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The Dangers of Non-compliance of the Consumer Protection Act

  • by M Prem
  • in Consumer Protection Act

The Act recognises and protects 9 fundamental consumer rights such the right to fair, just and reasonable terms and conditions. If businesses commit offences by failing to adhere to the consumer protection laws, harsh penalties will ensue.

The Consumer Protection Act (CPA) aims to promote a fair, accessible and sustainable market place for consumer products and services. It also aims to establish national norms and standards to ensure better consumer protection.

The Act recognises and protects 9 fundamental consumer rights such the right to fair, just and reasonable terms and conditions. If businesses commit offences by failing to adhere to the consumer protection laws, harsh penalties will ensue.

CPA Applies to all Transactions

The CPA applies to every transaction within South Africa i.e goods and services provided to consumers for consideration in the ordinary course of business. This includes the State and franchises operating within South Africa. The CPA therefore affects most businesses with only a few exceptions.

The National Consumer Tribunal

The National Consumer Tribunal may be approached by various parties like consumers and credit providers for their case to be heard. It will hear all sides of a case before making a decision which has the same status as one made by the High Court of South Africa. The tribunal will determine the punishment for the offences made.

The Consequences of Non-compliance

A contract may be rendered void or a fine or term of direct imprisonment may be imposed.

1.     In the case where a person is convicted of a breach of confidence the penalty is a fine or imprisonment for a period not exceeding 10 years. A breach of confidence occurs when a person discloses any personal or confidential information concerning the affairs of any person, obtained in carrying out any function in terms of the CPA.

2.     Other offences not relating to the disclosure of personal or confidential information have consequences of possible fines and / or imprisonment for a period not exceeding 12 months.

3.     Fines for prohibited or required conduct such as marketing goods in a false or misleading manner, may cause the Consumer Protection Tribunal to impose a fine. An administrative fine imposed in terms of section 112 of the CPA may not exceed the greater of 10% of the respondents annual turnover during the preceding financial year or R1 million.

When determining an appropriate fine, the National Consumer Tribunal must consider the following factors:

1.     The nature, duration, gravity and extent of the contravention.

2.     Any loss or damage suffered as a result of the contravention.

3.     The behaviour of the respondent.

4.     The market circumstances in which the contravention took place.

5.     The level of profit derived from the contravention.

6.     The degree to which the respondent has co-operated with the Commission and the Tribunal.

7.     Whether the respondent has previously been found in contravention of this Act.

It is important for every business operating in South Africa to ensure compliance of the CPA. The easiest way to do this is to use a checklist. In case of non-compliance a contract may be rendered void, fines of up to R1 million imposed or worse still, you may be locked behind bars!

 

Tags: Consumer Protection Act

Subjects / Tags

  • Consumer Protection Act (4)
  • Contracts (6)
  • Corporate Governance (1)
  • General (4)
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