With most consumer related press focusing on the Consumer Protection Act, No 68 of 2008 (CPA) and national institutions such as the Consumer Commission and Consumer Tribunal, you would be forgiven for not having heard of the Western Cape Consumer Protector.
Schedule 4, Part A of the Constitution provides that consumer protection is a functional area of concurrent national and provincial competence. Thus, provincial legislatures are empowered to legislate around consumer protection. In the Western Cape, the provincial legislature enacted the Western Cape Consumer Affairs (Unfair Business Practices) Act, 2002 (Act).
The Act is intended to provide for the investigation, prohibition and control of unfair business practices. “Business practice” has a very wide definition and includes “an agreement… in connection with business … between two or more persons”. “Business” is defined as including “offering… a commodity”, and a “commodity” is defined as including “any service”.
Importantly, it also established the office of the Consumer Protector which consists of three sub-directorates: Complaints Management, Consumer Education and Marketing, and a Consumer Affairs Tribunal.
How does the Consumer Protector operate in practice?
The Consumer Protector acts as a prosecutor on behalf of complainants, prosecuting their complaints before the Consumer Affairs Tribunal. Consumers may approach the Consumer Protector with complaints regarding unfair business practices. The National Consumer Commission is also empowered to refer complaints to the Consumer Protector.
In practice, where a complaint has been lodged or referred to it, the office of the Consumer Protector may institute an investigation into the alleged unfair business practice where it has reason to believe such a practice has taken place or continues to take place. The purpose of the meeting is threefold:
- to inform the respondent more fully of the complaint;
- to obtain the views of the respondent regarding the complaint and the factual averments on which the complaint is based; and
- where appropriate, negotiate a settlement arrangement.
It is therefore simply intended to be an exploratory meeting and an opportunity to negotiate a settlement. This settlement can be made at any time after the institution of an investigation, but before a tribunal has made a final order.
If a matter does not settle during this stage, and if the Consumer Protector believes that there are grounds to take the matter further, the complaint will be referred to the Consumer Affairs Tribunal for adjudication (this being the Western Cape Consumer Tribunal, also established pursuant to the Act). The matter is referred to the Tribunal by way of a summons initiating the referral. It is at this point that proceedings take on an adversarial character. The Tribunal is an administrative tribunal and thus a ‘creature of statute’ with no inherent powers.
The chairperson of the Tribunal is expressly empowered to determine the procedure to be followed (subject of course to fundamental principles of natural justice). The process contemplates the calling and cross-examination of witnesses, in a similar manner to ordinary court proceedings. All proceedings are open to the public and a person against whom proceedings are instituted is entitled to participate in such proceedings and may appear in person, or be represented or assisted by an advocate, attorney or any other person.
The Tribunal has very wide powers under s23 of the Act to make orders, among others, directing that a party engaged in an unfair business practice desist in engaging in that practice, and that the consumer be refunded together with interest. It may also “make any order that is necessary to restore the consumer to the position he or she would have been in if that unfair business practice had not taken place”. A person who contravenes an order of a Tribunal is guilty of an offence and is liable for a fine not exceeding R200,000 or to imprisonment not exceeding five years, or both.
Interplay with the CPA
If the Consumer Protector is of the opinion that a complaint may more appropriately be dealt with by another competent authority, the matter may at any time be referred to that other authority, including a national authority. Thus, the Consumer Protector is empowered to refer matters to the National Consumer Commission. This would enable
the Commission to issue compliance notices under the CPA, requiring a respondent to cease engaging in a particular course of conduct that infringes the CPA.
If the Commission was to issue a compliance notice as a result of a respondent failing to comply with the provisions of the Consumer Protection Act, the respondent would have an opportunity to respond to any such compliance notice. If a compliance notice is not complied with, the Commission can directly apply to the National Consumer Tribunal for the imposition of an administrative fine, or refer the matter to the National Prosecuting Authority for prosecution as an offence. In principle, administrative fines imposed may not exceed the greater of 10% of the respondent’s annual turnover during the preceding financial year or R1 million.
Importantly, in the case of Joroy 4440 CC v Potgieter and Another NNO 2016 (3) SA 465 (FB), the court held that the remedies available to consumers (including approaching the Commission or an industry ombud) must first be exhausted before approaching a court for redress under section.
If utilised properly by consumers, the Western Cape Consumer Protector may assist in alleviating the current burden on the National Consumer Commission of dealing with complaints. In order to be truly effective, however, more needs to be done to promote the office of the Consumer Protector to foster a greater awareness of its mandate.