South African consumers have probably been the most exposed consumers in the world with virtually no protection from exploitation and no recourse against scrupulous importers, manufacturers, wholesalers, retailers and service providers, especially if they could not afford to employ lawyers to sue these companies through the Courts, which could be enormously expensive and take many years to reach finality. This is all set to change when the Consumer Protection Act is fully in force South African consumers will be some of the best protected consumers in the world and those in the supply chain who forget that best beware of the long arm of the National Consumer Commission and National Consumer Tribunal.

The Consumer Protection Act was signed into law on 24 April 2009 and has been of full force and effect since 1 April 2011 at which time the anti-discrimination provisions, the rights of consumers to inspect goods and to expect timeous and correct delivery of goods, the use of plain language in all documents, the requirements for trade descriptions, the provisions against misrepresentation, and deception, the right of consumers to contractual provisions which are just, fair, and reasonable, the right of consumers to prices which are just, fair and reasonable, and warrantees and product returns all came into effect. One of the most important portions, which provides for the liability of the importer, manufacturer, wholesaler and retailer for any harm or damage caused by the goods they supply already came into effect on 24 April 2010.

What both consumers and suppliers need to understand, is that the Act applies to any transaction in which goods or services are supplied or offered to be supplied, or where a person is exposed to any goods or services regardless whether any supply actually took place, as long as the consumer is a natural person or a juristic person having a turnover or nett asset value below R 2 million. Thus, a person who is exposed to marketing only is still considered a consumer in terms of this Act as is a person who received a product or service for free. It is possible for the same person to be a supplier in one transaction and a consumer in another transaction, for example, where a small business or farmer purchases feed or packaging material and then packages and sells milk. There need not be a direct relationship between the manufacturer or producer and the end user for application of the Act as between the end user and the manufacturer.

Marketing Practices

The Act prohibits discriminatory marketing between consumers on any Constitutional grounds, such as race, gender, sexual orientation, religion, and the like. However, specific provision is made for favourable treatment of pensioners over 60 and minors under age 18. In addition, discrimination based on purely commercial reasons, such as a milk distribution area which is economically viable, or minimum order value is also permitted.

There are extensive provisions regarding labelling and marketing, including strict regulation of direct marketing, promotional competitions, the use of language, the content of labels, and prohibitions against misrepresentations to and deception of consumers, especially the most vulnerable who are challenged either by literacy, language, age, or health.

Thus, where any direct marketing to consumers is undertaken, this has to be limited to working hours on weekdays and shortened hours on Saturday, and the consumer must be given the option to either pre-emptively opt out from all or certain direct marketing, or to opt out from a specific supplier's marketing by either registering on a pre-emptive block register which will be established and which all marketers will have to consult before conducting any direct marketing or by contacting a supplier directly in order to inform them not to be contacted again.

Where promotional competitions are held, whether by manufacturers, packers, or retailers, the rules of the promotion must be strictly in accordance with the Act and there must be enough prizes or awards to satisfy the demand which results therefrom. Of great importance is the prohibition on charges of any kind for the entering of promotional competitions, whether in the form of a premium SMS or any other form, and only the actual cost of communication may be charged to an entrant, for example, a postage stamp to enter by mail or a standard SMS charge for entering by SMS.

In the case of promotions or specials, there must be sufficient stock of the free or reduced price item to satisfy reasonably expected demand or else the exact number available on promotion must be stated. The days of specials where the retailer has less stock when advertising a special than when the product is sold at its usual price are numbered. The retailer will be liable to a consumer to supply the product at the advertised price for as long as the promotion period has not expired or until the stated limit of stock has been sold and "while stocks last" is no longer an acceptable practice.

Another practice that will bite the dust is the "E & OE" printed at the bottom of each advertisement and on which retailers rely if they have made an error in the advertised price. In terms of the Act, all goods for sale must be priced and only the displayed or advertised price may be charged unless the displayed or advertised price can be deemed to be "an obvious and inadvertent error" which in most cases would be very difficult for a retailer to prove, and even then the displayed price must be charged until the consumer has been informed of the error and of the correct price, presumably not while paying.

Similarly to the Food Labeling Regulations, the use of specific languages in documents, forms, and notices is not prescribed and where specific forms, notices and documents are prescribed by the Act or by any other public regulation then such should be used. In all other cases, such as contracts, portions of labels for which no prescribed format exists, marketing materials, and the like, plain language must be used such that it is reasonable to conclude that an ordinary consumer of the class of persons for whom the notice, document or visual representation is intended, with average literacy skills and minimal experience as a consumer of the relevant goods or services, could be expected to understand the content, significance and import of the notice, document or visual representation without undue effort. Thus the choice of language is upto the individual producer, but the above requirements must be met. The Commission will eventually publish guidelines on when the plain language requirement has been met. In the context of foodstuffs it is believed that where any statements as to the benefits of the product or special characteristics of the product are advertised or appear on labelling, great care must be taken to ensure that consumers will understand the content, significance and import thereof.

Further to what has been stated about the plain language requirements, the Act also makes provision for specific goods, such as grain products, to be the subject of regulation under this Act in so far as trade descriptions are concerned, so that the country of origin, the ingredients used, the manufacturing processes employed, the name and address of producers of imported products, and the presence of GM ingredients in the goods be disclosed on the label thereof. However, this provision will only apply to goods once they have been called up by the Minister and only to the extent of the call up. Currently it appears that Maize and Soy will require GM labelling where the GM content thereof is in excess of 5 mass%.

Finally, in so far as labelling, marketing, and advertising are concerned, there is a prohibition of any and all misrepresentations to consumers, whether direct or indirect, and a supplier has the duty to correct any misunderstanding by a consumer expressed to the supplier. Numerous examples of situations where misrepresentation is taking place are listed in the Act and these include claiming product is available when it is not, has a certain characteristic when it does not, and has a price advantage over other products when this is not the case. In addition, advantage may not be taken of consumers who are unable to look after their own interests due to illiteracy, blindness, deafness, inability to understand a language, age, and the like. This provision goes further than the prohibition on health and other claims on foodstuffs in terms of the Food Labeling legislation and false or questionable "wellness" claims on foodstuffs and on products not regulated at present, such as food supplements and complementary medicines will need to be substantiatable by scientific evidence or be removed from marketing, advertising and labelling in order to avoid being charged with a prohibited conduct under the Act.

Right to Goods which are Safe and of Good Quality

12. The Act provides, amongst others, for a warranty of quality, the right to safe, good quality goods, warnings concerning the fact and nature of risks associated with goods, safety monitoring and recall of products, and liability for damage caused by goods. Of these, it seems likely that the liability for damage caused by goods will have the most far reaching effects on your business, however, in time the other consumer rights in this chapter will increase the burden on your business.

Liability to a Consumer

Section 61 of the Act, which provides for so called "no fault" liability of the importer, manufacturer, wholesaler, and retailer of unsafe, defective, failed or hazardous goods, or where inadequate instructions or warnings have been provided, came into effect on 24 April 2010 and potential claims by consumers are already accumulating as you read this. From the outset, it must be borne in mind that the liability for such damages is not only in terms of the Consumer Protection Act and both existing common law liability and criminal law liability will continue to exist so that a company could find itself both liable civilly under this Act but also under common law and criminal law.

Furthermore, the sword of the Consumer Tribunal will hang over the heads of repeat, intentional, or grossly negligent transgressors where a fine of upto 10 % of turnover of a company may be levied. In terms of other provisions there are criminal sanctions against individuals which carry prison terms of upto 10 years.

The Act also puts in place a product recall regime in terms of which product recalls may be ordered by the National Consumer Commission and which may require accurate record keeping of the sales of designated products and returns thereof for product failure monitoring and for reporting of such figures in order to permit recalls of out of specification products to be ordered before they cause damage or harm.

Suppliers need to take note that the liability for harm or injury caused by goods introduced under the Act is vastly different from the position prior to the coming into effect of Act in that under the Act the supplier need not have been negligent nor breached an explicit or implied contractual term in order to be liable. Thus the Act imposes a no fault liability on any producer or importer, distributor or retailer of any goods for damage caused wholly or partly as a consequence of supplying any unsafe goods, a product failure, defect or hazard in any goods, or inadequate instructions or warnings provided to the consumer pertaining to any hazard arising from or associated with the use of any goods, irrespective whether the harm resulted from any negligence on the part of the producer, importer, distributor or retailer, as the case may be.

Some of the causes from which such claims could arise include allergic reactions to ingredients of which the consumer has not adequately been warned, foreign objects in food products. food poisoning and other food safety related situations. It is quite likely that some consumers or consumer groups will attempt to rely on these provisions against producers who use hormones (rBST), antibiotics, and other production aids without adequately disclosing this information or, in some cases, claiming they are absent when they are not, for example, "rBST free" labelling.

From 24 April 2010 the only defences open to a person in the supply chain alleged to be liable for harm caused to a consumer will be that:

(a) the unsafe product characteristic, failure, defect or hazard that results in harm is wholly attributable to compliance with any public regulation;

(b) the alleged unsafe product characteristic, failure, defect or hazard—

(i) did not exist in the goods at the time it was supplied by that person to another person alleged to be liable; or

(ii) was wholly attributable to compliance by that person with instructions provided by the person who supplied the goods to that person, in which case, subparagraph (i) does not apply;

(c) it is unreasonable to expect the distributor or retailer to have discovered the unsafe product characteristic, failure, defect or hazard, having regard to that person's role in marketing the goods to consumers; or

(d) the claim for damages has prescribed in terms of Section 61(5).

A further element of liability which is introduced by the Act is that of no fault vicarious liability in terms of which if an employee or agent of a person is liable in terms of this Act for anything done or omitted in the course of that person's employment or activities on behalf of their principal, the employer or principal is jointly and severally liable with that person.

A major consequence of the coming into effect of the Act, and especially the no fault liability, will be the need for distributors and retailers to have insurance tailored for this type of liability and systems, both administrative and laboratory, to test products and keep accurate records in order to be able to sustain the defence that it is unreasonable to expect the distributor or retailer to have discovered the unsafe product characteristic, failure, defect or hazard, having regard to that person's role in marketing the goods to consumers. There will off-course be much debate as to what the effect of the role as a wholesaler or retailer has on the liability of the wholesaler or retailer in terms of the defence that they merely sell on what has been sold to them without reviewing or testing the safety or suitability thereof, however, in the writers opinion, the bigger the wholesaler or retailer, the less likely this defence is to succeed.

The good news is that what has not changed is the determination of the extent of any damages claimed.

Thus, there are no punitive damages as is the case in the US and actual damages suffered as well as any provable past, present, or future economic loss may claimed.

Thus, the extent of provable damages has not been changed by the Act, however, the consumer will no longer have to prove negligence on the part of anyone in the supply chain in order to open the door to a damages claim, which is the case under the present common law, and thus there may be many spurious or minimal claims against supply chains where the damages are either incalculably small or very minor in extent, such as the replacement of a carton of milk, but which require proper responses to the National Consumer Commission, and even the Consumer Tribunal, from legally qualified personnel rather than the current customer care line type of approach. Failure to deal fully with all the issues at an early stage may result in claims escalating.

Warranty and Right to Return Goods

Besides the issue of claims for damages as a result of harm caused by foodstuffs, every consumer has a right to receive goods that are reasonably suitable for the purposes for which they are generally intended for, are of good quality, and will be useable for a reasonable period of time taking into account the sell by date and all the surrounding circumstances of their supply.

In determining whether any particular goods satisfied the above requirements, all of the circumstances of the supply of those goods must be considered, including but not limited to the manner in which, and the purposes for which, the goods were marketed, packaged and displayed, the use of any trade description or mark, any instructions for, or warnings with respect to the use of the goods, the range of things that might reasonably be anticipated to be done with or in relation to the goods, and the time when the goods were produced and supplied. It is irrelevant whether a product failure or defect was latent or patent, or whether it could have been detected by a consumer before taking delivery of the goods unless the consumer has been expressly informed that particular goods were offered in a specific condition, and has expressly agreed to accept the goods in that condition.

Thus, in the context of food products, the consumer is entitled to food products which have the product characteristic as indicated on the packaging and in marketing, which will have a reasonable shelf life depending on the type of product, for example, fresh pasteurised, UHT, and the like. The products should be safe and not contain any foreign objects nor be produced using any undesirable additives nor packed in material which would detract from the safety or suitability thereof. The products should always comply with all Agricultural Products Standards, Food labelling requirements, and compulsory specifications.

It is very important to note that the producer or importer, the distributor and the retailer each warrant that the goods comply with the requirements and standards contemplated above and the retailer, for example, cannot merely refer the consumer back to its supplier when a situation arises.

Within six months after the delivery of any goods to a consumer, but before the sell by date in the case of foodstuffs, the consumer may return the goods to the supplier, without penalty and at the supplier's risk and expense, if the goods fail to satisfy the abovementioned requirements and standards, and the supplier must either replace the failed, unsafe or defective goods, or refund to the consumer the price paid by the consumer for the goods, at the direction of the consumer.

Redress for Consumers

The Consumer Protection Act carries a big stick to stop prohibited conduct in the form of a fine of R 1 000 000 or 10% of turnover, whichever is the greater. As has been seen from the actions of the Competition Commission and Tribunal, fines of this magnitude not only can but will be imposed to protect consumers.

Thus, for example in the case of misleading and deceptive advertising, the ASA will lose its importance and consumers are more likely to complain to the National Consumer Commission and Tribunal which will have the power to impose huge fines and not just a slap on the wrist as is presently the case.

Besides the Sword of Damacles of a 10% fine hanging over the heads of suppliers, consumers will be able to complain to the National Consumer Commission and mechanisms set up by the Commission, in order to press their complaints and claims without the need for expensive lawyers. The redress system will be simple for the consumer but onerous on the supplier against whom the complaint has been lodged and a lot of resources may need to be employed to provide timeous and complete answers to investigations by the Commission. Yet further, the Commission will have the power to institute investigations of its own accord and will be able to carry out dawn raids and seize documents as part of its investigations into undesirable practices.

Thus, all in all, the Consumer Protection Act will be a knight on a white horse for consumers and the grim reaper for unscrupulous suppliers, however, in the writer's opinion, the majority of responsible importers, manufacturers, and retailers have little to worry about and may indeed benefit as the Act leads to the demise of those unwilling or unable to comply with the new paradigm.

The author, Janusz F Luterek, Pr.Eng is an engineer and an attorney specialising in all aspects of technology law with a specific focus on food law and consumer law.  Janusz may be contacted at This email address is being protected from spambots. You need JavaScript enabled to view it.

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