{"id":18153,"date":"2011-03-22T09:35:08","date_gmt":"2011-03-22T07:35:08","guid":{"rendered":"http:\/\/www.whalecottage.com\/blog\/?p=18153"},"modified":"2011-05-27T01:03:56","modified_gmt":"2011-05-26T23:03:56","slug":"consumer-protection-act-no-joke-affects-every-business-from-1-april","status":"publish","type":"post","link":"https:\/\/www.chrisvonulmenstein.com\/blog\/accommodation\/consumer-protection-act-no-joke-affects-every-business-from-1-april\/","title":{"rendered":"Consumer Protection Act no joke, affects every business from 1 April"},"content":{"rendered":"

\"\"<\/a>It is surprising how little has been written about the new Consumer Protection Act No 68 of 2008, which comes into operation\u00a0on 1 April.\u00a0\u00a0 It gives tremendous power to consumers in their dealings with businesses, and will put every business on\u00a0its toes, the punitive fines of R1 million or more being a strong motivator.<\/p>\n

The Act itself runs to just under 100 pages, and whilst written to be understood, it is a volume of information to comprehend.\u00a0\u00a0We bought the book written by Advocate Neville Melville, ‘The Consumer Protection Act Made Easy’, to guide\u00a0us in evaluating\u00a0our business in terms of compliance with the new Act.\u00a0\u00a0 It is frustrating that there are many grey areas, as the author had to write the book as broadly as possible, to be applicable to every South African business and industry.\u00a0\u00a0 I have written this blogpost with a focus on how the new Act will affect the hospitality industry,\u00a0not as an expert by any means, as an hospitality business owner.\u00a0\u00a0 Accommodation provision is most specifically identified as a type of Service covered by the Act, whereas restaurants are not mentioned as such, but the Act applies to the provider of “Goods”, which includes anything “marketed for human consumption”.\u00a0\u00a0 Any contracts entered into before 1 April 2011 are excluded from the provisions of the Act.<\/p>\n

The Act is introduced as follows: “To promote a fair, accessible and sustainable marketplace for consumer products and services and for that purpose to establish national norms and standards relating to consumer protection, to provide for improved standards of consumer information, to prohibit certain unfair marketing and business practices, to promote responsible consumer behaviour, to promote a consistent legislative and enforcement framework relating to consumer transactions and agreements, to establish the National Consumer Commission…”.\u00a0<\/p>\n

It has been designed with the express purpose to protect the poor, and vulnerable and historically disadvantaged consumers, and to ‘promote their full participation as consumers’.\u00a0 It also\u00a0aims to apply ‘internationally recognised customer rights’, and\u00a0seeks to ensure transparent ‘redress’ for consumers subjected to ‘abuse or exploitation in the marketplace’.\u00a0 From a consumer perspective, it will certainly lead to improved customer service and better quality products, as complaints about service and product quality, as incorporated by the Act, can be taken to the newly established National Consumer Commission.\u00a0\u00a0 The penalties that businesses can\u00a0face are R1 million\u00a0or 10 % of the annual turnover, whichever is the higher figure.\u00a0\u00a0 Advocate Melville advises that businesses must ensure that they have sufficient public liability insurance.\u00a0\u00a0<\/p>\n

The Consumer Protection Act ascribes eight rights to consumers:<\/p>\n

!.\u00a0\u00a0 The Right of Equality<\/span><\/p>\n

\u00a0\u00a0\u00a0\u00a0 A business may not exclude or unfairly discriminate against any person, or category of persons, prioritise one set of persons over another, or charge certain types of persons more than another.\u00a0 This raises an important issue about the “Right of Admission” signs in hotels and restaurants.\u00a0 Le Quartier Fran\u00e7ais in Franschhoek, in banning patrons from its establishments, may fall foul of the new Act on this point.\u00a0\u00a0<\/p>\n

One may not contract with a minor, or with mentally challenged persons.\u00a0<\/p>\n

2.\u00a0\u00a0 The Right to Privacy<\/span><\/p>\n

\u00a0\u00a0 Consumers have the right to reject or block unwanted direct marketing or any other communication via e-mail, telephone\u00a0and sms.\u00a0 Allowable contact times for direct marketing may be specified in future.\u00a0\u00a0 Newsletters, for example,\u00a0must have an ‘unsubscribe’ option, to allow recipients the right to not receive them in future, especially if they are deemed to be for ‘direct marketing’ purposes.\u00a0<\/p>\n

3.\u00a0\u00a0 The Right to Choose<\/span><\/p>\n

Products may not be bundled together with another product or\u00a0service linked to it, and therefore a supplier or retailer cannot make it mandatory to buy another (possibly unwanted) product as part of a package.\u00a0\u00a0 Consumers also have the right to ‘examine goods’, yet cannot be held liable for damage in doing so, a bizarre\u00a0ruling – however ‘gross negligence, recklessness, malicious behaviour or criminal conduct of the consumer’ is chargeable.\u00a0<\/p>\n

By agreement, the consumer and supplier can agree how, when and by whom the product or service will be delivered.\u00a0 If it is not specified, it is implicit that the supplier must deliver the product within a reasonable time period.\u00a0\u00a0 The consumer has the right to check the goods on delivery, to ascertain whether they meet the specifications of the order.\u00a0\u00a0\u00a0<\/p>\n

4.\u00a0\u00a0 The Right to Disclosure<\/span><\/p>\n

\u00a0\u00a0\u00a0\u00a0 All documentation must be written in plain and understandable language (the tenancy clause in the Taj Cape Town ‘legal document’ when one checks in will not meet this criterion in the Act!).\u00a0 The advertised or marked price is the one that must be honoured, even if it is an error.\u00a0\u00a0 A brand name or trade mark must not attempt to mislead consumers.\u00a0 “Grey market goods” must be identified by the sellers as such.\u00a0 Important to note is that a ‘written record of the transaction’ must be provided, and must contain the following prescribed information:<\/p>\n

*\u00a0\u00a0 Supplier’s full registered business name and VAT registration number<\/p>\n

*\u00a0\u00a0 Address<\/p>\n

*\u00a0\u00a0 Date of transaction (could be two dates for accommodation establishments, if a deposit is taken to make the booking.\u00a0 The transaction date will differ from the actual accommodation dates, so there could be three sets of dates)<\/p>\n

*\u00a0\u00a0 Description of goods and services provided<\/p>\n

*\u00a0\u00a0 The unit price<\/p>\n

*\u00a0\u00a0 The quantity supplied<\/p>\n

*\u00a0\u00a0 The total price before tax<\/p>\n

*\u00a0\u00a0 The VAT amount – few establishments separate this amount, as all transactions are VAT inclusive<\/p>\n

*\u00a0\u00a0 The\u00a0total price.\u00a0<\/p>\n

The right to disclosure also would include information about anything that can affect the consumer’s use of the product, in containing potentially hazardous or harmful ingredients (e.g. Reuben’s at One&Only Cape Town correctly specifies which of its dishes contain nuts, alcohol, and pork).<\/p>\n

5.\u00a0\u00a0 The Right to Responsible and Fair Marketing<\/span><\/p>\n

\u00a0\u00a0\u00a0\u00a0 Marketing must be honest.\u00a0\u00a0 One may not over-promise, exaggerate, mislead or make false claims, so as to lead the consumer to have a different expectation.\u00a0\u00a0One must honour one’s commitment to have a specified product or service available on the date\/time that was agreed.\u00a0 Restaurants, for example, may not claim that their dishes contain ingredients that they do not, or that they are imported when they are sourced locally.\u00a0 Advertising must realistically portray the benefits of the product or\u00a0service.\u00a0\u00a0<\/p>\n

Loyalty programs are specifically mentioned, and the ruling is that the promised reward must be available to the consumer.\u00a0 The communication of how the loyalty programme works must be clear.\u00a0<\/p>\n

6.\u00a0\u00a0 The Right to Fair and Honest Dealing\u00a0<\/span><\/p>\n

The Act uses the word ‘unconscionable’, a complex word Melville writes, given that the Act itself calls for ‘plain language’ in all dealings with the consumer!\u00a0 This clause calls for positive conduct with the consumer, and does not\u00a0allow a supplier to use ‘undue influence, pressure, duress or harassment, unfair tactics or any similar conduct’ in getting\u00a0payment due to the supplier, or goods returned.\u00a0\u00a0 As a hospitality supplier, it would be great if the Act protected suppliers against such abuse and blackmail too!<\/p>\n

The supplier may not withhold material facts about the product or service (e.g. renovations taking place at a guest house), nor imply a benefit of the product or service that does not exist, or fail to correct a misunderstanding that the consumer expresses about the product or the service.\u00a0\u00a0\u00a0Reasonable availability of the product or service must be accurately communicated, as must be the availability of parts for repairs.\u00a0\u00a0 Pyramid schemes are expressly forbidden.\u00a0<\/p>\n

Overbooking, with the express purpose of taking more bookings than one has the capacity for, based on the knowledge that not all booked customers will arrive (e.g. airlines, hotels) is no longer allowed, as one must have the service\/product available if it has been booked.\u00a0\u00a0 Any such overbooking and therefore inability to honour a booking calls for a refund of the cost of the booked service as well as the costs involved in cancelling the booked service (e.g. loss of\u00a0business suffered by the customer), which could become\u00a0very costly for the supplier!\u00a0\u00a0 However, the supplier may make an alternative arrangement on behalf of the customer, and that customer is reasonably expected to accept the alternative arrangement.<\/p>\n

7.\u00a0\u00a0 The Right to fair, just and reasonable terms and conditions<\/span><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The Act regulates ‘agreements’ (not calling them contracts)\u00a0between suppliers and consumers.\u00a0 One may not contract with minors, and those that are mentally unfit.\u00a0\u00a0 Information in the agreement must be in plain understandable language.\u00a0 Repairs must be pre-quoted.\u00a0\u00a0\u00a0 Some agreements will be specified by the Minister to be in writing.\u00a0 The sales record must contain the required information (as specified above).\u00a0 Any risk to the consumer that may lead to serious injury or death must be highlighted (does a pool count?).\u00a0 Any other potential risks associated with the product or the service must be highlighted.\u00a0\u00a0 A ‘fair’ price must be offered, and the terms must be ‘fair’ and reasonable, although ‘fair’ is not defined.\u00a0 “Unfair” is however defined as agreements\u00a0which are\u00a0one-sided in benefit to a party other than the consumer, or are based on misleading information.\u00a0 No clause in an agreement can be in contravention, or cancel any provisions, \u00a0of the Consumer Protection Act.\u00a0\u00a0 PIN codes and ID books may not be kept by the supplier, and only copies may be made of the ID book and the PIN code used for a transaction.<\/p>\n

A contentious provision for businesses is the right to a cooling-off period, which allows the consumer to\u00a0return bought goods within five days of purchase, and must be refunded in full within 15 business days.\u00a0 The notice of cancellation must be in writing.\u00a0\u00a0Melville uses the word ‘good’, and not ‘service’, so it is not clear if this applies to bookings made for services such as accommodation, for which a 50 % deposit is likely to have been taken.\u00a0\u00a0 Even more uncertain is how the provision that a consumer can return a ‘good’ if he\/she did not have a chance to see the product beforehand, but only of it is not hazardous to the public health (which would exclude food and beverages) or if it has been tampered with.\u00a0 Such a clause could apply to accommodation too, being an unsighted purchase\u00a0(but is defined as a ‘service’), so this may not be applicable.\u00a0 \u00a0<\/p>\n

Consumers have the right to cancel an advance booking or order, ‘but may be liable for a charge for doing so’.\u00a0\u00a0 A supplier may “require payment of a\u00a0reasonable deposit in advance and impose a reasonable charge for the cancellation”\u00a0. The ‘reasonable’ is not defined, but Melville writes that it should be decided on the basis of the following:<\/p>\n

\u00a0\u00a0 *\u00a0\u00a0 The nature of the products and services<\/p>\n

\u00a0\u00a0 *\u00a0\u00a0 the length of notice of the cancellation<\/p>\n

\u00a0\u00a0 *\u00a0\u00a0 the “reasonable potential for the service provider, acting diligently,\u00a0to find an alternative consumer between the time of receiving the cancellation notice and the time of the cancelled reservation”.\u00a0<\/p>\n

\u00a0\u00a0 *\u00a0\u00a0 The general practice of the industry concerned<\/p>\n

In the case of the death or hospitalisation of the person making the booking, the deposit paid must be refunded in full, but this does not apply to a family member’s death or hospitalisation.\u00a0<\/p>\n

Should a supplier close a service facility (say a guest house which decides to close over winter), 40 business days’ notice must be given to the customer, and the deposit payment must be refunded within 5 business days\u00a0after\u00a0the service facility has closed.\u00a0<\/p>\n

8.\u00a0 The Right to fair value, good quality and safety<\/span><\/p>\n

Any\u00a0good, or element within a good,\u00a0that can cause harm, injury or potential death to the consumer must be spelt out to the consumer.\u00a0\u00a0 These risks can include those that the consumer may not ordinarily have expected, especially those which can lead to serious injury or death.\u00a0\u00a0 At Whale Cottage we have evaluated our operation relative to this clause, and have changed our breakfast menu to\u00a0highlight all nut-based cereals, and have changed the content of one of our Huguenot Fine Chocolates’ turn-down chocolates, which previously was a hazelnut praline.<\/p>\n

Products that are available to or sold to the consumer that may contain hazardous substances must have the warning and description on the pack or available separately (e.g. we stock Tabard insect spray in our guest bedrooms, with instructions and health warnings on the pack).\u00a0<\/p>\n

The Act calls for compensation to consumers if the products bought caused harm to themselves and\/or their property.\u00a0 Not only the direct supplier is liable, but also the importer, the retailer, the manufacturer, the distributor, and the installer can be sued for damages within a three year period from the date of the loss or damage.<\/p>\n

A further requirement is that products and services\u00a0should be\u00a0of a quality that consumers are ‘generally entitled to expect’.\u00a0 It states that industry association codes and practice would guide what this reasonable level of quality would be.\u00a0 For the accommodation industry, the Tourism Grading Council guidelines and requirements probably would be a good quality guide.\u00a0 Timing of the delivery of the service is once again highlighted as having to be ‘reasonable’, and suppliers must give consumers ‘reasonable’\u00a0notice (timing undefined) of ‘unavoidable’ delays.\u00a0\u00a0 A good requirement, for anyone dealing with builders or repairmen, is that the property must be left in the condition it was when they first started their work.\u00a0 Suppliers of repair services must safeguard the consumers’ goods in their care, and this includes deposits that may have been paid.<\/p>\n

Products bought must deliver on what they are expected to perform.\u00a0 They must be in good working condition and free of defects.\u00a0 So, for example, a toaster used in a guest house can not be expected to perform the same service compared to one used domestically, and the consumer must declare the usage, so that he\/she can make the most suitable purchase.\u00a0 If the product\u00a0does not perform, the consumer can return the product within a six month period, and can demand a new replacement product, money back, or repair of the item.\u00a0\u00a0 The consumer has the right of choice in this regard, not the supplier.\u00a0 This places a responsibility on suppliers to stock enough of any products to be able to replace products, especially if the items might be discontinued!\u00a0\u00a0 Repaired goods have a three month warranty period through the Act.\u00a0\u00a0 No ‘voetstoots’ clause applies for any purchase any longer.<\/p>\n

The Consumer Protection Act is a lengthy piece of legislation, and each business is advised to\u00a0check its practices and communication to customers, to evaluate its compliance with the new Act.\u00a0 It could become an explosive minefield if opportunistic\u00a0consumers were to try to exploit the provisions of the Act, especially for the service industry, where things are not always black or white.\u00a0 However, the protection it affords consumers is welcomed, and the improvement in the level of service and quality of products one can expect as a result is too.<\/p>\n

POSTSCRIPT 26\/5:<\/strong>\u00a0 This afternoon I attended a Consumer Protection Act workshop at the Radisson Blu hotel, organised jointly by Cape Town Tourism and FEDHASA Cape.\u00a0\u00a0The first part was presented by a lawyer from Webber Wentzel, the most boring speaker, who quoted clauses from the Act and had assumed that the audience knew nothing at all about the Act.\u00a0 He had misread his audience completely.\u00a0 He was followed by FEDHASA legal consultant Peter Cumberlege, who was far more entertaining as well as informative, but with strong views that FEDHASA Cape appears to rely on, without robust debate!\u00a0\u00a0The key points made:<\/p>\n

*\u00a0\u00a0 nothing in the Act is new – we all treat guests fairly<\/p>\n

*\u00a0\u00a0 the most contentious statement was that the hospitality industry should NOT have a standardised cancellation and refund policy – all establishments are unique.\u00a0 However, the Chairman of the National Consumer Tribunal said in Franschhoek recently that the hospitality industry should form an industry body, and should standardise its cancellation policy, given that the Act regularly refers to standard industry practice.<\/p>\n

*\u00a0\u00a0 Establishments must try to\u00a0resell cancelled rooms, and should try not to charge for these.\u00a0 If there is a charge, it should be to recover expenses, and not a full room rate, especially if the establishment is not fully booked on the day of the cancellation- this is a contentious view of Cumberlege, and many would disagree with him.<\/p>\n

*\u00a0\u00a0 SQ prices must come off restaurant menus<\/p>\n

*\u00a0\u00a0 Invoices can no longer be handwritten, given the invoice requirements in the Act<\/p>\n

*\u00a0\u00a0 All websites and brochures should be checked for accuracy of claims.\u00a0 Avoid overclaims.<\/p>\n

*\u00a0\u00a0 If one overbooks one’s accommodation, the guest must be given equal or better accommodation, or one must refund: interest on money held plus monies paid plus cost of cancellation to the client<\/p>\n

*\u00a0\u00a0 One is responsible for guests’ belongings on one’s property<\/p>\n

*\u00a0\u00a0 Disclaimers and waivers are now meaningless in contracts<\/p>\n

*\u00a0\u00a0 Sites representing a number of establishments must state the rate of the establishment and the percentage commission that they have added = full disclosure<\/p>\n

The Consumer Protection Act Made Easy<\/strong>, Adv NJ Melville, 2010.\u00a0 Exclusive Books.<\/p>\n

Chris von Ulmenstein, Whale Cottage Portfolio: www.whalecottage.com<\/a>\u00a0 Twitter: @WhaleCottage<\/p>\n","protected":false},"excerpt":{"rendered":"

It is surprising how little has been written about the new Consumer Protection Act No 68 of 2008, which comes into operation\u00a0on 1 April.\u00a0\u00a0 It gives tremendous power to consumers in their dealings with businesses, and will put every business on\u00a0its toes, the punitive fines of R1 million or more being a strong motivator. The […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_jetpack_memberships_contains_paid_content":false},"categories":[7,124,528,22,21],"tags":[32367,295,3447,85,32378,3801,10650,10649,3899,9579,10646,10654,9408,10658,10656,2939,320,32369,10648,1899,10653,10662,887,27,7992,10668,10673,549,10663,7993,10651,10647,6837,10671,1094,10667,11643,4037,10666,8266,10652,13,41,10655,10659,10660,10664,10669,10670,10657,10661,3620,10672,10398,101,10665,10674,11642,32373],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t