THE IMPACT OF THE CONSUMER
PROTECTION
ACT 68 OF 2008 (CPA) ON INSURANCE
ANDREW PACKMAN
and
DREW SCHNEHAGE
PURPOSE OF ACT
•
•
•
•
Establish national norms and standards
Provide improved standards of consumer
information
Prohibit unfair marketing
Provide consistent enforcement of transactions
and agreements
PURPOSE OF ACT(2)
•
•
•
Fulfil rights of historically disadvantaged people
and promote their full participation as consumers
Protect interests of all consumers – redress for
consumers subject to exploitation in the
marketplace
Effect to internationally recognised consumer
rights
OPERATIONAL DATES
•
•
•
•
Assented to
Published on
Come into effect
:
:
:
24 April 2009
29 April 2009
Already, operative
± October 2010
Give suppliers opportunity to comply and re-draft
agreements
THE ROLE PLAYERS
“Consumer” –
• a person to whom particular services are
marketed/rendered in the ordinary course of the supplier’s
business;
• a person who has entered into a transaction with the
supplier in the ordinary course of the supplier’s
business (unless the transaction is exempt from the
application of the CPA by Section 5(2) or Section 5 (3);
• the user of particular goods or recipient or beneficiary of
services irrespective whether they are a party to a
transaction concerning the supply of the goods and
services.
“Supplier” –
• a person who markets any goods or services;
“Market” – (as a verb)
• means to promote or supply any goods or
services;
“Goods” Includes –
• anything marketed for human consumption;
• any tangible object, including any medium on which anything is or
maybe written or recorded;
• any literature, music, photograph, motion picture, game, information,
data, software, code or other intangible product written or encoded
on any medium, or a license to use any such intangible product;
• a legal interest in land or any other immovable property, other than
an interest that falls within the definition of “service” in this section;
and
• gas, water and electricity
“Services” –
• includes but is not limited to;
• the undertaking, underwriting or assumption of any risk by one
person or on behalf of another;
• the undertaking, underwriting or assumption of any risk by one
person on behalf of another, except to the extent that any such
service –
• constitutes advice or intermediary services that is subject to
the Financial Advisory and Intermediary Services Act;
• is regulated in terms of the Long-Term and Short-Term
Insurance Acts
The exclusion of the Short-Term Insurance Act,
1998 (Act No. 53 of 1998), and the Long-Term
Insurance Act, 1998 (Act No. 52 of 1998), is
subject to those sector laws being aligned with
the consumer protection measures provided for
in the CPA within a period of 18 months from the
commencement of the CPA, failing which, the
provisions of the CPA will apply.
“Supply” – (As a verb)
• In relation to goods, includes sale, rent,
exchange and hire;
• In relation to services means the selling of
services or to perform or causing to be
performed or provided
“Retailer” –
• with respect to any particular goods is a
person who in the ordinary course of
business supplies those goods to a
consumer
“Distributor” –
• In relation to any particular goods is the
person who in the ordinary course of
business is supplied with those goods by
producer, importer or other distributor and in
turn supplies them either to another
distributor or a retailer
“Importer” –
• With respect to any particular goods is a
person who brings those goods or causes
them to be brought from outside the
Republic into the Republic with the intention
of making them available for supply in the
ordinary course of business
“Producer” –
• With respect to any particular goods is a
person who, inter alia, grows, mines, creates,
manufactures or otherwise produces goods
within the Republic or who causes that to be
done with the intention of making
business
course of
“Intermediary” –
• A person who, in the ordinary course of business and for
remuneration or gain, engages in the business of –
• representing another person with respect to the actual or
potential supply of any goods or services;
• accepting possession of any goods or other property from a
person for the purpose of offering the property for sale; or
• offering to sell to a consumer, soliciting offers for selling to a
consumer any goods or property that belongs to a third
person, or service to be supplied by a third person
REALISATION OF
CONSUMER RIGHTS
•
Section 4(1)
• Person may approach court, tribunal,
commission
• Rights are infringed, impaired, threatened
• Person
• Own behalf
• Interest of group
• Public interest
REALISATION OF
CONSUMER RIGHTS
•
•
•
Section 4(4)
Court, tribunal, commission must interpret (o.b.o.
supplier):
• Standard form
• Contract
• Other documents
For benefit of consumer
REALISATION OF
CONSUMER RIGHTS
•
Section 4(4)(a)
•
•
•
Ambiguity that allows more than one
reasonable interpretation
Interpret in favour of consumer
Statutory contra proferentum rule
REALISATION OF
CONSUMER RIGHTS
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•
•
•
•
Section 4(4)(b)
Any restriction, limitation, exclusion, deprivation
•
of consumer’s legal rights
Limited to the extent that reasonable person
•
would contemplate or expect:
• Content of document
• Manner and form of contract presented
• Circumstances of transaction
Interpret in favour of consumer
Statutory contra proferentum rule
Section 40(2) –
• It is unconscionable for a supplier knowingly to
take advantage of the fact that a consumer was
substantially unable to protect the consumer’s
own interests because of physical or mental
disability, illiteracy, ignorance inability to
understand the language of an agreement, or any
other similar factor
RIGHT TO FAIR, REASONABLE, JUST
TERMS AND CONDITIONS
•
•
•
Section 48(2)
“Unfair, unreasonable, unjust” – meaning?
Without limiting generality:
• Excessively one sided in favour of person other than
consumer
• Terms so adverse to consumer as to be inequitable
• Consumer agreed on
• False
• Misleading
• Deceptive misrepresentations
• Consumer agreed subject to conditions should have
been notified of (but was not)
RIGHT TO FAIR, REASONABLE, JUST
TERMS AND CONDITIONS
•
•
Section 49(3)
Provision, condition, notice must be:
• In writing
• Plain language
RIGHT TO FAIR, REASONABLE, JUST
TERMS AND CONDITIONS
•
•
Section 49
Consumer’s attention must be drawn to:
• Provisions
• Condition
• Notice
RIGHT TO FAIR, REASONABLE, JUST
TERMS AND CONDITIONS
•
•
Section 49(5)
Consumer must have adequate opportunity to:
• Receive provision / notice
• Comprehend it
RIGHT TO FAIR, REASONABLE, JUST
TERMS AND CONDITIONS
•
•
•
•
•
Section 49(1)
Limits risk / liability of supplier / another
Assumes consumer’s risk of liability
Duty on consumer to indemnify supplier /
another
Acknowledgement of any fact by consumer
RIGHT TO FAIR, REASONABLE, JUST
TERMS AND CONDITIONS
•
•
•
Section 48(1)(c)
Supplier must not require consumer to:
• Waive rights
• Assume obligation
• Waive liability of supplier
On terms that are:
• Unfair
• Unreasonable
• Unjust
RIGHT TO FAIR, REASONABLE, JUST
TERMS AND CONDITIONS
•
•
Section 49(4)
Fact, nature and effect of provision / notice must
be:
• Conspicuous manner and form
• Likely to attract attention of consumer in
circumstances
• Before consumer enters into transaction /
required to offer compensation for the
transaction, whichever one is earlier
EXEMPTIONS
There are certain exemptions
- not important to us
RIGHT TO FAIR, REASONABLE, JUST
TERMS AND CONDITIONS
•
•
•
Section 48(1)(a) & (b)
Prohibits offers / marketing on:
• Prices
• Terms
that are:
• Unfair
• Unreasonable
• Unjust
RIGHT TO FAIR, REASONABLE, JUST
TERMS AND CONDITIONS
•
•
•
•
Section 49(2)
Unusual character / nature
No reasonable expectation of its presence
Condition results in serious injury / death
POWERS OF COURTS
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•
Section 52:
If Act has no remedy, court may make order
POWERS OF COURTS
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Section 52(3)
Transaction unconscionable, unjust, unreasonable,
unfair in whole / part
Make further order deemed just and reasonable
Restore money / property
Compensate consumer for losses / expenses relating to
transaction and court proceedings
Require supplier to stop activities and practice
Serve any part and declare void if person alleges
agreement terms and conditions void
POWERS OF COURTS
•
•
Section 52(2)
Court considers
• Fair value of goods and services
• Nature of agreement, subjective elements:
• Education
• Experience
• Sophistication
• Bargaining power
POWERS OF COURTS
•
Section 52(2) (continue)
• Circumstances reasonably foreseeable?
• Objective conduct of parties
• Extent of negotiations
• Documents in compliance with Act?
• Actual / reasonable expected knowledge of
consumer of provisions
• Amount of identical / equivalent goods /
services in market
LIABILITY FOR DAMAGES
CAUSED BY GOODS
Section 61(5) –
• Harm for which a person may be held liable in terms of this
section includes –
• the death of or injury to, any natural person;
• an illness of any natural person;
• any loss of, or physical damage to, any property,
irrespective of
whether it is movable or immovable;
• any economic loss that results from harm contemplated
above
Section 61(1) –
• Except to the extent contemplated in sub-section (4), the producer
or importer, distributor or retailer of any goods is liable for any
harm, as described in sub-section (5), caused wholly or partly as
a consequence of –
• supplying of unsafe goods
• a product failure, defect of hazard in any goods;
• inadequate instructions or warnings provided to the consumer
pertaining to any hazard arising from or associated with the use
of any goods;
POWERS OF COURT TO ENFORCE
CONSUMER RIGHTS
CLASS ACTIONS Section 76(1)(c) –
• In addition to any other order that it may make
under this Act or any other law, a court considering
a matter in terms of this Act may award damages
against a supplier for collective injury to all or a
class of consumers, generally, to be paid on any
terms or conditions that the court considers just and
equitable and suitable to achieve the purposes of
this Act
PENALTIES
Section 111(1) –
• Any person convicted of an offense in terms of this Act is liable –
• in the case of a contravention of Section 107(1) to a fine or to
imprisonment for a period not exceeding ten years, or to both a
fine and imprisonment, or
• in any other case, to a fine or to imprisonment for a period not
exceeding twelve months, or to both a fine and imprisonment
• Despite anything to the contrary contained in any other law, a
Magistrate’s court has jurisdiction to impose any penalty provided
for in this section
ADMINISTRATIVE FINES
Section 112(1) –
• A tribunal may impose an administrative fine in respect of prohibited or
required conduct.
• An administrative fine imposed in terms of this Act may not exceed the greater
of –
• 10% of the Respondent’s annual turnover during the preceding financial year
• R1,000
• When determining an appropriate administrative fine, the tribunal must
consider the following factors;
• the nature, duration, gravity and extent of the contravention
• any loss or damage suffered as a result of the contravention
• the behaviour of the Respondent
• the market circumstances in which the contravention took place
• the level of profit derived from the contravention
Section 112(1) (continued) –
• the degree to which the Respondent has cooperated with the
Commission and
the Tribunal
• whether the Respondent has previously been found in contravention
of this Act
• For the purposes of this section, the annual turnover of the supplier at the
time when an administrative fine is assessed, is the total income of that
supplier during the immediately preceding year, as determined in the
prescribed manner
• A fine payable in terms of this section must be paid into the National
Revenue Fund
CONCLUSION
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