Transcript OP DIE WENPAD

HEAD FOR SUCCESS
Business Studies Grade 12
TERM 1
Topic 1: Impact of recent legislation on business – response to demands for
redress and equity
CONSUMER PROTECTION ACT
(NR 68 of 2008)
(The National Consumer Protection Act was introduced to create awareness
of consumer rights and to protect consumer rights)
CONSUMER PROTECTION ACT
(NR 68 of 2008)
NATURE of the CPA:
 This Act came into force in April 2011 and granted rights and methods to
consumers / buyers within which providers can be held liable for misleading
and exploitable behaviour.
 In the past, consumers were exploited by businesses because of poverty,
illiteracy, inability to read and understand contracts / advertisements /
warnings, etc. when agreements were signed with these consumers. This
type of consumer is known as vulnerable consumers. The CPA wants to
prevent this.
 Historically disadvantaged persons were not allowed to enjoy full
participation as consumers. The CPA wants to give an equal opportunity to
them as consumers.
 Elimination of previous discriminating Acts that did not allow all consumers
full participation in the economy which also contributed to the exploitation
of consumers.
 This Act makes the application of the NCA more praktical.
CONSUMER PROTECTION ACT
(NR 68 of 2008)
PURPOSE of the CPA:
 Protect consumers / buyers against fraudulent / misleading marketers.
 Provide consumer protection as it is the case in First World Countries.
 Assist previously disadvantaged people to know their rights and to be
treated fairly as consumers.
 Promote the social and economic welfare of consumers.
 Consumer organisations can be established to promote the collective
interests of consumers. This gives consumers the opportunity to participate
in decision making processes concerning the marketplace and consumer
interests.
 Promote and protect the interests of consumers by providing access to
information.
 To improve consumer awareness.
 To improve and encourage responsible and informed consumer choice.
 To promote fair business practices.
CONSUMER PROTECTION ACT
(NR 68 of 2008)
PURPOSE of the CPA:
 The Act introduces a formal set of consumer rights into law by referring to
eight specific consumer rights, namely :
 equality in the consumer market
 privacy
 choice
 disclosure and information
 fair and responsible marketing
 fair and honest dealing
 fair, just and reasonable terms and conditions
 fair value, good quality and safety
CONSUMER PROTECTION ACT
(NR 68 of 2008)
THE IMPACT OF THE ACT ON DIFFERENT ASPECTS OF BUSINESS:
The following are examples of the impact the Act may have on different aspects of
doing business:
 Marketing:
 The Act prohibits discriminatory marketing (i.e. excluding persons from accessing any
goods or services or targeting particular communities for exclusive supply of goods or
services).
 It also deals extensively with general marketing standards, bait marketing, negative
option marketing, direct marketing, catalogue marketing, trade coupons and similar
promotions, customer loyalty programmes, alternative work schemes and referral
selling.
 The consumer’s choice:
 The Act deals with:
 the consumer’s right to select suppliers;
 the expiry and renewal of fixed-term agreements;
 pre-authorisation of repair or maintenance services;
 providing consumers with estimates;
 the right to choose or examine goods;
 the right to return goods and so-called unwanted goods.
CONSUMER PROTECTION ACT
(NR 68 of 2008)
THE IMPACT OF THE ACT ON DIFFERENT ASPECTS OF BUSINESS:
The following are examples of the impact the Act may have on different aspects of
doing business:
 Cancellation of advance reservations, bookings or orders :
 Consumers are allowed, subject to a reasonable cancellation charge, to cancel
advance reservations, bookings and orders.
 However, no cancellation charge may be imposed if a consumer is unable to honour
the booking because of death or hospitalisation.
 Disclosure and information:
 Consumers are entitled to information in plain and understandable language.
 This is defined with reference to what “an ordinary consumer with average literacy
skills and minimal experience as a consumer of the relevant goods or services, could
be expected to understand without undue effort”.
 The Act also requires:
 the display of the price of goods or services;
 product labelling and trade descriptions in certain circumstances;
 disclosure of reconditioned or grey market goods;
 written sales records; and
 proper identification of deliverers and installers of goods
CONSUMER PROTECTION ACT
(NR 68 of 2008)
THE IMPACT OF THE ACT ON DIFFERENT ASPECTS OF BUSINESS:
The following are examples of the impact the Act may have on different
aspects of doing business:
 Fair and honest dealing with consumers:
 The Act deals extensively with:
 so-called unacceptable conduct;
 false or misleading representations;
 fraudulent schemes and offers, pyramid schemes and auctions.
 Over-booking and over-selling:
 A supplier must not accept payment for goods / services it he / she (the supplier)
has no intention of supplying such goods / services or intends to supply goods /
services that are materially different from those for which payment was
accepted.
 In instances where a supplier is unable to honour a commitment to the
consumer, the consumer will be entitled to a refund of any amount paid to the
supplier, as well as to resulting damages sustained by the consumer.
CONSUMER PROTECTION ACT
(NR 68 of 2008)
THE IMPACT OF THE ACT ON DIFFERENT ASPECTS OF BUSINESS:
The following are examples of the impact the Act may have on different
aspects of doing business:
 Fair value, good quality and safety:
 The Act deals with the right to demand:
 quality service;
 the right to safe, good quality goods;
 implied warranties of quality;
 warranties on repaired goods and warnings concerning the fact and nature
of risks relating to the use of the product or service.
CONSUMER PROTECTION ACT
(NR 68 of 2008)
THE IMPACT OF THE ACT ON DIFFERENT ASPECTS OF BUSINESS:
The following are examples of the impact the Act may have on different
aspects of doing business:
 Liability for damage caused by goods:
 The imposition of strict liability for damage caused by goods is one of the most
controversial provisions contained in the Act.
 It provides that the producer or importer, distributor or retailer of any goods is
liable for any harm caused wholly or partly as a consequence of the following:
 Supplying any unsafe goods;
 a product failure, defect or hazard in any goods;
 or inadequate instructions or warnings provided to a consumer pertaining to
any hazard arising form or associated with the use of any goods –
irrespective of whether the harm resulted form any negligence on the part of
the producer, importer, distributer or retailer.
CONSUMER PROTECTION ACT
(NR 68 of 2008)
THE IMPACT OF THE ACT ON DIFFERENT ASPECTS OF BUSINESS:
The following are examples of the impact the Act may have on different aspects of
doing business:
 Business names:
 The Act determines that a person must not:
 carry on business;
 advertise;
 offer to supply or supply goods or services;
 or enter into an agreement with a consumer
 in any name other than
 the person’s full name as per identification book for natural persons;
 and registered name for juristic persons;
 or a registered business name.
 The rationale for requiring business names to be registered is to enable the
consumer to know the legal identity of the party he / she is dealing with.
 When engaging in any business activities, a business person is required to include
certain information on all trade catalogues, circulars, letter, orders, sales records
and statements of account.
CONSUMER PROTECTION ACT
(NR 68 of 2008)
THE IMPACT OF THE ACT ON DIFFERENT ASPECTS OF BUSINESS:
The following are examples of the impact the Act may have on different aspects of
doing business:
 Class actions:
 The Act allows for class actions in the form of accredited consumer protection groups,
which may act to protect the interests of a consumer individually or of consumers
collectively.
 The Act determines that these groups may approach a court, the National Consumer
Commission on the basis that a consumer’s rights in terms of the Act have been
infringed.
 Promotional competitions:
 The Act contains a number of requirements with regard to promotional competitions
(e.g. making the rules of the competition available at no cost, etc.).
 The promoters of these competitions will have to ensure that they comply with the Act.
 A cooling-off period:
 The Act protects consumers when goods are marketed directly / by phone.
 Consumers have a period of five working days to revoke the agreement in writing.
CONSUMER PROTECTION ACT
(NR 68 of 2008)
ADVANTAGES AND DISADVANTAGES:
ADVANTAGES:
DISADVANTAGES:
Greater certainty about consumers’ rights.
Staff members must be trained to learn the
responsibilities of the business.
Greater fairness in transactions.
Consumers must be educated about their
rights.
Better balance between the interest of
suppliers and consumers
Some goods or services may cost more.
More effective means of redress for
consumers.
Businesses have to reveal much more
information about their products and
processes.
Promote and protect the economic interests
of consumers by improving access to
information, enabling them to make informed
decisions relating to their individual needs.
The CPA encourages consumers to complain
about businesses.
CONSUMER PROTECTION ACT
(NR 68 of 2008)
ADVANTAGES AND DISADVANTAGES:
ADVANTAGES:
DISADVANTAGES:
Protects consumers from dangerous situations
with regard to their welfare and safety.
Unfair action on complaints can harm the
businesses’ public image.
Forcing businesses to provide consumer
education and promotion.
It places an extra financial and administrative
burden on businesses.
Promote a fair, accessible and sustainable
marketplace for consumers’ needs for
products and services.
Some businesses feel that the act put too
much strain on them, while the consumer is
always right.
Make it compulsory for consumers to make
informed and responsible decisions
CONSUMER PROTECTION ACT
(NR 68 of 2008)
RIGHTS AND RESPONSIBILITIES OF CONSUMERS AND BUSINESSES:
RIGHTS OF THE BUSINESS:
RIGHTS OF CONSUMERS:
A supplier may cancel a fixed-term agreement
20 days after giving the consumer notice of a
material failure by the consumer.
Consumers’ rights include the following:
• The right to privacy
• The right to choice
• The right to information
• The right to accountability from suppliers
• The right to fair and responsible marketing
• The right to fair and reasonable terms and
conditions.
Except on public holidays and Sundays, a
supplier may approach the consumer for direct
marketing purposes between 08:00 and 20:00
on weekdays and between 09:00 and 13:00 on
Saturdays.
In the case of direct marketing, the consumer
may cancel a contract within 5 business days
after concluding the contract or receiving the
goods.
Suppliers can only enforce consumer
agreements if the agreement was in plain
understandable language.
The consumer may retain unsolicited goods
without payment.
CONSUMER PROTECTION ACT
(NR 68 of 2008)
RIGHTS AND RESPONSIBILITIES OF CONSUMERS AND BUSINESSES:
RIGHTS OF THE BUSINESS:
A supplier can enforce consumer agreements
that are in writing even if the agreement has
not been signed by the consumer.
RIGHTS OF CONSUMERS:
The consumer may retain unsolicited goods
without payment.
May cancel an advance booking, reservations
or order, subject
CONSUMER PROTECTION ACT
(NR 68 of 2008)
RIGHTS AND RESPONSIBILITIES OF CONSUMERS AND BUSINESSES:
RESPONSIBILITIES OF BUSINESSES:
Contracts must be in plain and understandable
language.
Contractual terms must not be unfair,
unreasonable or unjust.
Some contractual terms are prohibited.
Suppliers may not make false or misleading
representations.
Prices of goods or services must be displayed.
Sales records must be kept.
Customer loyalty programmes and promotional
competitions are regulated.
Especially vulnerable consumers are protected.
The supplier must perform according to their
contracts.
RESPONSIBILITIES OF CONSUMERS:
The consumer must perform according to the
contract.
CONSUMER PROTECTION ACT
(NR 68 of 2008)
REMEDIES:
 The consumer can refer a complaint to the National Consumer
Commission.
 The consumer and the supplier have access to alternative dispute
resolution mechanisms.
 Suppliers are subject to administrative fines.
 The National Consumer Commission can investigate market practices of
suppliers.
CONSUMER PROTECTION ACT
(NR 68 of 2008)
COMPLIANCE WITH THE PROVISIONS IN THE LAW AND PENALTIES IF THE BUSINESS
FAILS TO COMPLY:
 The CPA describes certain conduct as prohibited conduct.
 The National Consumer Commission (NCC) has powers of investigation,
involving inspections and interrogation.
 The NCC may issue compliance notices – failure to comply with a
compliance notice constitutes a criminal offense.
 The NCC may monitor the consumer market to detect and prevent
prohibited conduct.
 The National Consumer Tribunal (NCT) may:
 hold hearings.
 declare conduct as prohibited conduct.
 Interdict prohibited conduct (i.e. order such conduct to cease).
 grant an order for interim relief.
 grant an order imposing an administrative fine.
 Businesses that are guilty of violating the provisions of the CPA, can be
imposed to a fine of up to R1 million or 10 % of their turnover.