5. Consumer protection - e-Transactions Law

5. Consumer protection - e-Transactions Law

CONSUMER PROTECTION Department of Commercial Law University of Cape Town APPLICABLE LEGISLATION ECTA ss42 48 Only applies to electronic transactions s42(1) Only protects natural persons (s1 def of consumer) Extends to foreign vendors/suppliers s47 No party autonomy s48 complaints to National Consumer Commission s49

Consists of supplier duties, regulation of certain marketing activities plus consumer rights Applies to all transactions Extends protection to legal persons with an annual turnover of less than R2 million (s1 def of consumer) Applies to transactions occurring in South Africa s5 No party autonomy s48(1)(c) complaints to Tribunal, Ombud, National Consumer Commission

or courts s69 Consists of supplier prohibitions & obligations plus consumer rights Electronic Transactions Law Consumer Protection Act (CPA) 2 ECTA : DUTIES OF THE SUPPLIER s43(1): Disclose prescribed minimum information on a website (what about other electronic platforms?) 2. S43(2):Allow the consumer a chance to review, correct or withdraw from the transaction 3. s43 (3)- (4): Breach of s43(1) (2) by a supplier entitles the consumer to cancel the transaction within 14 days and

to seek a refund 4. S43(5) (6) : Provide a secure payment system or be liable for losses sustained by consumer due to insecure payment system 5. s44: to refund a consumer who exercises their right to cancel within the statutory cooling-off period 6. S46: Execute order within 30 days of receipt of order Electronic Transactions Law 1. 3 ECTA: S44 COOLING OFF NB Where s44 ECTA is applicable, s16 CPA does not apply Electronic Transactions Law

44. (1) A consumer is entitled to cancel without reason and without penalty any transaction and any related credit agreement for the supply(a) of goods within seven days after the date of the receipt of the goods; or (b) of services within seven days after the date of the conclusion of the agreement. (2) The only charge that may be levied on the consumer is the direct cost of returning the goods. (3) If payment for the goods or services has been effected prior to a consumer exercising a right referred to in subsection (l), the consumer is entitled to a full refund of such payment, which refund must be made within 30 days of the date of cancellation. (4) This section must not be construed as prejudicing the rights of a consumer provided for in any other law. 4 ECTA S42(2) COOLING OFF EXCLUSIONS s44 does not apply to the following e-transactions: (a) for financial services; (c) supply of foodstuffs, beverages or other goods intended for everyday consumption (d) for services which began with the consumer's consent before the end of the seven-day period referred to in s44(1); (e) where the price for the supply of goods or services is dependent on fluctuations in the financial markets and which cannot be controlled by the supplier;

Electronic Transactions Law (b) auctions; (f) where the goods are made to the consumer's specifications; are clearly personalised; by reason of their nature cannot be returned; or are likely to deteriorate or expire rapidly; 5 ECTA S42(2) (3) COOLING OFF EXCLUSIONS (g) where audio or video recordings or computer software were unsealed by the consumer; (i) for the provision of gaming and lottery services; or (j) for the provision of accommodation, transport, catering or leisure services and where the supplier undertakes, when the transaction is concluded, to provide these services on a specific date or within a specific period. (3) This Chapter does not apply to a regulatory authority established in terms of a law if that law prescribes consumer protection provisions in respect of electronic transactions. Electronic Transactions Law (h) for the sale of newspapers, periodicals, magazines and books;

6 CONSUMER RIGHTS Consumer Right to equality Right to privacy Right to choose Right to disclosure and information Right to fair and responsible marketing Right to fair and honest dealing Right to fair, just and reasonable terms and conditions Right to fair value, good quality and safety Electronic Transactions Law rights i.t.o the Act:

7 INAPPLICABILITY OF THE CPA Inapplicable CPA provision this section does not) Cooling off s44 s16 Delivery s46 s19 Disclosure of price s43 s23 Sales records s43

s26 Catalogue marketing s42- 49 s33 Electronic Transactions Law Applicable ECTA provision (if this section applies 8 CPA SUPPLIER PROHIBITIONS False or misleading representations s4(5)(b) (c), s29, s41, s30(1), s37(1) 2. Unfair discrimination s8-9 3. Unwanted direct marketing s11

4. Exceeding the regulated duration of fixed term contracts or denying a consumers early termination s14(1) 5. Repairing or maintaining goods without consumer preauthorisation s15(1) 6. Arbitrary bundling of goods & services s 21(1) 7. Provision of unsolicited goods or services s21(1) 8. Misleading trade descriptions s24(4) 9. Fraudulent or pyramid schemes or offers s42(1), s43(1) 10. concluding unfair, unreasonable or unjust agreements (price, marketing or negotiation) s48(1) (2)

Electronic Transactions Law 1. 9 CPA SUPPLIER PROHIBITIONS Negative option marketing s31(1) 2. Making promotional or loyalty programme offers without an intention to fulfil them s34(3), s35(2), s 63 3. Pretending a person has won a competition s36(2) 4. Promotion, offering or supplying goods or services upon the condition that the consumer will refer others s38(1) 5. Contracting with, or knowingly taking advantage of, persons without legal capacity s39(1), 40(2) 6.

Overbooking or overselling s47(1) 7. Requiring consumers to waive their rights, assume obligations or waive supplier liability s48(1) Electronic Transactions Law 1. 8. Supplying unsafe, hazardous or defective goods 10 SUPPLIER DUTIES Provision of prescribed information by intermediaries s27(1) Inform consumers of the right to cancel direct marketing agreements s32(1) Task: read ECTA and compile a list of any other

supplier duties Electronic Transactions Law Permit consumers to cancel non-specialised advance bookings, reservations or orders s17 Use prescribed notice or document formats or use plain understandable language s 22(1) (2) Disclose that goods are reconditioned or grey market s25(1) Provide written records of transactions s 26(2), s 50(1) 11 ONLINE AUCTIONS S45 ECTA S45: Applicable to auctions in the physical and electronic environments auction includes a sale in execution of or pursuant to a court order, to the extent that the order contemplates that the sale is to be conducted by an auction (section 45(1)). S45(2): sale by auction in lots, each lot is, unless there is evidence to the contrary, regarded to be the subject of a separate transaction.

Electronic Transactions Law S45 (3): a sale by auction is complete when the auctioneer announces its completion by the fall of the hammer, or in any other customary manner, and until that announcement is made, a bid may be retracted. 12 ONLINE AUCTIONS S45 ECTA S45 (4) provides that notice must be given in advance that a sale by auction is subject to (a) a reserved or upset price; or (b) a right to bid by or on behalf of the owner or auctioneer, in which case the owner or auctioneer, or any one person on behalf of the owner or auctioneer, as the case may be, may bid at the auction. S45 (5): If notice is not given in advance that the owner or auctioneer has a right to bid, they are not allowed to bid at that auction, either in person or by employing someone else to bid on their behalf. If they do, a consumer may approach a court to declare the transaction fraudulent.

S45(6): further provisions via Regulation Electronic Transactions Law 13 ONLINE AUCTIONS: REGULATIONS 1. 2. Electronic Transactions Law Regulation 30: specific provision for auctions in the electronic environment: May only be conducted if all requirements in respect of an auction provided for in these regulations or other applicable law, but with the necessary changes, if any, to suit an electronic medium or platform the relevant internet website or electronic medium

or platform is generally available to anyone over the age of 18 years at any time of the day 14 REG 30 REQUIREMENTS CONTD the relevant internet website or electronic medium or platform provides high standards of security for electronic transactions; (d) the relevant internet website or electronic medium or platform provides for easy access to all records prescribed in these regulations in a generally used or accepted medium or format; (e) the internet auction provider keeps the information contemplated in regulation 28 (4) Electronic Transactions Law 15 REGULATION 28 (4) (4) An auctioneer must have a vendors roll in which all details of

the auction are recorded, which must, as a minimum, include (a) the advertising of the auction; (b) the rules of auction; (c) the bidders record; (d) the declarations contemplated in regulation 21 (2) (h) and 27; (e) a list of all goods on auction, including goods which were withdrawn from auction; ( f ) the names of the successful bidders, the goods or lots bought and the prices paid in respect thereof; (g) the details of any challenges to the validity of the auction or the conduct thereof, and the particulars of the persons making such challenges, if available; (h) any items or lots not sold; (i) the details of any reserved price or any matter contemplated in subsections (4) and (5) of section 45 of the Act. Electronic Transactions Law 16 REG 30 REQUIREMENTS CONTD Reg 30(2): to create the bidders record required by Reg 26(2) a prospective bidder in an auction to be held via the internet or other electronic medium or platform must register by providing (a) his or her full names, identification or passport number, age, physical address, internet protocol address, and where applicable, login code or name, and password; and

(b) the details of the means by which payment will be effected. Reg 30(3): An auctioneer conducting an auction via the internet or other electronic medium or platform may not exclude liability if any goods purchased by auction are not delivered to the purchaser thereof. Electronic Transactions Law 17 INTERNATIONAL STANDARDS Electronic Transactions Law Directive 97/7/EC of the European Parliament and of the Council of 20 May 1997 on the protection of consumers in respect of distance contracts

Recommendation of the OECD Council concerning guidelines for consumer protection in the context of electronic commerce, 1999 Recommendation of the OECD Council concerning guidelines for consumer protection in the context of electronic commerce, 2002 OECD Policy Guidance for addressing emerging consumer protection and empowerment issues in mobile commerce, 2008 18 Electronic Transactions Law Electronic Transactions Law compiled by Caroline B Ncube is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 2.5 South Africa License. To view this a copy of this license visit http://creativecommons.org/licenses/by-nc-sa/2.5/z a/ 19

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