Technology law specialist firm Hahn & Hahn partner Janusz Luterek, who is also a professional engineer, believes that the construction, motor vehicles and cellular telephones sectors are likely to attract the most complaints related to the newly implemented Consumer Protection Act (CPA), by value, from consumers.
This is based on the number of complaints and disputes currently being received by companies repre-sented by Hahn & Hahn.
However, the National Consumer Commission (NCC) states its focus is on the information and communication technology (ICT), retail, pharmaceuticals and healthcare sectors, says Luterek.
“These are broad objectives and, within the ICT sector, I believe the focus will be on the cellular phone industry, particularly the hardware and services industries. Further, the construction industry will also be a priority, focusing on home builders and residential property developers as well as motor vehicles sold to private individuals. There are incidents where dealers and service centres give the public a raw deal, especially when buying used motor vehicles,” he explains.
Based on information gathered during the course of representing two of South Africa’s largest retailers over the past five years, most complaints, although small in value, relate to the food industry, followed by fast-moving consumer goods and the cellular phone industry in third place, says Luterek.
He adds one of the main challenges the Act faces will be the sheer volume of complaints needing the attention of the NCC. “The NCC may be initially overwhelmed and will need a very good system to manage the complaints process,” says Luterek.
He believes the likely NCC process will require consumers to first try to resolve complaints directly with the supplier and, only if the supplier is unable to resolve the problem, can the matter be taken up by the ombudsman (where available) or with the NCC.
The NCC will consider the documents provided by the complainant and will set a deadline for any additional information to be provided. If the information supports a possible claim, only then will the claim be further investigated and the supplier contacted by the NCC.
The NCC will then try to mediate the dispute and, only if this fails, will a compliance notice or referral to the National Consumer Tribunal be issued. This com- pliance notice may lead to a hearing, where, if the supplier is found guilty, it could be fined up to R1-million, or 10% of turnover, whichever is greater.
Luterek notes, however, that several suppliers have already revised their quality control systems and consumer complaint-handling processes, as they are aware of the complete paradigm shift that has resulted from the CPA coming into effect.
He notes that the regulations governing the process will need to be easily understood by consumers so that minimal frivolous and vexatious complaints are lodged.
“Consumers’ expectations will need to be adequately managed. Consumers cannot be led to believe that they can become wealthy when they bring a complaint to the NCC,” explains Luterek.
Further, he warns that any market- ing material or advertisements must be written in plain and easily understood language so that the consumer with average literacy and skills levels will understand the significance and importance of what is being conveyed to him or her through the advert. “Presumably, if this is not done, the consumer may be deceived or, at least, potentially deceived through the use of complex language and jargon,” he notes.
Meanwhile, Luterek explains that, while the CPA will fully protect the consumer, suppliers are also protected from unscrupulous claims, such as when a consumer purposefully alters or damages a product with the intention of claiming those damages from the supplier.
“The consumer is required to follow the supplier’s reasonable instructions and warnings on any product. The CPA specifically excludes the right to return goods that have been altered contrary to the manufacturers or suppliers instructions.
“Likewise, where the consumer has opened the packaging or otherwise interfered with or damaged the goods, this would disqualify the consumer from returning the goods to the supplier,” Luterek explains. But, under certain circumstances, where goods are defective or have failed, these can be returned regardless of whether they have been opened or the box has been thrown away.
He mentions that, under the CPA, all products will have a minimum warranty of six months, and any warranty covers defective goods, poor-quality goods, or goods that do not last as long as they are reason- ably expected to owing to poor design or manufacturing defects. “The CPA also protects consumers who have bought goods sold for a purpose they cannot perform, or perform inadequately,” he says.
Further to the right to return defective and poor-quality goods, consumers will now have the right to claim for damages caused by any goods, regardless of whether the importer, manufacturer, distributor or retailer was negligent. The strict liability will make it much easier for a consumer to claim for any damage to property or harm to themselves.
However, consumers need to understand they can only claim for damages actually suffered, and proven future economic loss, and there is no provision for punitive damages, as with some cases in the US, and awards of millions of rands for minor harm will not be made in South Africa, he says.
“With the introduction of class actions in the South African legal arena, lawyers and consumer bodies will now be able to lodge claims on behalf of a class of persons who suffered any harm or damages. These awards could be large, especially if a large number of people suffer harm from poor-quality products,” concludes Luterek.
– With additional reporting by Shannon de Ryhove