Many retailers have standard policies that deal with returns and repairs relating to defective products. Some of these policies may have been drafted long ago and have probably become outdated due to changing legislation.
The Consumer Protection Act (the “CPA”) contains provisions that have a direct impact on these policies. The CPA introduced standard warranties for goods supplied to consumers. There are also remedies for consumers who purchased goods that do not comply with those warranties. There has been some confusion regarding when consumers may return goods to suppliers, or request refunds or replacements.
The CPA prescribes four warranties for products (in section 55). These warranties constitute standards with which all products supplied to consumers must comply.
Suppliers must warrant that their goods:
- are reasonably suitable for the purposes for which are generally intended;
- are of good quality, in good working order and free of any defects;
- will be usable and durable for a reasonable period of time (having regarded to the use to which they would normally be put and to all the surrounding circumstances of supply); and
- comply with any applicable standards set under the Standards Act, 1993 or any other public regulation.
Suppliers may not exclude the warranties mentioned above. As such, a store’s returns policy may not limit the right that consumers have under the CPA. For instance, the policy may not state that sale goods may not be returned if those goods do not comply with the CPA’s warranties.
The first two warranties may be excluded if the supplier expressly informs the consumer that the goods are offered in a specific condition and the consumer expressly accepts the goods in that condition. This may sound similar to the “voetstoots” provisions in our common law, but it is much more limited. Firstly, the retailer will have to make sure that they disclose the product defect to the customer and, secondly, the customer must make it clear that they accept the product in that condition.
What can a consumer do if a product does not meet the standards?
If a product does not comply with the prescribed warranties, the consumer may return the product to the supplier within six months after delivery. (This is regulated by section 56 of the CPA.) For example, if a customer bought a kettle and it stops functioning within six months, the customer can return the kettle to the retailer.
The supplier may not charge a penalty for the return (such as a handling or administration fee). The goods will also be returned at the supplier’s risk and expense. This means that the retailer must pay for the costs related to returning the product to the supplier.
If a product does not comply with the CPA’s standard warranties, the consumer has the discretion to request the supplier to either:
- repair the product;
- replace the product; or
- refund the purchase price paid by the consumer for the product.
The customer can choose any of these three remedies. As such, a retailer cannot force a customer to choose the repair option if the customer would like a refund.
A consumer can not return a product for any defect. The defect must be a material imperfection in the manufacture of the product which makes it less acceptable than persons generally would be reasonably entitled to expect. A defect can also be any characteristic of the product which renders it less useful, practicable or safe than persons generally would be reasonably entitled to expect.
The CPA lists some factors that must be considered when one has to determine whether a product complies with the standard warranties. These factors include the manner in which, and purpose for which, the products were marketed. The instructions for use of the goods and any warnings must also be taken into account. For example, if a kettle is marketed for boiling water, a customer should not be able to return it because they could not cook soup in it or if the kettle malfunctioned because the customer tried to boil muddy water. However, the manufacturer and retailer must make sure that the product information explain the purpose of the product and set out any limitations. Product labelling and instructions must be comprehensive.
If a retailer repairs a defective product, but it appears that the defect has not been fixed or a further defect is discovered, the retailer must replace the product or refund the purchase price to the consumer. This means that there is no further repair option. This remedy is limited to three months from the date of repair.
The consumer’s right to return goods, as discussed above, only relate to the situation where the goods do not comply with the CPA’s standard warranties. However, there are also other instances in which consumers can return goods. This is regulated by section 20 of the CPA.
According to this section, goods may also be returned by a consumer if:
- the consumer purchased the goods as a result of direct marketing and the customer has cancelled the transaction within the period allowed by the CPA;
- the consumer did not have the opportunity to examine the goods before delivery and the consumer rejects them because they are not of the contemplated type or quality or do not meet the material specifications of a special order;
- the supplier delivered goods that were mixed with other goods that were not ordered; or
- the consumer expressed a particular purpose for the goods and, within ten business days after delivery, the goods are unsuitable for that purpose.
Retailers must update returns policies
These provisions may afford consumers much wider rights than what is allowed for by many retailers’ current refund policies. Suppliers therefore need to check that their policies comply with the CPA’s provisions. The consumer’s right to request a refund can also pose a risk to suppliers. Suppliers would therefore have to be careful to check whether products are returned within the six months period provided for by the CPA.
Retailers must take note that the National Consumer Commission (“NCC”) is serious about enforcing the CPA. The NCC has already done spot checks at some stores to check their returns policies. If a retailer’s policy does not comply with the CPA, a customer could report the retailer to the NCC. The retailer could face substantial penalties if it does not correct its policy.
Written by Danie Strachan, partner at Adams & Adams