Consumer Protection Act of South Africa

Introduction

The coming into effect of the Consumer Protection Act on the 31st of March 2011 has many implications for businesses in the retail industry. It may impact on a variety of areas in the business, including the development and design of new products, customer relations, marketing and sales, and risk management processes. The purpose of this act is to empower the consumer and advance the consumer socially and economically (KPMG,2009 ). It aims to do this through a legal framework to regulate markets and protect consumer interests, and this legal framework creates a shift from the system of buyer beware into a new market which could be more correctly described as "seller beware". Retailers need to be aware that they now bear the onus of ensuring that their goods are of a satisfactory standard and that they comply with the new regulations. They need to develop management processes that prioritize the rights of the consumer in order to align their business with the standards set by the new Act. Retailers who have been in careful compliance with international consumer best practice and previous South African consumer law will find the introduction of the new act less onerous (KPMG,2009). Retailers who do not comply with the act will be vulnerable to fines of up to the higher of 10% of turnover or R1 000 000 ( JF Luterek, Pr.Eng Attorney and Patent Attorney, Hahn &Hahn Attorneys,2009).

Aspects of the business affected by the Act

Liability

One of the major impacts of the act is that since its implementation, retailers can now be held liable for the provision of defective goods, whereas previously consumers could only seek redress from the manufacturer if they were dissatisfied with their purchases. Since the implementation of the act all parties in the supply chain are liable for failure to provide goods which are of adequate quality and are suitable to their purpose. Another change is that previously the onus was on the consumer to prove that there was negligence in order for there to be a liability, but the Act does away with this, so in order for a consumer to claim damages they only need to prove that there was a causal link between a defect in the product and harm to the consumer( JF Luterek, Pr.Eng Attorney and Patent Attorney, Hahn &Hahn Attorneys,2009). This may lead to an increase in product recalls, which impacts negatively on company profit. Therefore retailers need to be aware of this and introduce strict quality controls and supply chain management to ensure a minimum of defective products reach their shelves. Additional insurance expenses may also need to be incurred (KPMG,2009). Also, it may be beneficial for businesses to modify the packaging of their products in order to warn consumers of any potential hazards and also to give clear instructions