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Know your customers' rights, and protect your
business...
The new Consumer Protection Act aims to protect consumers and
has implications for all players in the supply chain, from
manufacturers to end users. For small business owners it is
important to note that the Act impacts on both the direct and
indirect marketing practices you use to "promote" your
goods and services.
The general rule
The general rule is that your marketing may not be misleading,
fraudulent and/or deceptive. This extends to the nature and price
of the goods or services, how you supply your goods and the
sponsoring of events. Among other things, the Act introduces very
specific requirements relating to catalogue marketing, bait
marketing, negative option marketing and discriminatory marketing.
Promotional competitions, auctions and trade coupons are also all
affected.
Specific marketing practices
Read on to find out how the Act will impact your various
marketing activities:
Direct marketing
Direct marketing includes any approach to a customer in person,
by mail or electronic communication that is unsolicited. It also
covers all transactions concluded at a place other than your
offices, showroom or place of business.
Customers can now ask you to stop communicating with them
directly.
The Act creates a "cooling off" period during which
your customers can cancel a transaction made via direct marketing
without incurring any penalties. This must be done within five days
of delivery of the goods or conclusion of the agreement.
Promotional competitions
The maximum charge for a promotional competition has been capped
at R1.50. Prize winners also can't be expected to appear in
future marketing related to the promotion. And, you must get their
permission if you plan to use their personal information or
pictures in future.
Negative option marketing
This approach - where a sale is considered made if a customer
fails to perform a required action, for example when goods are sent
via the post to consumers - is now prohibited. There is no longer
room for agreements that come into existence purely on the basis of
not being declined by the consumer.
Bait marketing
You can't advertise and conclude deals if the goods or
services or advertised prices are not available. Also, if you
advertise goods or services at a specific price, and limit the
number available, you must make sure that you have enough to cover
your undertaking.
Catalogue marketing
Customers who buy off catalogues can't inspect the goods
before purchasing. But the Act does protect them in some way by
setting out the information that must be disclosed to the
purchaser.
Discriminatory marketing
You can't target a specific person or group of persons in a
discriminatory manner.
Packaging
The Act is very specific about the information that must be
included on your packaging. For instance, information must be
provided in language that the ordinary consumer with the average
literacy skills and minimal experience of relevant goods or
services can understand.
Product labelling and packing material must be in plain and
understandable language, and must contain warnings and instructions
detailing the risks associated with a particular good or service.
The Act says that all suppliers in the supply chain will be held
jointly and severally liable for any harm suffered if warnings or
instructions are inadequate.
If you haven't already done an audit of your current
marketing practices, it's time to do one to ensure that your
advertising is not misleading and deceptive or even fraudulent. The
Consumer Commission monitor and ensure compliance with this Act and
non-compliance opens you up to fines or worse.
Finally, because of the wholesale changes introduced by the Act,
expect to see its provisions tested against case law. So watch out
for rulings or practice directives issued by the Consumer
Commission and/or the Consumer Tribunal. In the meantime, work on
your compliance.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The Consumer Protection Act that came into effect on 1 April 2011 has many consumers jumping for joy and many more businesses screaming from the rooftops.
Recent media hype regarding the imminent implementation of the Consumer Protection Act, 68 of 2008 ("the CPA") has highlighted its impact on the manufacturing, supply and distribution of goods and services.
