park, cnr Bond and Kent streets in Randburg, Johannesburg.