Unconscionable conduct, defined in the Consumer Protection Act, No 68 of 2008 (CPA) to include unethical or improper conduct that will shock the conscience of a reasonable person, is outlawed in terms of s40 of the CPA and falls under the broader consumer right to fair and honest dealings. Specific forms of unconscionable conduct include the use of physical force, coercion, undue influence, pressure, duress or harassment, unfair tactics or any other similar conduct, against a consumer. This may occur in the context of marketing any goods or services; in the supply of goods or services to a consumer; during the negotiation, conclusion, execution or enforcement of an agreement to supply any goods or services to a consumer; at demand, collection or payment for goods or services by a consumer; or during the recovery of goods from a consumer. The CPA prohibits unconscionable conduct in various phases of a transaction involving a consumer. Suppliers must constantly ensure that even their promotional activities are free of unconscionable conduct.
Although s40 only refers to suppliers, it must be kept in mind that a supplier is involved in the marketing of goods and services, which is, by definition, both the supply and the promotion of goods and services. However, where a business outsources its marketing to a marketing consultancy firm, for example, in order to create and implement marketing strategies for the business, then both the firm and the business to which it provides marketing services will incur liability insofar as unconscionable conduct is concerned. It is unclear from the provision whether the two entities are jointly and severally liable in this regard.
Furthermore, unconscionable conduct would be present where a supplier knowingly takes advantage of the fact that a consumer was substantially unable to protect its own interests because of a disability, illiteracy, ignorance, inability to understand the language of an agreement, or any other similar factor. This provision is in keeping with the purpose of the CPA which essentially includes reducing and improving any disadvantages experienced by consumers who are in a vulnerable position.
A failure to adhere to this provision may result in the issuance of a compliance notice. Where a person fails to act in accordance with a compliance notice the National Consumer Commission may apply to the National Consumer Tribunal for the imposition of an administrative fine, which may be up to 10% of a company’s annual turnover or R1 million.