What recourse you will have if you believe that your rights under the Consumer Protection Act have been violated.

The new era in consumer protection law that began with the National Credit Act (NCA) three years ago has now been firmly entrenched with the Consumer Protection Act (CPA), which is expected significantly to enhance your rights as a consumer. But the speed and ease with which you will be able to obtain redress remains to be seen.

A major benefit of the CPA is that recourse is not limited to the person who bought the goods or services. According to The Consumer Protection Act Made Easy by former banking ombudsman Neville Melville, a complaint can be lodged by:

* Anyone who uses the goods or services that are the subject of a complaint;

* Anyone who is authorised to act on your behalf if you cannot act in your own name;

* Anyone who acts as a member of, or in the interest of, a group or class of affected persons;

* Anyone who acts in the public interest – with the permission of the National Consumer Tribunal or the court to which the complaint is directed; and

* An association that acts in the interest of its members.

You, as a consumer, have numerous choices of recourse available to you, thanks to the CPA. The CPA does not restrict you to suing suppliers in court, which means you can avoid paying expensive legal fees. The avenues of recourse available to you include the National Consumer Tribunal, the National Consumer Commission, the appropriate ombud’s office, alternative dispute resolution (such as mediators or arbitrators), consumer courts and criminal courts. However, the Act does not stipulate which of these avenues you must approach first.

Ironically, although the CPA is intended to avoid expensive legal fees, you might want to consult a lawyer who can advise you on the best forum for your complaint. In some forums, such as the National Consumer Tribunal, you can choose to be represented by a lawyer, usually at great cost, or you can take up the complaint yourself. You will have to weigh up the cost of paying an attorney against the claim you are making and the compensation you are likely to receive.

In other forums, for example, an ombud’s office, you are not allowed to have legal representation. You must send to the ombud a prescribed form that describes the nature of your complaint and what compensation you are seeking.

Trudie Broekmann, a senior associate at law firm Webber Wentzel, says there are various categories of remedies and recourse in terms of the CPA, depending on the nature of the complaint:

* Invalid agreements. Any agreement or clause in an agreement that is found to be in breach of the Act by the National Consumer Commission, the National Consumer Tribunal, a consumer court, an ombud, a magistrate’s court or an arbitrator may be ruled invalid. If the entire agreement is nullified, you have no obligations under it.

If only a clause or clauses are nullified, it is simply those clauses that are struck from the contract, while the rest of the contract is retained. You can claim compensation for any expenses or losses suffered as a result of an agreement that is partly or wholly invalid by making representation to the enforcement agency that ruled on your complaint.

If an agreement or a clause in an agreement is found to be in breach of the Act, there is an alternative to ruling the entire contract invalid or to striking out the offending clauses. The CPA gives the various enforcement agencies the power to rewrite the agreement or the clause so that it is to your favour.

* Discrimination. The Equality Court has jurisdiction over any contravention of your right to equal treatment set out in the CPA.

The basis on which you cannot be discriminated against is the same as that set out in the Promotion of Equality and Prevention of Unfair Discrimination Act. A supplier can discriminate based on other factors, such as providing a discount for a large order. So discriminating on the size of your purchase is not unfair under the CPA.

A supplier cannot discriminate against you based on, among other things, your race, gender, sexual orientation or religion. (For a comprehensive list of the grounds on which suppliers may not discriminate against you, as well as more details about the CPA in general, refer to the article “10 things you should know about the Consumer Protection Act” in the third-quarter 2010 edition of Personal Finance.)

If you believe you have been discriminated against, you can either institute proceedings at an Equality Court or file a complaint with the National Consumer Commission. The commission will refer the complaint to the Equality Court if it appears to be valid. The court will presume that if you have been treated differently, this constitutes discrimination, unless the supplier can demonstrate to the court that the different treatment is fair.

Every High Court is an Equality Court for the area of its jurisdiction, and more than 200 magistrate’s courts have also been designated as Equality Courts.

Equality Courts have the power to order payment of damages, or to refer your complaint to the South African Human Rights Commission or the Commission for Gender Equality. The presiding officer at the Equality Court may also submit your

complaint to the National Prosecuting Authority (NPA) for the possible institution of criminal proceedings.

* For any other conduct prohibited under the Act or where your rights as a consumer have been infringed, impaired or threatened, you can lodge a complaint through any one of these channels:

* The National Consumer Tribunal;

* An ombud;

* Alternative dispute resolution;

* A provincial consumer affairs court; and

* The National Consumer Commission.

National Consumer Tribunal

You can complain directly to the National Consumer Tribunal (www.thenct.org.za), which has already been established in terms of the NCA.

The tribunal has the power to conduct hearings, make findings and impose administrative fines of up to 10 percent of a company’s annual turnover in the previous financial year, or R1 million.

You do not need legal representation to complain to the tribunal.

An ombud There may be an existing ombud scheme that can address your complaint.

A decision taken by an ombud is binding on a supplier. If the ombud cannot resolve the matter or you are not happy with the decision, you can approach either the National Consumer Tribunal or, if all your other options have been exhausted, a court that has jurisdiction over the matter.

Most of the existing ombud schemes deal with complaints that are related to financial products and services.

Broekmann says the CPA has left the door open for the Minister of Trade and Industry to appoint new ombuds, created in terms of an industry code under the CPA. Any such ombud must be accredited by the National Consumer Commission before it can make rulings on infringements of consumer rights.

The Act does not stipulate that you have to attempt to address a problem with a supplier or company before you seek recourse as per the Act. However, most ombud offices require that you try to address your complaint with the company, fund or insurer concerned before you approach the office.

Clive Pillay, the Ombudsman for Banking Services, says complaints to his office are first referred to the bank concerned, and the bank is given 20 days within which to resolve the complaint.

“Only in the event of a bank not being able to resolve the complaint or the bank suggesting a resolution that the consumer finds unacceptable, can the matter come to us for further investigation.

“With that in mind, regardless of whether or not the complaint is related to the CPA, the consumer will still have to approach the bank first before coming to our offices,” Pillay says.

Jennifer Preiss, the Deputy Ombudsman for Long-term Insurance, says details of the complaints procedures will be contained in the regulations to the CPA. At the time of writing this article, the draft regulations had not yet been released for comment.

“As a general rule, consumers are advised to try to resolve their complaints with the insurer concerned before referring the complaints to us. We will only be able to determine whether any change to our process is required after the regulations have been finalised,” Preiss says.

Noluntu Bam, the Ombud for Financial Services Providers, says consumers are encouraged to try to resolve their complaints with the insurer or financial intermediary concerned.

“If the complaint comes directly to our office, it is referred back to the financial intermediary or insurer, and they are given six weeks to resolve the matter before we intervene. If the consumer has already attempted to resolve the matter with the financial intermediary or insurer, the company is given two weeks to resolve the complaint before we intervene. We will, in all likelihood, use the same protocol for CPA-related complaints,” Bam says.

Brian Martin, the Ombudsman for Short-term Insurance, says you are not required to attempt to resolve an issue with a short-term insurer before you file a complaint with his office.

“Consumers are at liberty to approach our office directly for assistance at any time on issues arising out of contracts of insurance. We will either investigate these matters or redirect them to another forum if the complaint falls under the jurisdiction of another forum,” he says.

However, Martin warns that you should not engage in what is known as “forum shopping”, which is pursuing the same complaint in a number of different forums at the same time.

Charles Pillai, the Pension Funds Adjudicator (PFA), says he anticipates confusion among consumers. “Consumers are initially unlikely to be aware of the difference between CPA-related complaints and those that are not CPA-related. Already there is confusion as to which ombud you should approach.

“What is required is an intensive and ongoing consumer education drive to make people aware of the various forums that deal with their complaints, as well as their rights under the CPA.

“In the interim, the different ombuds will have to assess complaints and refer them to the correct forum where necessary,” he says.

The Pension Funds Act states that you may approach the fund concerned first or you can take your complaint directly to the PFA.

Alternative dispute resolution

This refers to a person or entity that provides a conciliation, mediation or arbitration service, such as the Arbitration Foundation of South Africa (www.arbitration.co.za).

Most mediators and arbitrators will charge a fee, which will vary, so you should establish the fee you will be charged upfront.

If the dispute is resolved by alternative dispute resolution and you are awarded damages, the dispute resolution agent can record this as an order.

The next step in the process is for you to submit the order to the National Consumer Tribunal or a High Court for it to be made a consent order. Submitting the order to the tribunal is likely to be your cheaper option, because you do not require legal representation at the tribunal.

If you approach a High Court, you are likely to need both an attorney and an advocate to represent you. Since lawyers charge by the hour for both the time spent in court and the time spent preparing your case, your bill is likely to run into thousands of rands.

Consumer affairs courts

Consumer affairs courts are established by provincial legislation and are run by provincial departments of economic development. To date, consumer affairs courts have been established in the Free State, Gauteng and Limpopo.

Consumer protection offices, which can receive and investigate complaints, already exist in all nine provinces, Fati Manamela, the chief director of the Gauteng office of consumer affairs, says. In fact, they were established “way back in 1996”.

“The consumer protection offices are up and running,” Manamela says. “However, not all the offices can refer complaints on to a consumer court, as these courts have yet to be established in most provinces.” This poses a huge challenge to the implementation of the CPA, Manamela says.

“The provincial consumer affairs courts (tribunals) are by law mandated to deal with complaints under the CPA. If these courts are not being established, consumers will lack the necessary protection that the new Act envisages. This creates an indictment on the provincial authorities,” he says.

The Gauteng consumer court, which was established in October 1999, is the longest-running consumer court in the country.

An example of a case handled by the court is that of a complainant who invested R10 000 with a bank for three years. At the end of that period, she approached the bank to withdraw her funds, but was told that the money had been withdrawn shortly after she made the investment.

The consumer court brought in handwriting experts to prove that the signature used to withdraw the money was not that of the complainant. She was able to produce the original deposit slip. The bank agreed to refund her investment, as well as the interest that would have accrued to her.

Reeva Welman, the consumer protector for the Gauteng consumer affairs office, says the office currently receives between 150 and 180 complaints each month. “Once an investigation is complete, you can expect the matter to be set down for hearing in about a month’s time. We try to finalise all complaints within a 60-day period,” she says.

You do not have to approach a consumer court through your lawyer. Each consumer court has a consumer protector (usually someone with a qualification in law) who takes up your case on your behalf. Unlike the Small Claims Court, which may hear cases for claims only under R7 000, consumer courts can hear cases for claims of any amount.

National Consumer Commission

The National Consumer Commission,

which was recently established in terms of the CPA, will have its own inspectors and investigators. It may initiate an investigation, or it can investigate a matter that has been referred to it or brought to its attention.

If you have not already submitted your complaint to a consumer court or an ombud, the commission may refer you to one to resolve your dispute.

The commission may also refer your case to an ombud for further investigation or the commission may appoint an investigator to look into the complaint. After receiving the investigator’s report, the commission may issue you with a notice of non-referral, refer the matter to the NPA, propose a draft consent order or issue a compliance notice.

If the matter is referred to the NPA, you will probably have to wait for the case to be prosecuted before you receive compensation.

* Non-referral. A notice of non-referral means that the commission is not willing to hear your complaint. If you are issued with such a notice, you may take the matter to a consumer affairs court or to the relevant ombud in the hope that one of them will agree to take it up.

Broekmann says a notice of non-referral can be issued for one of four reasons:

1. The commission regards your complaint as vexatious or frivolous;

2. Your complaint does not provide facts that constitute grounds for a remedy under the CPA;

3. Your claim has prescribed – it has been more than three years after the act or omission that is the cause of your complaint or more than three years after the conduct has ceased; or

4. The person or company about which you are complaining is already the respondent in proceedings that relate substantially to the same conduct.

If your notice of non-referral is for one of the first two reasons, you can take your complaint to either a consumer court or the National Consumer Tribunal.

However, if the notice of non-referral is because your claim has prescribed or because the supplier is already involved in complaint procedures under the Act, you have no further recourse.

* Consent order. If the person or company to which your complaint relates agrees to the order of the commission, the National Consumer Tribunal or any court with jurisdiction can confirm the agreement as a consent order, which means that both parties have agreed to the terms of the order. With your agreement, the consent order could include an award of damages to you.

* Compliance notice. The commission will send a compliance notice to a company or supplier that is in breach of legislation, such as the CPA or the NCA. The notice will inform the company or supplier what it has done to fall foul of the legislation and what action can be taken to remedy the situation. A compliance notice will usually state that the offending company or supplier has a specific time frame within which to take corrective action or to provide reasonable evidence of compliance with the law.

If the above avenues of recourse prove unsuccessful, you can take the matter to a court that has jurisdiction over your complaint. Broekmann says if you decide to litigate, you would be better off appointing an attorney to handle the matter and to represent you in court.

If you have suffered any loss or damage as a result of a company or supplier transgressing the CPA, you cannot institute a civil claim for damages unless you file a notice from the chairperson of the National Consumer Tribunal with the clerk of the civil court at the same time. In other words, you must first approach the tribunal and indicate that you intend to file a civil claim for damages.

Although it is not an option specified in the CPA, you can also take your complaint to the Small Claims Court if it relates to a matter that is worth less than R7 000.

Criminal courts can deal with complaints that relate to:

* Where any person has disclosed confidential information obtained as a result of initiating a complaint or participating in any proceedings under the CPA;

* Hindering the duties of officials tasked with enforcing the CPA; and

* Altering, removing or falsifying a displayed price or label.

Much work to be done

Consumer law specialist Paul Esselaar of Dingley Attorneys says the various avenues of recourse available to consumers in terms of the CPA will almost certainly result in their being more willing to enter into disputes with suppliers or companies.

“However, this means that the number of claims against suppliers and companies will increase and this in turn is likely to increase the cost of business in South Africa.”

Among the problems with the Act that Esselaar pinpoints are that you may pursue a few avenues of recourse only to have to go to court anyway. All you will have done is delay the whole process, he says.

“Secondly, it is not entirely clear at this point how effective the other methods of recourse will be,” he says. And you may have to pay costs for an arbitrator or mediator to try to resolve your case.

Esselaar points out that the NCA increased rather than decreased the workload on magistrates, which was never the intention of the government.

Esselaar says that although consumers are bound to be confused by the different avenues of recourse available to them, the failure of the Department of Trade and Industry (DTI) to table the regulations under the CPA well before October 2010 means that consumers will still largely be unaware of their rights for some time to come.

At the time of writing this article at the beginning of September, the regulations had still not been released for comment, and Esselaar told Personal Finance that a comprehensive consumer education campaign was not possible, because most of the details of the Act are expected to be housed in the regulations.

“It is easy to use the NCA as a parallel and consider the amount of time that has lapsed since 2007, when it came into full effect, for consumers to understand the NCA. Moreover, it is only now – three years later – that the real cost of the NCA is starting to be appreciated. I don’t believe it was wise to release an Act without the regulations which are clearly so vital to the success of the CPA. Once again, like the NCA, I think the real cost will be felt and quantified after the fact. That, to me, is an example of poor planning,” he says.

Nomfundo Maseti, the chief director of policy and legislation at the DTI, told Personal Finance that the department has prioritised certain issues to be dealt with in the draft regulations, and these issues may be released for draft comment before the rest of the regulations are published. Among the issues to be prioritised are the threshold at which small, micro and medium enterprises will be recognised as consumers in terms of the Act; the language to be used for documentation issued by the National Consumer Commission; the criteria for the accreditation of consumer groups; country-of-origin labelling; and the labelling of genetically modified organisms.

TO MAKE CONTACT

Consumer affairs courts have been established, and are fully operational, in only three provinces:

* Free State – telephone 051 400 4852/4;

* Gauteng – telephone 011 355 8690 or 0860 4288 364 (choose option one and at the next option choose four); and

* Limpopo – telephone 015 293 8556/7.

The contact details for the consumer affairs offices in the provinces that do not yet have consumer courts are:

* Eastern Cape – 041 508 5800;

* KwaZulu-Natal – 033 264 2500.

* Mpumalanga – 013 752 3761/65;

* Northern Cape – 053 830 4800;

* North West – 018 387 7866/76; and

* Western Cape – 021 483 5133.

ROLE OF THE CONSUMER COMMISSION

The duties of the national consumer Commission in terms of the Consumer Protection Act (CPA) are to:

* Receive and investigate complaints;

* Monitor the effectiveness of accredited consumer groups, industry codes, alternative dispute resolution agents and service delivery to consumers;

* Issue and enforce compliance notices;

* Refer any concerns regarding anti-competitive behaviour to the Competition Commission;

* Refer matters to the National Consumer Tribunal; and

* Refer any offences in terms of the National Credit Act to the National Credit Regulator.

The commission will also carry out the following tasks:

* Refer any complaints of discriminatory marketing to the Equality Court;

* Establish a registry for the pre-emptive blocking of marketing offers;

n Monitor competitions to ensure that consumer rights are protected in line with the CPA;

* Investigate and oversee the recall of defective products;

* Promote legislative reform; and

* Promote the development, adoption and application of industry-wide codes of practice regarding product failure and related complaints regarding harm and subsequent product recalls.

SUBMISSIONS CAN BE CONFIDENTIAL

When you make a submission or forward a complaint to the National Consumer Commission, the National Consumer Tribunal or an inspector or investigator appointed in terms of the Consumer Protection Act (CPA), you have the right to request that all or part of the information you submit be kept confidential.

For example, you may submit information to the National Consumer Commission about a company that you believe is violating the CPA so that the commission can investigate your claim. If, as a result of the investigation, your claim is found to be true, the commission can take action against the company on the basis of the evidence turned up during its investigation. In such a case, there may be no need to make your confidential submission public knowledge.

However, if you want to ensure that the information you submit remains confidential, you must submit a written statement to the commission or tribunal that provides reasons for your request. The commission or tribunal will consider your statement and tell you whether or not the information will be treated as confidential.

The CPA does not state whether you can decide to withdraw your complaint or submission if the commission or tribunal rejects your request.

If the information is treated as confidential and the commission or tribunal finds that such information will be revealed when it gives reasons for a ruling, the commission or tribunal must give you a copy of the reasons for the ruling at least five business days before the information becomes public knowledge.

Within those five business days, you can apply to court for an order to protect the confidentiality of the information you have submitted.

* This article was first published in the 4th quarter 2010 edition of Personal Finance magazine.