What do we need to know about the Consumer Protection Act?

Much has been said about the need for increased protection for consumers. It is believed that the Consumer Protection Act will assist many consumers who believe that they have not been treated fairly in business.

Many small business owners have expressed their concerns that all the responsibility is placed on them and that their clients would too easily seek litigation against them.

What are the most important aspects covered by the Consumer Protection Act?

We would like to share some of the aspects highlighted by Standard Bank in a recent Newsletter

  • Language

Product/service information must be in a language appropriate for the target market, and understandable to someone with average literacy skills. Consumers often complain about the “fine print” in the terms and conditions of policies. This stipulation should address some of these concerns.

  • Agreements

Any agreement that seems excessively one-sided against the customer can be ruled to be unreasonable and therefore not applicable. The CPA also applies to franchise and lease agreements.

  • Contract terms and renewals

Fixed-term agreements cannot be automatically renewed at the end of the term, except on a month-to-month basis. During this time the consumer cancel by giving 20 business days’ notice.

  • Cooling off period

Consumers who buy something that is marketed directly to them have a five-day “cooling off” period in which to return the item.

  • Refunds, repairs and warranties

Consumers have up to six months to return faulty or unsafe goods, regardless of the warranty that the seller might provide.

Repair work that falls outside warranty must be quoted for in writing. Suppliers cannot charge for quoting, or charge more than what is quoted.

If a consumer claims damages as a result of an unsafe, faulty or hazardous product, it is up to the supplier to prove they are not at fault.

  • “Voetstoots”

This is no longer an acceptable term or condition. A seller has to inform consumers of any defects – obvious or hidden – and they have to agree to buy it in that condition.

  • Overbooking, reservations and cancellations

Cancellation fees must be “reasonable”, based on how early the cancellation is made and how easy it is for the supplier to rebook it.

  • Marketing

Consumers can pre-emptively block direct marketing attempts. Marketers must first obtain permission before they can market to someone directly. SMS or MMS-based competitions are allowed, but entries can only be charged at standard SMS rates. Prepaid certificates, credits and vouchers only “expire” once they are redeemed by the bearer, or after three years from the date of issue.

  • Trading name

Any business name that is used for trading, in any way or form, must be registered.

For more detail on the Consumer Protection Act, click here.

We will strive to discuss some of the stipulations in the Consumer Protection Act in a bit more detail on this Blog. We would like to focus on especially those sections that will impact on the relationship between insurers and their clients.

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