The Consumer Protection Act

How does a business become compliant with the Act?

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Significant adjustments are required to avoid fines and to ensure that consumers do not report your company’s non-compliance.


Directors and managers should follow a holistic approach to manage compliance with the Act. The Act is all encompassing which means that a transgression may arise from any area of your business. The following is a generic framework for achieving compliance:

  • Perform a compliance audit (our firm offers this service);
  • Training staff (your staff interact with your clients, so they can be the greatest source of risk for non-compliance);
  • Install or enhance the companies quality control procedures;
  • Amend contracts (contracts will need to be amended to make them compliant);
  • Manage client complaints;
  • Consider product liability insurance and professional indemnity insurance;
  • Continuous education programs (for your managers and staff);
  • Keep abreast with developments and changes in this law;
  • Ensure that your suppliers are reputable and that they carry insurance (you can be held joint and severally liable with your supplier);

ACHIEVING COMPLIANCE IN COMMERCE

Bliden Campbell Attorneys (BCA) strives to achieve compliance in commerce for their clients, thereby reducing the risk of a business having to pay the penalties associated with non compliance. There is furthermore the public relations nightmare for the larger companies who are caught transgressing the Act.

Our firm offers seminars, training, compliance audits, amendments to contracts on a National basis.

Which businesses are affected by the Act?

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Almost all businesses are affected and have to comply with the Act.

The Act is applicable to all transactions which occur in the ordinary course of business, for the supply of goods and/or services by a supplier to a consumer (as defined in the Act). The Act is therefore applicable to all business transaction performed in the ordinary course.

Note however that large companies and government departments are not defined as consumers in terms of the Act and therefore cannot rely on the protection offered by the Act.

Can the consumer now cancel any contract?

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Yes, the consumer is able to cancel certain types of contracts.

Two sections of the Act which is of concern to the commercial sector are:

Section 14: the consumer may now cancel any long term contract on 20 business days written notice. This applies to cell phone contracts, leases and gym contracts. This section arguably creates commercial uncertainty for companies which rely on long term contract. This section is however not applicable as between companies.

Section 16: the consumer may now cancel, without reason or penalty, any contract on 5 business days written notice, where the contract resulted from direct marketing. Methods of direct marketing include brochures, exhibitions, trade shows, door to door marketing, tele-marketing, email drops etc,

Companies will need to build contingencies into their budgets and cash flow to provide for the possibility of these two sections, being the 5 day cool-off and the cancellation of long-term contracts.

What are the consequence of non-compliance?

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The consequences are severe.

Section 112 of the Act provides that transgressors may be fined for prohibited or required conduct. The fine may not exceed the greater of 10% of the annual turn-over of the offending company or R1 000 000.

The consequence of non-compliance is therefore great. The Consumer Tribunal may hand down sanctions like what has been seen from the Competitions Tribunal. Non-compliance can lead to a massive fine accompanied with the associated negative public relations.

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