CONSUMER LAW: Executives Prepare for the Consumer Protection Act
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The phasing in of the new Consumer Protection Act (CPA) will begin in April at which point consumers will be given far greater rights when purchasing goods and services.
Some of the country’s top CEO’s, CFO’s and HR executives have been meeting to discuss how their business could be negatively affected and how to prepare for the CPA.
The meetings, hosted by worldwide global information sharing organisation Executives Global Network (EGN), run peer group meetings for CEOs, CFOs and HR managers addressing diverse topics.
“Members are currently discussing the CPA and management’s role,” said Martin Humphries, managing director of EGN.
The Act is intended to protect consumers from exploitation of any kind and provides a no-fault liability for suppliers. Fines are up to R1-million or 10% of turnover can be imposed. Product guarantees will be strictly enforced and suppliers are required to produce labelling that consumers can understand.
The aim of the Act is to protect poorly informed consumers from purchasing products and services that do not perform according to the intended specifications and that are hazardous. The Act will also prohibit certain unfair marketing and business practices which will be monitored by a new consumer tribunal.
This will mean that any producer, importer, distributor or retailer is liable for any harm their product may cause. They will also be liable for supplying unsafe goods, a product failure, defect or hazard in any goods. If there are inadequate instructions or warnings the entire supply chain will be held liable no matter who is at fault.
The Act states that every consumer has the right to receive goods that are reasonably suitable for the purposes for which they were intended and are of good quality. They must be in good working order and free of defects. The consumer has the right to return goods for full refund within 10 days.
Labelling is another area aimed at protecting the consumer. The wording on products must be truthful. Consumers have the right to information in plain and understandable language. Ordinary consumers must be able to understand the information, its significance and importance.
All packaging must display the price of the goods. If any errors are made on pricing, the displayed price will be charged until the error is corrected. The product must also be useable and durable for a reasonable period of time.
The Act will include services from government entities such as Eskom, municipalities and large organisations such as Telkom.
The State will be excluded as a consumer as well as consumers with a turnover or net asset value above a threshold still to be determined. Small businesses and private individuals will be covered.
The new law will come into effect 18 months after it is signed by the state president, except the strict liability section, which comes into effect in April 2010.
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