Outline

1. Consumer Protection ActMncane MthunziChief Executive OfficerConsumer Goods Council of South Africa

2. Outline • CGCSA Philosophy • Consumer Protection Act 68 of 2008 • Purpose of the Act • Ambit of the Act • Fundamental Consumer Rights • Act Enforcement • Redress Process Matrix • High-level Industry Impact • Industry Response • Importance of Self-regulation • Moving Forward

3. CGCSA and its new philosophy • Collective mindset • Open and honest engagement • Support for the open market system • Compliance with the law • Respect for the Institutions of democracy • Advance public education • Contribute to social dialogue

4. CPA Timelines • Signed 24 April 2009 • No regulations yet, however • Strict Liability: On 24 April 2010 (12 months) • Full Implementation On 24 October 2010 (18 months) • Provided regulations are in place by then (expected Gazette by end-August 2010) • 6 –months extension may be provided • Industry preparations for compliance must begin as soon as possible

5. Purpose of the CPA Intension of the CPA: “To promote and advance the social and economic welfare of consumers in South Africa by” • Protecting Consumers, especially the vulnerable, against; • Exploitation • Unfair business practices • Empowering Consumers to make wise & informed purchasing decisions

6. The Scope of the CPA • To Promote: • A fair, accessible and sustainable marketplace for consumers; • Responsible consumer behaviour; • To Prohibit: • certain unfair marketing and business practices • To Provide for: • Improved standards of consumer information; • Harmonisation of laws relating to consumer transactions and agreements; • A consistent enforcement framework • To Establish the National Consumer Commission

7. Fundamental Consumer Rights: Chapter 2 • Right to Equality in consumer market • Right to Privacy • Right to Choice • Right to Information & Disclosure • Right to Fair & Responsible Marketing • Right to Fair & Honest dealing • Right to Fair, Just & Reasonable Terms & Conditions • Right to Fair value, Good Quality & Safety

8. 1. Right to Equality • Protection against unfair discrimination • Exclusive access to goods & services • Priority preferences • Unfair Price differentiation • Exceptions on reasonable grounds (Section 9) • Equality Court Jurisdiction

9. 2. Right to Privacy • Speaks to unwanted direct Marketing • Consumer has the right to: • Request discontinuation of communication • Pre-emptively block communication or being approach

10. 3. Right to Choice • Selecting suppliers (Bundling & Conditions); • Expiration & Renewal of fixed-term agreements; • Cooling off periods etc. Consumer has the right to choose, cancel, rescind, return goods etc.

11. 4. Right to Information & Disclosure • Full disclosure of pricing • Product labelling • Sales records • Identification of deliveries etc Consumer has the right to information in plain and understandable language

12. 5. Right to Fair & Responsible Marketing • Bait Marketing (advertising without enough stock) • Negative option marketing (assuming silence is ‘yes’) • Catalogue Marketing (full Information) • Trade Coupons/Promotions/Loyalty Programs: (accountability) Consumer has the right to fair & responsible marketing i.e. Consumer is protected against false, misleading or deceptive representation

13. 6. Right to Fair & Honest Dealing • Fraudulent Schemes (Pyramid schemes) • Auctions • Over-selling & Over-booking • The Act protects the consumer against unfair & unconscionable conduct • Consumer has the right to assume supplier is entitled to sell goods (third party issues)

14. 7. Right to Fair, Just & Reasonable Terms & Conditions • Unfair & unreasonable pricing • Unfair terms & conditions • Notice on Certain terms & conditions (fine prints) • Consumer is protected against Unfair, Unreasonable & Un just contractual terms • Suppliers will be subjected to principles of legality

15. 8. Right to Fair value, Good quality & Safety • Implied warranty of quality • Warning against risk • Disposal of certain products etc. • Consumer has the right to: • Demand quality service • Safe & good quality goods

16. Enforcing the CPA • Consumer has a right to complain & seek redress • Six Options: • Alternative Dispute Resolution (ADR): as contemplated by s.70 • Industry Ombudsman: as accredited by s.82.6 • National Consumer Commission (2010 April) • Provincial Consumer Court • National Consumer Tribunal • Court with Jurisdiction (Only Appeal)

17. Redress Process Matrix Tertiary Recourse Primary Recourse Secondary Recourse Consumer Court by Appeal Tribunal Consumer Court Consumer Commission Industry Ombudsman ADR Manufacturer/ Retailer/Supplier

18. High Impact Areas to Industry • Policy areas of high impact • Safety • Product liability • Labelling • Display/Returns/ Replacement policies • waste disposal et al* (National Waste Initiative) • Recall Procedure – food and other (Section 60 & 61) • Relationship between

19. Self Regulation Evolution • Industry Codes of Conduct (S.82) • Alternative Dispute Resolution (ADR) (S. 70) • Industry Ombudsman (S.82.6)

20. Industry Reaction to the Act 1. Industry Codes of Conduct (S.82) • Self-regulating mechanism • Regulating business interaction within industry • Affirming industry commitment to consumer’s rights • Guide to Consumer education and cooperation • Provision for Alternative Dispute Resolution

21. Industry Reaction to the Act 2. Alternative Dispute Resolution (ADR) • Section 70 makes provision for ADR • Industry based or independent • Consent order

22. Industry Reaction to the Act 3. Industry Ombudsman • Section 82.6 makes provision for Industry Ombudsman (accredited by Commission) • Provided that: • Industry codes provide for ADR scheme; and • That ADR mechanisms are adequately situated and equipped

23. Importance of Self-Regulation • Reduces external regulation • Increases Public Trust • Can be Flexible and act quickly • Potential Liability brought by the Act - R1 000 000 fine or 10% of turnover whichever is higher

24. Moving Forward • CGCSA to facilitate the development of Codes with the Industry • Define the Terms of Engagement • Understand the Magnitude and Scope • Who will be subjected? • Monitoring & Enforcing the Codes • Intra-Industry handling of complaints • e.g. Complaints Ownership Challenge • Locating the Ombudsman/ADR

25. Q & A Thank You