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Stakeholders request balanced approach to consumer protection legislation

June 1, 2009

Portfolio Committee on Trade and Industry

Retailers have expressed concern that proposed legislation on consumer protection will not maintain a necessary balance between adequate protective measures and the need to stimulate economic growth and job creation. The Direct Marketing Association (DMA) has made a submission during public hearings on the Consumer Protection Bill to Parliament’s portfolio committee on trade and industry. The DMA is a section 21 company established to maintain high standards of direct marketing and ensure compliance with an established ethics framework. The Association welcomed the initiative to improve consumer protection legislation, but expressed concern that a necessary balance between adequate protection of consumers and economic growth priorities had not been met.

The definition of direct marketing was perceived to be too broad and concerns remained on how direct marketers could control cellphone and internet access to marketing material by consumers without any prompting by marketers. Therefore, DMA proposed that reference to bluetooth, internet connection and websites be deleted from the bill. Consumers should be allowed to opt out of unwanted direct marketing activities. The DMA’s opt-out register should be used as the authoritative register for consumers to indicate which marketing practices they wanted to avoid. More than one register could open up the possibility that marketers could overlook a particular register on which a consumer’s name appeared and send unwanted material.

Regulations will need to determine when marketers will be prohibited from contacting consumers. However, the DMA requested an amendment to the bill that would prevent marketers from being held responsible for the late receipt or receipt during prohibited times of electronic communication. The Association recommends that certain products need to be excluded from the consumers’ right to return goods. For example, CDs and DVDs could be copied and then returned, thus creating a legal channel to encourage copying. In terms of unconscionable conduct, the DMA welcomed the introduction of a definition, but questioned whether clever marketing tactics might not unfairly be deemed to be unconscionable conduct in certain instances.

The Retailers Association also conveyed support for the overall objectives of the bill that sought to strengthen consumer protective measures, but held the view that certain amendments should be introduced to bring about an “effective and fair consumer market”. The Association welcomed the removal of the official language requirement from the bill as the production of consumer related information in all official languages would have been too onerous. The bill covered a wide area of law and consequently overlaps with other pieces of legislation were inevitable, thus creating an uncertain and unstable regulatory environment. Further clarity was needed on the interaction between the National Credit Act and the bill in terms of asset finance.

The six-month return period for goods on safety and quality grounds was inappropriate for certain items such as perishable food. Therefore, the Association proposed that the six-month stipulation be replaced with a reasonable time period determined by the nature of the goods in question. Concern was raised at the introduction of strict liability on the part of suppliers for damage caused to consumers. Additional insurance costs for business would be significant, in particular to smaller and medium sized enterprises. The Association declared that the institutional structures for redress as outlined in the bill would in effect act as “a barrier to the access of justice” due to time delays, duplication of forums and excessive legislation. The Association declared that the structures contained in the Labour Relations Act were better capable of delivering accessible consumer justice.