DENISE FOUCHEENDCODER/ ENDCODE.ORG

REINFORCING CONSUMER RIGHTS:

RETURN, REPAIR, OR REFUND? The concurrency of the CPA and the NCA

CONTEXT:

South African Consumer Protection law

The Right to Return, Repair or Refund

The NCA and these rights

Technology challenges to consumer rights

Brand risk – staying true to the promise

Recommendations

SA Consumer Protection law

EC

T

20022005(2007)

2008(2011) 20131985

NCA CPA POPIUNGCP

1996

CONSTITUTIO

N

Return, Repair, or Refund

• CPA: Right to Return S20• Right to return if defective within 6 months of

purchase date.

• Consumer chooses remedy-repair, refund or replacement.

• Service provider may not insist on repairing but entitled to examine or send it away to be assessed but not to be assessed and then simply repaired without consumer agreement to that repair.

• In cases of direct marketing 5 days to automatically cancel and claim a refund.

Return, Repair, or Refund

• No general right of return in terms of SA law

• CPA: 4 instances when one can return goods1. Direct marketing cooling-off period s16

• 5 days

2. Goods which have not been seen before purchase s20 with s19• Upon delivery

3. Good do not meet particular purpose s55(3)• 10 days

4. Implied warranty of quality s56• Up to 6 months

• ECT: consumer provisions trumps CPA for online purchases• 1-3 above do not apply

• General right to return (cooling off period) • 7 days

Return, Repair, or Refund

• CPA• Direct Marketing – Cooling Off period s16

• s16(1) does not apply to a transaction if s44 of the ECT applies

• A consumer may rescind a transaction resulting from any direct marketing without reason or penalty s16(3)

• by notice to the supplier in writing,

• within five business days

• A supplier must– S16(4)

• Return any payment within 15 business days after

• receiving notice of the rescission, if no goods had been delivered to the consumer or

• receiving from the consumer any goods supplied in terms of the transaction

• Not attempt to collect any payment in terms of a rescinded

transaction

Return, Repair, or Refund

• CPA

• Consumer’s rights with respect to delivery of goods or supply of service s19• s19 does not apply to a transaction if s46 of the ECT applies

• S19(2)(a) the supplier is responsible to deliver the goods or perform the services–

• on the agreed date and time or within a reasonable time after concluding the transaction or agreement

• at agreed place of delivery

• at cost of supplier

• The goods remain at the supplier’s risk until the consumer has accepted delivery

• Allow consumer reasonable opportunity to examine the goods to ascertain consumer is satisfied goods are as contemplated in the agreement s19(5)

Return, Repair, or Refund

Location / date / time other than

as agreed

Accept the delivery

Require at agreed location

/ date / time

Cancel without penalty

Larger quantity of goods

Reject all

Accept agreed, treat excess as

per s21

Mixed goods

Accept agreed upon goods

Reject all

• CPA• Consumer’s rights with respect to delivery of goods or supply

of service s19

Return, Repair, or Refund

• Unsolicited goods or services s21

Supplier informs consumer goods were

delivered in error within 10 days

Becomes unsolicited if supplier fails to recover them within 20 business

days after informing

Clearly addresses to another person

Becomes unsolicited only if recipient informs supplier and not recovered within the following 20 business

days.

• Must not frustrate recovery attempts• Not liable for loss or damage during time

in person’s possession or control• If a person is in possession of unsolicited

goods, person may retain the goods /return at supplier’s expense

• Supplier liable to any other person in respect of any right or valid claim relating to such goods.

• Person has no obligation to pay for unsolicited goods or services

• If consumer has made any payment relating to unsolicited goods or services, consumer is entitled to recover that amount with interest

CPA

Return, Repair, or Refund

• S54 Consumer’s rights to demand quality service• 54(2) If supplier fails to perform a service to the standards contemplated in subsection (1) the

consumer may require the supplier to either remedy any defect or refund a reasonable portion of price paid for services performed and goods supplied, having regard to the extent of the failure.

• S55 Consumer’s rights to safe, good quality goods• Right to receive goods:

• Reasonably suited for purpose for which intended

• Good quality

• Free of any defects

• S56 Implied warranty of quality• Within 6 months after the delivery of any goods, consumer may return the goods to the

supplier without penalty and at supplier’s risk and expense if goods fail to satisfy requirements and standards contemplated in s55 and supplier must at direction of consumer either repair or replace the failed, unsafe or defective goods; or refund the consumer the price paid

• S56 Implied warranty of quality• Warranty on repaired goods for a period of three months

Return, Repair, or Refund

Supplier unable to deliver goods in respect of lay-by and consumer has paid

full price

consumer option: supply equivalent of goods

refund the consumer money paid with interest if inability to supply is

due to circumstances beyond supplier control

double the amount paid as compensation for breach of

contract

• Lay-bys s62(2)(b)

• Pre-paid service (s64 (3)(b)) • If a supplier intends to close a facility to which the supplier has committed to provide future

access in terms of an agreement with a consumer to provide any service without making available a reasonably alternative facility, supplier must no later than five business days after closing the facility refund the balance of any money belonging to the consumer

Return, Repair, or Refund

• NCA: Designed to protect consumer in the credit market and make credit and banking services more accessible.

• Lower income earners with limited access to credit channels

• Complex credit agreements rendered many consumers vulnerable to credit providers.• Regulate consumer credit and credit marketing practices

• Promote responsible credit granting and use

• Prohibit reckless credit granting

• Regulate credit information

• Established recourse for unfair credit practices.

Return, Repair, or Refund

• NCA & CPA:• CPA does not apply where transaction constitutes a credit

agreement under the NCA S2(d)

• Goods and services that are the subject of the credit agreement are not excluded from the CPA ambit.

• A credit provider sells a product to a consumer on credit, the credit agreement must be drafted in terms of the NCA.

• Consumer will be afforded CPA protection regarding the product, such as the right to return faulty goods.

• Inconsistency between CPA and other law, must be interpreted concurrently. S9

• Act thus must be applied concurrently with the NCA. If not possible, Act most beneficial to consumer will prevail.

Return, Repair, or Refund

• NCA & CPA:• If credit provider sells a product under a credit agreement, credit

agreement must comply with NCA and CPA.

• Drafted in plain understandable language

• Not contain prohibited contract terms and conditions

• Consumer not be required to waive any rights

• CPA provisions regarding safety monitoring and recall and liability for damages caused by goods apply to all transactions even those exempted from CPA application.

• NCA regulates process, content, formalities, rights and obligations related to credit agreements; CPA regulates rights of consumers regarding standard and quality of goods and services supplied.

• Two Acts must be read together.

• When a credit provider sells a product to a consumer on credit, the credit agreement must be drafted in terms of the NCA

Return, Repair, or Refund

• NCA: Simplifying credit agreements and information

disclosure affects:• CREDIT PROVIDERS:

• Banks

• Microlenders

• Retailers

• CONSUMERS:

• Natural persons

• Juristic persons (asset value/annual turnover equals/exceeds R1million threshold)

• OTHERS:

• Debt counsellors

• Credit bureaux

Return, Repair, or Refund

• NCA• CONSUMER RIGHTS:

Apply for creditProtected against

discrimination in granting of credit

Informed by credit not granted

Receive free copy of credit agreement

Credit agreement in plain language

Personal and financial info treated confidentially

Understand all fees, costs, interest rates, total

instalment and any other details

Say no to increases on credit limit

To decide whether you want to be informed

about products or services via telephone, sms, mail or

email campaigns

To apply for debt counselling

Return, Repair, or Refund

• NCA• MARKETING TO CONSUMERS:

Restricts and outlaws certain

practices of loan canvassing

Automatic credit limit increases and

negative option marketing

Provides for clear and understandable

marketing communications

Consumers must receive detailed quote valid for 5

days

Caps interest rates

Caps maximum amount a credit

provider can charge for other fees

Return, Repair, or Refund

• NCA• MARKETING TO CONSUMERS: specific provisions

• Early settlement of credit agreements

• Consumer may terminate the credit agreement at any time by paying the settlement amount. s122

• Consumer entitled to cancel a credit agreement at any time with or without prior notice to credit provider. s125

Tech challenges to consumer rights

• Internet: applicable law

• Big data: privacy violations

• Growing power imbalance: private sector has more information on consumers’ spending habits and credit histories thanconsumers themselves

• Online Competitions

• Electronic commerce: understanding terms, conditions and costs related to online transactions; delivery; payment

“Online finger-wagging, lawsuits, disgruntled customers -- they're the unfortunate byproducts of what many people perceive to be big data abuses.”

According to a September 2013 study from data privacy management company Truste, 1 of 3 Internet users say they have stopped using a company's website or have stopped doing business with a company altogether because of privacy concerns.

Tech challenges to consumer rights

• European Commission Directive on Consumer Rights: to protect consumers purchasing goods online

• Ban on “cost-traps”. Online buyers to confirm understanding of price to be paid

• Returning goods: reimbursement for goods not matching expectations. Extension from 7 to 14 calendar days under which consumers can withdraw from a sales contract.

• Transparency: traders obliged to disclose total cost of product or service and any extra fees; extra charges for paying by credit card will not be allowed; bans pre-ticked boxes on additional services

• Online search: increasing number of ads and paid linkes in search result pages. More complicated to access best options and most competitive prices as Google drives viewers to sponsored services.

“The greatest concern of respondents is that, returning a product they did not like and getting reimbursed, is not easy”.

Civic Consulting, 2011 poll of European online shoppers

CPA Enforcement issues

• Weak enforcement mechanisms

• Consumer awareness is low

• National Consumer Tribunal: administrative penalties. Enforcement through compliance notices

• Safety monitoring and recall (s60). The National Consumer Commission must promote systems to receive notice of the return of any goods because of a failure, defect or hazard

“Complain, complain, complain - I can't say it enough - complain. Take advantage of the commission because at the end of the day, you can have the best laws in the world, you can have the most well equipped commission but if you don't tell us what the problems are - we have no way of knowing.”National Consumer Commissioner Mamodupi Mohlala to the South African public

Avoiding brand risk

• South Africans posted more than 5 million tweets* during Q4 2011

• Next nearest was Kenya with 2.47 million tweets

• Nigeria was the third most-active country with 1.65 million tweets

South Africa has the most active Twitter population in Africa

* Survey analysing 11.5m geo-located tweets across Africa. Source: PC Mag (2012)http://www.slideshare.net/OnDevice/south-africa-mobile-consumer-trends

Avoiding

brand risk

• Social media provides a platform for happy and disgruntled customers

• An unmediated channel for commenting on brand experiences

• Compliance with consumer legislation as a barrier to the channel

RecommendationsCreate campaigns with the consumer in mind:

• Product and/or services promises are achievable

Ensure Refund and Returns policies are in place and compliant:

• Training:• CPA

• Refund and Returns policies

• Enforcement

• Outsourcing of services to digital marketing specialists: governance of outsourcing agreement

Website disclosures:

• Your company: kind of business; location; contact details

• The products and services: exactly what is being sold, at what cost

• The Sale: additional costs relating to sale; warranties or guarantees; safe payment options; estimated delivery date for the order

• Consumer Protections: privacy policy; policies on unsolicited email; complaints procedures; return, refund or repair policies.

RecommendationsStandard Business terms and conditions:

• Review in terms of consumer legislation

Marketing practices and methods:

• Review in terms of consumer legislation

Consumer law impact on business:

• Complianece framework and rollout of compliance programmes

Case study

• Standard Bank of South Africa Ltd v Dlamini (2877/2011) [2012] ZAKZDHC 64; 2013 (1) SA 219 (KZD) 23 October 2012

Case law backing the consumer’s right to plain language in terms of the NCA and the CPA

Denise Fouche

denise.fouche@endcode.org

endcode.org

THANX, QUESTIONS?

References

• http://www.euractiv.com/sections/consumer-choice-internet/eu-bets-consumer-rights-boost-e-commerce-301370

• http://www.computerworld.com/article/2485493/enterprise-applications-big-data-blues-the-dangers-of-data-mining.html