The South African National Consumer Protection Act (CPA) came into a little over three years ago, aimed at promoting fairness, openness and good business practice between suppliers of goods and services and the consumers thereof. In addition to the Act, several industry bodies including the Retail Motor Industry Organisation (RMI) and the National Association of Automobile Manufacturers of South Africa (NAAMSA) contributed by writing specific codes of good practise for their various sectors to support the legislation and act as an addendum for members. This has provided consumers with what some have called “the most comprehensive consumer rights in the world” – but how has it affected the motor trade?
“The Act was, in some ways, an aggregator for many different laws and regulations that were already in effect,” says motor industry veteran and Head of Gumtree Automotive Jeff Osborne. “All of which are now encompasses under a single piece of legislation. But the most significant change has been that the burden of proof for defects or non-delivery no longer rests with the consumer, which means that the average South African no longer has to incur the expense and complicated complaint procedures previously associated with taking action against unscrupulous or negligent businesses. Consumers are more aware of their rights and better equipped to enforce them.”
Osborne says that consumers should always keep the conditions of the Act in mind when dealing with any supplier or service provider in the motor industry. “A good example would be the minimum 6 month warranty that is automatically implied when buying a new or second-hand vehicle from your local dealership,” says Osborne. “This means that a dealership cannot legally issue a warranty of fewer than six months. But bear in mind that the Act is only applicable to business-to-consumer (B2C) interactions, not private-to-private or business-to-business sales (B2B) sales.”
Dealerships are also required to disclose all the defects associated with the vehicle being sold, and to afford the consumer the opportunity to accept or reject the item in that declared space. “The Act has very specific rules with regards to documentation as well. The days of small print are long gone – all contracts have to be implicit, simple, non-legalistic and provided to the consumer in the language of their choice. The onus lies with the supplier to ensure that all documentation provided is understood clearly.”
The same applies to quotations and servicing, says Osborne, who believes that the Act has gone a long way in diminishing instances of “unpleasant surprises” at a service level. “First of all, when you are told that a part is in need of replacing, the service agent or dealership must provide you with a quote that you need to sign off. If they then decide to do further work on the car (exceeding the quote) out of their own volition without your explicit permission, you are only required to pay for what you’ve been quoted for and authorised. They will not be able to remove parts added without your authorisation either, under the section of the Act pertaining to Unsoliticited Goods. The onus lies with the service agent to keep communication open and keep customers informed throughout the process – or they will receive the shorter end of the stick.”
The penalties of non-compliance are “severe”, says Osborne. “If a dealership conducts themself in a manner that conflicts with the Act, they are guilty of a criminal offense and can face fines of up to 10% of their annual turnover – which would put most small businesses out of business. It’s crucial that all dealerships understand the Act and comply with it.”
Osborne, however, has said that he feels for the majority of motor dealerships the Act merely enforced practises they already had in place. “No reputable dealership would have felt threatened by the Act – the overwhelming majority of dealerships I’ve met have always handled consumer complaints and rights with a high level of integrity.”
Osborne urges dealerships to leverage the Act as a marketing opportunity. “Compliance to the Act and ensuring that the recommended best practises drawn up by the industry are enforced in your organisation is a powerful differentiator – we have to communicate the message to the consumer that their rights will be honoured and respected through our displays and advertising and interactions.”
All in all, Osborne says, the Act has impacted both consumers and dealerships in a positive manner. “The vast majority of South African dealerships are reputable and extremely concerned with customer satisfaction,” he states. “The Act will hopefully weed out the isolated few that do not have their customers’ best interests at heart and improve the industry as a whole, for all concerned.”
About Jeff Osborne
Jeff Osborne served as the CEO of the Retail Motor Industry Association (RMI) for 13 years. He currently heads up Gumtree Automotive.