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CONSUMER LAW - FAQ's             Back to home page


In the fourth quarter of 2016 there were 24.31 million credit active consumers, 9.76 million of whom had impaired records. – 40%, or two out of every five credit active consumers. A record is declared impaired if a debtor is three or more months in arrears on an account, if the debtor is under administration, or there are judgements against the debtor.

South Africa’s consumer laws have been revised into two acts, The National Credit Act and the Consumer Protection Act, designed to protect consumers against the many abuses and practises such as overcharging, poor quality and overselling. It is important to be informed about these laws as there are still many abuses in the market place. Businesses that don’t comply with these new laws may find themselves dealing with cancelled contracts, compulsory refunds, contractual damages or even criminal penalties. At over 200 pages the Act is complex and businesses are advised to obtain legal advice.

Consultation before confrontation-one of the big challenges for consumers is to complain in the correct manner – to state your problem in such a manner to ensure that it will be resolved and attended to. For more information on the best channels and methods to do so, the visit the website of the South African national consumer union (Sancu) (

The Consumer Goods and Services Ombud does a great job in assisting consumers and you can learn more here.

Mediation saves both time and money as it aims to avoid costly litigation proceedings. 

If you are over- indebted as a consumer, debt counselling may be of value to you.




  1. What does the National Credit Act (NCA) entail?
  2. What is the National Credit Register (NCR) and the Consumer Tribunal (CT)?
  3. What is the Repo Rate and does it influence consumer spending?
  4. What are the ceilings on interest rates, fees and charges?
  5. What constitutes reckless lending?
  6. What if I cannot repay my debts?
  7. Where can consumers lodge a complaint (NCA related)?
  8. What are some of the rights that protect consumers under the Consumer Protection Act (CPA)?
  9. Where can consumers lodge a complaint? (CPA related)?
  10. What is the distinction between defective products on the one hand, and hazardous and unsafe products on the other?
  11. Who and what does the CPA apply to?
  12. What are the quality and safety standards expected for products?
  13. What are a supplier’s obligations in relation to potentially hazardous or unsafe products?
  14. Who can be held liable for a defective or unsafe product?
  15. What can they be held liable for?
  16. Who can institute a product liability claim?
  17. What needs to be proved by the plaintiff?
  18. When must the claim be brought?
  19. What defences can be raised?
  20. What can businesses do to limit their legal liability?
  21. When is liability incurred for defective goods?
  22. What is meant by strict liability?
  23. How does the CPA relate to other laws?
  24. When buying a financial product / investment, what does the law say you must be told?
  25. How do I recognize and avoid investments ‘that sound too good to be true’?


1. What does the National Credit Act (No 34 of 2005) (NCA) entail?


The National Credit Act, 2005 came into effect on 1 June 2007 and it sets out what the law is when consumers take loans or buy goods on credit. It also provides for the establishment of the National Credit Regulator (NCR) which monitors activities in the credit market and ensures that credit providers for example banks, microlenders or companies selling goods on credit, comply with the NCA.

The National Credit Act, 2005 puts controls in place which restrict credit marketing practises, ensure that assessments regarding a consumers’ ability to afford buying goods on credit are undertaken when they apply for credit, penalize companies who grant credit recklessly, limit interest rates and the total amount that credit providers can charge for other fees including when the account goes into arrears, and regulate credit bureaus and debt counsellors.

The National Credit Act will soon be replaced by the National Credit Amendment Act, which seeks to clampdown on unregistered microlenders who charge exorbitant interest rates to vulnerable consumers.It will also improve the rights and protection of consumers in a number of ways:

  • Section 29 has been amended – and is aimed at allowing a consumer to consult a debt counsellor when they receive a letter of demand from a credit provider thereby reintroducing the original intention of the NCA to allow a consumer to restructure debt without fear of legal action.
  • The second critical change for consumers is an amendment of the NCA that will disallow untimely termination of debt review by credit providers. Many credit providers terminate credit agreements from debt review after just 60 days which makes it difficult to implement the restructuring of debt as proposed in the NCA.
  • Payment distribution agencies, who have collected some R14bn for credit providers since 2007, are to be registered. The Act also improves the ability of consumers who can resume normal payments to leave debt review.
  • The Act also strengthens the ability to deal with reckless credit, making the guidelines prescriptive: setting out the expenses that should be assumed for consumers and setting out the amount of debt a consumer can take on in relation to his or her household income.

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2. What is the National Credit Regulator (NCR) and Consumer Tribunal (CT)?


The Act provides for the establishment of the NCR to regulate the credit industry and ensure that credit grantors comply with the NCA. The NCA has a complaints division where consumers can complain, and they have an investigations unit which investigates alleged contraventions of the Act. The NCR refers cases which have merit to the Consumer Tribunal.

All credit providers, credit bureaus and must register and report to the NCA. The CT has been established with the same status as a High Court, to hear cases where companies have allegedly not complied with the NCA.

Certain practises of agents canvassing for loans are now unlawful or restricted, for example, door to door selling and canvassing at homes and work places without invitation.

Marketing practises and are also more controlled to protect consumers, for example credit facility limits may not be automatically increased and negative option marketing is illegal (‘if you do not refuse the offer, we will assume you agree’)

Consumers must also be given a quote, valid for 5 days, with all the details about the loan, so that consumers can shop around and compare prices.

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3. What is the Repo rate and does it influence consumer spending?


The Repo rate system was established in March 1998; the word "repo" is derived from the word "repurchasing".

Banks, by law, are obliged to retain a certain percentage of their assets in cash, which is not always possible due to their clients’ cash withdrawals from accounts which sometimes exceed the banks’ expectancy.

To enable adherence to the duty of keeping assets in cash, banks tender for the Reserve Bank’s cash on a weekly basis at an auction. The Reserve Bank calculates the banks’ need for cash in advance and makes an appropriate amount available at the auction. The banks then ‘trade in’ some of their financial assets, for example debentures, for the Reserve bank’s cash.

The banks actually ‘rent’ this cash from the Reserve Bank - the assets must be bought back within seven days. The buyback price is slightly higher than the selling price and the difference will then be for the profit or interest of the Reserve Bank – therefore the reference to "repurchasing" rate. The tenders are all accepted at a predetermined repo rate. The monetary policy committee of the Reserve Bank, whose main purpose is inflation control, meet once every two months to assess the current rate.

The repo rate are used by the banks to set their own loan rates and is our economy’s most important interest rate - a rate drop directly influence consumer spending, demand for products and services and the price thereof.

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4. What are the ceilings on interest rates and fees and charges?


There is now a maximum interest rate which credit providers can charge depending on the type of credit and when the credit was granted. The rate in most cases is based on a formula which is dependant on the South African Reserve Bank repurchase (Repo) at the time the credit was granted. The repo rate changes quite frequently so check in the press for the repo-rate at the time the agreement was signed. From May 2016 the formula below will change entirely – leading to a reduction in interest rates payable. The maximum monthly admin fee is R68,40.

The table below sets out the rate per category as per 6 May 2016:





 Example - if the Repo Rate is

 6.5 %  as at 18.07.2019



 Mortgage agreement

 RR + 12%  p.a.

 18.5 %



 Credit cards/facilities

RR + 14% p.a.

 20.5 %



 Unsecured credit transactions

 RR + 21% p.a.

 27.5 %



 Vehicle Finance

RR + 17% p.a

 23.5 %



 Developmental credit Agreements

RR + 27% p.a.

 33.5 %



 Other credit agreements

 RR +17% p.a.

 23.5 %



 Incidental credit agreements
 (cash transactions that are not paid and the account  goes into arrears

 E.g. doctor’s bills/clothing accounts etc)

2% per month























The NCA also places a maximum that can be charged on other fees, for example, initiation, service and default fees and collection fees.

Insurance cover on loans is allowed but the charge must be ‘reasonable’ and the consumer has the right to use or cede an existing policy instead of taking a new policy.

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5. What constitutes reckless lending?


When making a loan application, the contract must be in simple language, available in at least two languages and consumers must receive a copy.

Consumers are entitled to a reason when credit is refused.

All credit providers must assess whether the consumer can afford the loan, and all loans must be recorded on a register so that a consumer will not become over indebted.

Any credit provider that gives credit without considering whether a client can repay the loan may be guilty of reckless lending. There could be severe penalties and the credit provider may even loose the right to recover the debt.

A consumer will not be protected if they did not answer questions honestly and fully in the loan application process and in such cases the credit provider will not be guilty of reckless lending.

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6. What if I cannot repay my debts?


When a consumer cannot afford to pay their debts, they have the right to approach a debt counsellor for assistance. (see National Credit Act) The counsellor will help the consumer to restructure or rearrange their debt payments if the consumer is deemed to be overindebted-this arrangement can be made an order of court.

Debt counsellors must be registered with the National Credit Regulator and charge for their services. Interest will also continue to be applied to the debt.

Consumers should sure that they understand exactly what will happen under counselling and should know upfront what the fees or charges will be.

Once a consumer has signed for debt counselling, this is noted on the credit bureau’s consumer profile and he/she is not allowed to obtain further credit until the counselling process is finalized or withdrawn.

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7. Where can consumers lodge a complaint? (National Credit Act related)


The Act encourages consumers to resolve their complaints directly with the company, and failing that to use ‘alternative dispute resolution’ such as ombuds offices.

If the consumer has tried to resolve the dispute with the company and they do not give him or here the desired response, the consumer can contact the following offices:

For any complaint about a bank:

The Ombudsman for Banking Services

Tel: 0860 662837
Fax: (011) 8380043

For any non bank credit, credit bureau or debt counselling complaint:

Credit Ombud

Tel: 0860 662837
Fax: (011) 7810589

For any complaint about debt counsellors/debt counselling:

The National Debt Mediators Society

Tel: 086 1116362

Before contacting the credit ombud about a credit bureau complaint, contact the credit bureaus first.

Transunion ITC

Tel: 0861 105665


Tel: 086 111 6362

If you are unhappy with the outcome of the above, go to the NCR.

National Credit Regulator

Tel: 0860 627627

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8. What are some of the rights that protect consumers under the Consumer Protection Act?


The Consumer Protection Act came into effect on 1 April 2011 and the National Credit Act on 1 June 2007. To benefit from the protection offered by the above acts the contact would have been signed on or after these dates.

Here are some of the rights and remedies provided for in the act:

The right to privacy-consumers have the right to ‘opt out’ or refuse to receive unwanted sms’s, telephone calls or correspondence relating to the marketing of products It is then the responsibilities of companies to ensure that these consumers are not contacted for marketing purposes.

The right to choose (including the right to choose to cancel)-consumers can cancel a fixed term contract at the end of the term. The supplier must notify the consumer 40 to 80 days before the term ends, of the date of termination and of any changes that would apply if the contract is renewed. The onus is then on the consumer to tell the supplier to terminate the agreement on the expiry date, or to agree to renew the contract on new terms, failing which the contract will continue on a month to month basis on the new terms.

The cooling-off period and cancellations from direct marketing-consumers can cancel which they entered into as a result of direct marketing within 5 business days without penalty or charges with no explanation needed.

Keeping and not paying for unsolicited goods and services-the Act allows for having unsolicited goods (not asked for) returned at the suppliers risk and expense. Where the supplier does not collect within 20 business days of receipt by the consumer or the supplied being notified to collect the goods, the consumer can keep the unsolicited goods.

Getting quotes for repairs and maintenance-a supplier must provide a consumer with a cost estimate without charge. A consumer does not have to pay for services done without their approval and every new or reconditioned part that is installed during a repair or maintenance contract must have a warranty of a minimum of 3 months.

A consumer has the right to expect their property to be returned to them in at least as good a condition as before. Where the service or repair is faulty or not up to standard, the consumer has the choice to either insist that the mistake be fixed or that he/she be refunded a reasonable part of the price paid (‘reasonable’ being linked to the extent of the failure)

The right to good quality products and to return faulty goods-consumers have the right buy and receive goods that are good quality, in good working order and free of faults, which will last a reasonable time and are suitable for their intended purpose. Where the goods do not meet the required standards, a consumer has the right to return the goods within 6 months of purchase, and have them replaced, repaired, or get a refund.

Lay-bye – with lay-bye purchases, the goods remain in the store until payment is made in full. But the CPA allows a consumer to cancel at any time for a refund of what they have paid, minus a cancellation fee of just 1% of the purchase price.

Warnings of risks and claim for injuries or loss caused by unsafe or defective goods-suppliers are required to inform consumers where goods may pose a risk (as defined in the Act) including one which a consumer may not be expected to be aware of. A consumer can claim damages from the producer, the importer, the distributor or the retailer of a product where the consumer has suffered harm as a result of the supply of unsafe goods, product failure, defect, hazard or failure to give adequate warnings relating to the product. The Act also allows to also claim for indirect financial loss suffered, for example, loss of income as a result of the injury.

Overselling and overbooking-a supplier may not accept payment for goods or services if they do not intend to supply the goods or provide the service offered. This does not apply where the failure to supply the goods or render the services offered was due to circumstances beyond the suppliers control, and the supplier took reasonable steps to inform the consumer.

Negative option marketing-a supplier may not create a sale or contract by advising the consumer that they are assumed to have accepted the offer if they do not advise that they are not taking it. A person may also not offer a consumer a rebate or commission on a purchase on condition that they assist in getting further sales.

Prices of goods and services must be disclosed and a written record given-in the case of goods, the price must be attached to the goods, and may not charge more than the displayed price and must provide a written record of each item sold or service provided as required in the Act (for example, name, VAT number, address, date, description, unit price, quantity, total price)

Catalogue marketing- where a consumer buys something without an opportunity to inspect the goods, for example by telephone or from a catalogue he/she can refuse to accept the goods if they do not match the description in ‘all material respects and characteristics’

Honouring bookings and reservations - hotels and airlines routinely overbook leaving the consumer to be ‘bumped off’ a flight or being unable to check into your hotel. The Act states that if a Company accepts a reservation and then fails to supply the goods or service at the agreed time and place – or something similar or better – because of lack of stock or capacity, the company must refund the consumer with interest, plus compensate them ‘for costs’ directly incidental to the supplier’s breach of contract’. If the consumer accepts the offer of a comparable substitute, no compensation is necessary.

Cancellation fees - Thanks to the Consumer Protection Act companies can no longer have a blanket “no refunds” policy pertaining to cancelled bookings. Companies must refund your deposit minus a “reasonable” cancellation penalty.

Companies must have a “sliding scale” of deposit forfeiture in proportion to the notice given – the sooner you cancel after booking the greater the refund. Make sure the contract you sign includes this “sliding scale” of what you’ll be refunded if you cancel at various times between booking and the event. If they do get another booking, they can charge you only an admin fee. They are obliged to show you the direct losses and costs they incurred due to your cancellation, which can include a portion of their marketing and admin costs. And a supplier may not impose any cancellation fee if the booking is cancelled because of the death or hospitalisation of the person “for whom or for whose benefit” the booking was made – and as mentioned above if a booking is as a result of direct marketing then the Consumer Protection Act allows consumers to cancel direct marketing deals within five business days, in writing, for a full refund.

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9. Where can consumers lodge a complaint? (Consumer Protection Act related)


As with the National Credit Act, the Consumer Protection Act encourages consumers to first try to resolve the disputes with the company or service provider concerned. If they are not successful, they can lodge a complaint with the National Consumer Commission or with the provincial Consumer Affairs Offices

National Consumer Commission

Tel: 0860 266 786
Fax: 0860 515229

Provincial Consumer Affairs Offices:

Eastern Cape

Tel: (040) 609 3052
Fax: (040) 752 3729

Free State

Tel: (051) 400 4700
Fax: (051) 400 9610


Tel: (011) 355 8117
Fax: (011) 355 3017

Kwazulu Natal

Tel: (031) 310 5310
Fax: (031) 310 5416


Tel: (015) 298 7071
Fax: (015) 2958750


Tel: (013) 752 3761/5
Fax: (013) 7523729)

North West

Tel: (018) 389 5046
Fax: (018) 8895636

Northern Cape

Tel: (053) 832 2566
Fax: (053) 883 2564

Western Cape

Tel: (021) 483 4235
Fax: (021) 483 3483

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10. What is the distinction between defective products on the one hand, and hazardous and unsafe products on the other?


A distinction must be made between defective products on the one hand, and hazardous and unsafe products on the other. Products that are defective are not necessarily dangerous, and similarly, goods can pose a risk or danger to consumers without being defective.

A defective product is one which fails to meet the reasonable expectation of consumers in general either because of some material imperfection in the manufacture of the product, or because it suffers from a characteristic that renders it less useful, practicable or safe. The important thing to note that the product will be assessed against the reasonable expectations of consumers in general rather than only the subjective expectations of the actual consumer who bought or used the product. It no longer matters whether the failure or defect could have been detected by the consumer before they take delivery of the product.

Consumers have the right to return faulty, damaged or poor-quality goods within 6 months of purchase ( the retailer may ask for proof of purchase). A supplier can insist on having the goods examined-this can take a week or more if the item is sent off site-to determine the cause of the damage. If a consumer damages a product, whether deliberate or by accident, the supplier is under no obligation to assist.

If defective, a customer has a right to a full refund, a replacement or a repair-the choice is the customer’s to make, not the supplier’s. All those stores that insist a repair be done instead of offering a replacement or refund are breaking the law. So are those who that provide vouchers or credits in place of a requested cash refund.

Customers have no right of return when it comes to change-of-mind returns, unwanted gifts, wrong sizes and colours and so on. Buyer’s remorse is not covered by legislation and no supplier is bound to take back any item that is not defective.

A hazardous product is one that presents a significant risk of personal injury or damage to other property when used.

Unsafe products are those that present an extreme risk of personal injury or property damage to the consumer or to other persons.

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11. Who and what does the CPA apply to?


Who is a consumer?

A consumer is any individual, small business (with annual turnover below R3 million), club or association to whom goods or services are marketed and sold AND any end users of those goods and services.

What goods and services are covered?

Most goods are included:

  • Consumables (food, clothing etc);
  • Other goods that can’t be consumed but can still be used and enjoyed by a consumer;
  • Content and entertainment products (books, music, movies, games, information products, software) and includes the licenses to use those products;
  • A legal interest in fixed property; and
  • Gas, water and electricity.

Services covered are:

  • Building, renovation and/or repair services;
  • Education, information, advice or consultative services (doctors, lawyers, training companies, universities etc.)
  • Banking and insurance services not regulated under the FAIS Act, Long Term and Short Term Insurance Acts;
  • Transportation services (tour buses, taxis, lift clubs);
  • Accommodation and hospitality services (hotels, B&B’s, restaurants);
  • Entertainment services (cinema’s, theatres, fun parks, casino’s);
  • Electronic communication access services (cell phone, internet, email);
  • Rental services (suit hire, home rentals, car hire); and
  • Franchise services.

The Act covers:

  • The promotion of these goods and services.
  • Service and sale contracts and other contracts with consumers.
  • The delivery and supply of those goods and services.
  • The quality and standard of the goods and services themselves.

The Act generally does not apply to agreements, transactions entered into and goods supplied before 1 April 2010. However, a number of provisions of the Act will apply to current fixed term agreements that have 2-3 years left to run on their terms.

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12. What are the quality and safety standards expected for products?


The standards and quality and safety expected for different types of products will be a question of fact that is decided in each case by the courts, with reference to industry standards. The courts will take into account all the surrounding circumstances, including the following:

  • The stated purposes of the product
  • The manner which the product was marketed, packaged and displayed.
  • The use of any trade description or mark on the packaging of the product.
  • The inclusions of any instructions or warnings with respect to the use of the product.
  • The range of things that may reasonably be anticipated to be done with or in relation to the product, and
  • The time that the product was produced and supplied.

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13. What are a supplier’s obligations in relation to potentially hazardous or unsafe products?


Persons packaging or installing potentially hazardous or unsafe products must apply to or include with the packaging of such products safety warnings and instructions for their safe use.

Such warnings and instructions must be produced either in a form prescribed by the Minister, or in plain language that an ordinary consumer of the class of persons for whom these documents are intended, with average literacy skills and minimal experience as a consumer of these goods and services, could be expected to understand.

Most products are included in the act-traditionally product liability extended mainly to manufactured goods such as motor vehicles, tools and equipment, cleaning products, pharmaceuticals and other medical products as well as food and beverages. However, the Act now extends protection to consumers who purchase music, movies and books, computer software and information products.

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14.Who can be held liable for a defective or unsafe product?


A producer is a person who:

a) grows, nurtures, harvests, mines, generates, refines, creates, manufactures or otherwise produces the product within South Africa themselves or causes any of those things to be done on their behalf with the intention of making that product available for supply in the ordinary course of business; or

b) in the case of “own-branded products”, applies their own name or trade mark to the product to create a reasonable expectation that they are the producer of that product.

An importer is a person who brings the product, or causes the product to be brought, from another country into South Africa with the intention of making the product available for supply in the ordinary course of business.

A distributor is a person who, in the ordinary course of businessis supplied with a product by a producer, importer or other distributor and in turn, supplies that product to either another distributor or to a retailer.

A retailer is a person who, in the ordinary course of business, supplies a product to a consumer

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15. What can they be held liable for?


The liability under the Act extends to any harm caused, including but not limited to:

  • the death of, or injury to, any natural person;
  • an illness of any natural person;
  • any loss of, or physical damage to property; and
  • any economic loss that results from the harm contemplated in 1-3.

There is no limit to the amount that can be claimed by a consumer. However, they will still need to prove that they actually suffered the loss they are claiming and that they took reasonable steps to mitigate their damages. The courts or other bodies hearing product liability claims will assess the damages claimed and proved by the consumer, and may make such awards as they deem just and equitable in the circumstances.

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16.Who can institute a product liability claim?


A larger number of persons can now enforce the rights introduced under this section of the Act. These persons include:

  • A person acting on his or her own behalf;
  • an authorised person acting on behalf of another person who cannot act in his or her own name;
  • a person acting as a member of, or in the interest of, a group or class of affected persons;
  • a person acting in the public interest, with leave of the Tribunal or court;
  • an association acting in the interest of its members; and
  • an accredited consumer protection group.

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17. What needs to be proved by the plaintiff?


Although a plaintiff will no longer need to prove negligence on the part of the supplier of the defective or dangerous product, they will still have to satisfy the following requirements to succeed with their claim:

  • The product was unsafe; OR
  • The product supplied suffered from a product failure, defect or hazard; and
  • The product was supplied by the defendant; and
  • The defendant failed, in the case of a hazardous product, to provide adequate instructions or warnings to consumers about the hazard; and
  • The plaintiff has suffered harm; and
  • The harm suffered was caused wholly or partially as a consequence of the supply of an unsafe, defective or failed product, or the defendant’s failure to provide adequate instructions or warnings.


18.When must the claim be brought?


A claim for damages under the Act must be brought by the plaintiff within 3 years after:

  • the death or injury occurred;
  • the earliest date from which the plaintiff first had knowledge of the material facts about an illness or property damage caused by the product in question;
  • the latest date that the plaintiff suffered any economic loss caused by the product in question.

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19. What defences can be raised?


A defendant who is facing a product liability claim can defend the claim by disproving the various elements that must be proved by the plaintiff, e.g. the product was not unsafe or defective; the product did not fail; or they did not supply the product to the consumer.

In addition, the Act offers the following defences to defendants:

The unsafe product characteristic, failure, defect or hazard that results in harm is wholly attributable to compliance with any public regulation.

The alleged unsafe product characteristic, failure, defect or hazard did not exist in the product at the time it was supplied by the defendant to another person.

The alleged unsafe product characteristic, failure, defect or hazard was wholly attributable to compliance by that person with instructions provided by the person who supplied the product to the defendant.

It is unreasonable to expect the distributor or retailer to have discovered the unsafe product characteristic, failure, defect or hazard, having regard to that person’s role in marketing the product to consumers.

The claim was not brought within the required 3 year period.

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20. What can businesses do to limit their legal liability?


Most suppliers uphold the necessary performance, quality and safety standards expected of them. However, there are still those that don’t and when the economy takes a knock has it has done over the past 18 months, there is an increased risk that businesses will try to cut corners in order to save on costs.

The product liability provisions of the Consumer Protection Act provides a welcome incentive for businesses to ensure that their products provide the safety that people using them or affected by them are reasonably entitled to expect.

The following checklist offers some suggested action steps for businesses to take to ensure that they are compliant with the new Act and to manage their legal risks in this regard.

Review current quality management policies and procedures to make sure that only quality and safe products leave your door. All stages of product development (design, manufacture, presentation and marketing) should be included in your review.

Consult your industry bodies to check or confirm whether there are any new industry regulations or standards for the products you are responsible for. If so, do you currently meet those standards or comply with those regulations?

Contact your insurance broker to review your product liability cover and assess whether it is still adequate.

Review your contracts with your own suppliers to make sure that you are adequately protected from liability when your suppliers are at fault. Include a comprehensive indemnity if you don’t have one already.

Kept proper sales records for all transactions across your supply chain in the event that you require evidence to defend a claim brought against you. The Act will also be introducing further provisions relating to recall programmes for defective or dangerous products which will require quick and efficient access to customer and sales information.

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21. When is liability incurred for defective goods?


There is no longer any distinction made between latent and patent defects, i.e. you will still be liable for defects even if that defect could have been reasonably detected by the consumer before they accepted delivery of the goods.

If you want to sell goods in a specific condition or “as is”, you must expressly inform the consumer of that condition and get the consumer’s express agreement that they are accepting the goods in that condition.

It is an implied provision of every consumer contract that the producer / importer / distributor / retailer each warrant that the goods are free of defects, safe and of a good quality.

You must repair or replace any unsafe, defective or poor quality goods returned by a consumer up to 6 (six) months after delivery at your own cost, or refund the price paid by the consumer for those goods.

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22. What is meant by strict liability?


You will be liable for any harm to consumers caused by unsafe, defective or hazardous goods irrespective of whether you were negligent or not. This would include death, illness or injury, damage or loss of property, and pure economic loss.

The only exceptions to such liability will be if:

  • the goods comply with a public regulation;
  • the unsafe product characteristic, failure, defect or hazard that results in the harm did not exist in the goods when you took delivery of them yourself;
  • you complied fully with instructions given to you by your own supplier or the manufacturer of the goods;
  • it is unreasonable to expect you, as a distributor or retailer of the goods, to have discovered that they were unsafe or defective

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23. How does the CPA relate to other laws?


The CPA must be interpreted in a manner that gives effect to the purposes of the Act set out in section 3. The following may be considered when interpreting the Act:

  • appropriate foreign and international law;
  • appropriate international conventions, declarations or protocols relating to consumer protection; and
  • any decision of a consumer court, ombud or arbitrator in terms of the Act.

If there is an inconsistency between any provision of the CPA and a provision of the Public Finance Management Act, 1999 (Act No. 1 of 1999), or the Public Service Act, 1994 (Proclamation No. 103 of 1994), the provisions of the Public Finance Management Act, 1999, or of the Public Service Act, 1994, as the case may be, prevail.

If there is an inconsistency between any provision of the CPA and a provision of any other Act:

  • the provisions of both Acts apply concurrently, to the extent that it is possible to apply and comply with one of the inconsistent provisions without contravening the second; and
  • to the extent that both Acts cannot be applied concurrently, the provision that extends the greater protection to a consumer prevails over the alternative provision.

No provision of the CPA must be interpreted so as to preclude a consumer from exercising any rights afforded in terms of the common law.

In any matter brought before the Tribunal or a court in terms of this Act,the court must develop the common law as necessary to improve the realisation and enjoyment of consumer rights generally, and in particular by poor, illiterate or rural consumers.

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24. When buying a financial product / investment, what does the law say you must be told?


The Financial advisory and Intermediary Services (FAIS) Act stipulates what a financial adviser must do when advising you or selling you a product. The adviser must provide you with the following information:

  • How the value of your investment is determined
  • The investment’s underlying assets
  • The past performance of the product
  • The adviser’s and the product’s charges and fees, and the implications of the charges on the value of your investment
  • Whether the adviser has a fee rebate arrangement with a product provider, and whether there are rebate arrangements among the providers of the products that he or she recommends
  • When and why the product will not pay out benefits
  • Whether the product has any guarantees
  • How easy it will be for you to access the money you invest
  • The consequences if you terminate an investment before date of maturity
  • The tax implications of the product
  • Whether there is a cooling-off period within which you have the right to cancel the product
  • Any Material risks associated with the product and
  • How the product is appropriate for your financial needs and risk profile.

Once your adviser has provided you with the above information, he or she must provide you with a written summary of:

  • The information on which he or she based his or her advice
  • The financial products that were considered
  • The products that he or she recommended and why and
  • How your risk profile and financial needs align with the recommended products

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25. How do I recognize and avoid investments ‘that sound too good to be true’?


The tell-tale features of a scam are:

  • It claims to pay out double-digit monthly returns
  • It claims to be an opportunity of a lifetime
  • There are no underlying investments
  • You can’t understand how it generates money
  • It is not a registered product or a product offered by an authorised financial services provider
  • Returns of profits earned by you may be dependent on you introducing more members to the scheme

Verify the legitimacy of a financial services provider before you invest by visiting or calling the Financial Services Board on 0800 110 443 .

Variations on a scheme:

- Pyramid scheme

An illegal business model that recruits members via a promise of payments or services for enrolling others into the scheme, rather than supplying investments or selling products or services.

-Ponzi scheme

A fraudulent investment operation where the operator pays returns to its investors from capital paid in by new investors, rather than from profit earned by the operator.

Ponzi schemes usually entice new investors by offering higher returns than other investments, in the form of short-term returns that are either abnormally high or unusually consistent.

These schemes occasionally begin as legitimate businesses, until the business fails to achieve the returns expected.

It becomes a Ponzi scheme if it then continues under fraudulent terms. The perpetuation of high returns requires an ever-increasing flow of money from new investors to sustain the scheme.

-High-yield investment programme

An online Ponzi scheme promising unsustainably high returns. Most of these scams work from anonymous offshore bases, which make them hard work to track down.


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