CAPE TOWN. – The recent case in which the National Consumer Tribunal found a boat broker guilty of prohibited conduct for selling a jet ski without informing the purchaser of the exact services he would render and the details of his commission, serves as a red-letter warning to intermediaries that failure to disclose details of their role could be punishable with heavy penalties, warned Trudie Broekmann, wellknown South African consumer attorney.
She said although the National Consumer Tribunal did not impose the penalty of R1 million which was demanded by the National Consumer Commission, the boat broker was penalized because he contravened section 27 and regulation 9 of the Consumer Protection Act which requires an intermediary to notify the consumer in details about his services and commission prior to the transaction being concluded.
The purpose of these disclosure duties for intermediaries is to empower consumers so that they can make informed purchasing decisions.
Broekmann warned that online retailers like Takealot, Loot, Superbalist and Mr Delivery who market goods manufactured by others, e-commerce platforms, online classifieds, travel and accommodation aggregators like Hotels.com and TravelStart, short term accommodation intermediators like AirBnb, car dealerships selling on consignment, conveyancers and travel agents could be intermediaries as defined by the Consumer Protection Act.
In her personal dealings with some of these online retailers as a consumer, she has noticed that they do not notify the consumer of the exact services they render and the details of the fee that they charge for their services as intermediaries.
Consequently they could be held accountable and even prosecuted by the National Consumer Commission if consumers complain about their failure to disclose.
Broekmann adds that the regulations are very detailed, but are often vague, impractical and confusing, and much of information required to be disclosed is of no particular value to consumers.
Nevertheless, a technical argument which relied on the precise interpretation of the wording of the regulations did not succeed with the Tribunal in the case against the boat broker, as the Tribunal interpreted the regulations generously so as to provide maximum information to consumers before they decide on a purchase.
This places suppliers in a difficult position- it is hard to work out exactly how to comply, especially if you operate online. In the light of the prosecution by the NCC, all intermediaries (defined as those who accept goods from other suppliers to sell to the public) need to urgently attend to setting up systems to ensure they comply with the disclosure requirements.
It is no excuse to claim that you were not aware of the requirements of section 27 and regulation 9 of the CPA and consequently did not make disclosure or that the commission was not substantial. In the case of the boat broker, he did inform the consumer of his role as facilitator of the transaction but did not disclose the fee and was penalised by being ordered to repay his commission of R6 213.00 to the purchaser.
The penalty which may be imposed on large online retailers is likely to be more substantial, and the National Consumer Commission could again demand a penalty of R1 million or 10% of the retailer’s previous year’s turnover, Broekmann warned.