Returns Policies and the CPA
Many retailers have standard policies that deal with returns and repairs relating to defective products. Some of these policies may have been drafted long ago and have possibly become outdated due to changing legislation.
By Danie Strachan
Amongst the provisions contained in the Consumer Protection Act (CPA) are standard warranties for goods supplied as well as remedies for consumers who purchased goods that do not comply with the warranties. These provisions have a direct impact retailer’s returns policies and since the CPA came into effect on 1 April 2011 there has been some confusion as to when consumers may return goods to suppliers, or request refunds or replacements.
Prescribed warranties
The CPA prescribes four warranties for products (in Section 55). These warranties constitute standards with which all products supplied must comply.
Suppliers must warrant that their goods:
- are reasonably suitable for the purposes for which they are generally intended;
- are of good quality, in good working order and free of any defects;
- will be usable and durable for a reasonable period of time (having regard for the use to which they would normally be put and to all the surrounding circumstances of supply); and
- comply with any applicable standards set under the Standards Act, 1993, or any other public regulation.
Suppliers may not exclude the warranties mentioned above and thereby limit the consumer’s rights under the CPA. For example, the returns policy may not prohibit the return of sale goods if such goods do not comply with the CPA’s warranties.
However, the first two warranties may be excluded if the supplier expressly informs the consumer that the goods are offered in a specific condition and the consumer expressly accepts the goods in that condition. This may sound similar to the “voetstoots” provisions in our common law, but it is rather more limited. Firstly, the retailer must disclose the product defect to the customer and, secondly, the customer must make it clear that they accept the product in that condition.
What can a consumer do if a product does not meet the warranted standards?
If a product does not comply with the prescribed warranties, the consumer may return the product to the supplier within six months after delivery (as regulated by Section 56 of the CPA). For example, if a customer bought a kettle and it stops functioning within six months, the customer can return the kettle to the retailer.
The supplier may not charge a penalty for the return (such as a handling or administration fee). The goods are returned at the supplier’s risk and expense and the retailer must bear the costs of returning the product to the supplier.
If a product does not comply with the CPA’s standard warranties, the consumer may at his/her discretion request the supplier to either:
- repair the product;
- replace the product; or
- refund the purchase price of the product.
The remedy applied is at the discretion of the customer and a retailer may therefore not compel a customer to choose the repair option if the customer would prefer a refund.
A consumer cannot return a product for just any defect. The defect must be a material imperfection in the manufacture of the product, rendering it less acceptable than persons generally would be reasonably entitled to expect. A defect can also be any characteristic of the product which renders it less useful, practicable or safe than persons generally would be reasonably entitled to expect.
The CPA lists a number of factors that must be considered when determining whether a product complies with the standard warranties. These factors include the manner in which, and purpose for which, the products were marketed. The instructions for use of the goods and any warnings must also be considered. For example, if a kettle is marketed for boiling water, a customer should not be able to return it because they could not cook soup in it, or if the kettle malfunctioned because the customer tried to boil muddy water. However, the manufacturer and retailer must ensure that the product information explains the purpose of the product and sets out any limitations. Product labelling and instructions must be comprehensive.
If a retailer repairs a defective product, but it appears that the defect has not been remedied or a further defect is discovered, the retailer must replace the product or refund the purchase price to the consumer with no further option to repair. This remedy is limited to three months from the date of repair.
Other returns
The consumer’s right to return goods, as discussed above, only relates to situations where the goods do not comply with the CPA’s standard warranties. However, there are also other instances in which consumers can return goods as regulated by Section 20 of the CPA.
According to this section, goods may also be returned if:
- the consumer purchased the goods as a result of direct marketing and then cancelled the transaction within the period allowed by the CPA;
- the consumer did not have the opportunity to examine the goods before delivery and the goods are not of the contemplated type or quality, or do not meet the material specifications of a special order;
- the delivery included additional goods not ordered; or
- the consumer expressed a particular purpose for the goods and within ten business days after delivery the goods were identified as unsuitable for that purpose.
Retailers must update their returns policies
The provisions of the CPA may afford consumers much wider rights than those allowed by the retailers’ current refund policies and it is therefore imperative that suppliers ensure that their policies comply with the provisions of the CPA. The consumer’s right to request a refund may also pose a risk to suppliers. Suppliers should therefore be careful to check that products returned fall within the six month period provided for by the CPA.
Retailers must take note that the National Consumer Commission (NCC) is serious about enforcing the CPA and retailers whose returns policies are not CPA compliant could face substantial penalties. The NCC has already conducted spot checks at certain stores to ensure that their returns policies comply with the provisions of the CPA and customers who encounter retailers whose returns policies do not comply with the CPA may also report such retailers to the NCC.
www.adamsadams.co.za
danie-s@adamsadams.co.za
+27 12 432 6000
By Danie Strachan
Amongst the provisions contained in the Consumer Protection Act (CPA) are standard warranties for goods supplied as well as remedies for consumers who purchased goods that do not comply with the warranties. These provisions have a direct impact retailer’s returns policies and since the CPA came into effect on 1 April 2011 there has been some confusion as to when consumers may return goods to suppliers, or request refunds or replacements.
Prescribed warranties
The CPA prescribes four warranties for products (in Section 55). These warranties constitute standards with which all products supplied must comply.
Suppliers must warrant that their goods:
- are reasonably suitable for the purposes for which they are generally intended;
- are of good quality, in good working order and free of any defects;
- will be usable and durable for a reasonable period of time (having regard for the use to which they would normally be put and to all the surrounding circumstances of supply); and
- comply with any applicable standards set under the Standards Act, 1993, or any other public regulation.
Suppliers may not exclude the warranties mentioned above and thereby limit the consumer’s rights under the CPA. For example, the returns policy may not prohibit the return of sale goods if such goods do not comply with the CPA’s warranties.
However, the first two warranties may be excluded if the supplier expressly informs the consumer that the goods are offered in a specific condition and the consumer expressly accepts the goods in that condition. This may sound similar to the “voetstoots” provisions in our common law, but it is rather more limited. Firstly, the retailer must disclose the product defect to the customer and, secondly, the customer must make it clear that they accept the product in that condition.
What can a consumer do if a product does not meet the warranted standards?
If a product does not comply with the prescribed warranties, the consumer may return the product to the supplier within six months after delivery (as regulated by Section 56 of the CPA). For example, if a customer bought a kettle and it stops functioning within six months, the customer can return the kettle to the retailer.
The supplier may not charge a penalty for the return (such as a handling or administration fee). The goods are returned at the supplier’s risk and expense and the retailer must bear the costs of returning the product to the supplier.
If a product does not comply with the CPA’s standard warranties, the consumer may at his/her discretion request the supplier to either:
- repair the product;
- replace the product; or
- refund the purchase price of the product.
The remedy applied is at the discretion of the customer and a retailer may therefore not compel a customer to choose the repair option if the customer would prefer a refund.
A consumer cannot return a product for just any defect. The defect must be a material imperfection in the manufacture of the product, rendering it less acceptable than persons generally would be reasonably entitled to expect. A defect can also be any characteristic of the product which renders it less useful, practicable or safe than persons generally would be reasonably entitled to expect.
The CPA lists a number of factors that must be considered when determining whether a product complies with the standard warranties. These factors include the manner in which, and purpose for which, the products were marketed. The instructions for use of the goods and any warnings must also be considered. For example, if a kettle is marketed for boiling water, a customer should not be able to return it because they could not cook soup in it, or if the kettle malfunctioned because the customer tried to boil muddy water. However, the manufacturer and retailer must ensure that the product information explains the purpose of the product and sets out any limitations. Product labelling and instructions must be comprehensive.
If a retailer repairs a defective product, but it appears that the defect has not been remedied or a further defect is discovered, the retailer must replace the product or refund the purchase price to the consumer with no further option to repair. This remedy is limited to three months from the date of repair.
Other returns
The consumer’s right to return goods, as discussed above, only relates to situations where the goods do not comply with the CPA’s standard warranties. However, there are also other instances in which consumers can return goods as regulated by Section 20 of the CPA.
According to this section, goods may also be returned if:
- the consumer purchased the goods as a result of direct marketing and then cancelled the transaction within the period allowed by the CPA;
- the consumer did not have the opportunity to examine the goods before delivery and the goods are not of the contemplated type or quality, or do not meet the material specifications of a special order;
- the delivery included additional goods not ordered; or
- the consumer expressed a particular purpose for the goods and within ten business days after delivery the goods were identified as unsuitable for that purpose.
Retailers must update their returns policies
The provisions of the CPA may afford consumers much wider rights than those allowed by the retailers’ current refund policies and it is therefore imperative that suppliers ensure that their policies comply with the provisions of the CPA. The consumer’s right to request a refund may also pose a risk to suppliers. Suppliers should therefore be careful to check that products returned fall within the six month period provided for by the CPA.
Retailers must take note that the National Consumer Commission (NCC) is serious about enforcing the CPA and retailers whose returns policies are not CPA compliant could face substantial penalties. The NCC has already conducted spot checks at certain stores to ensure that their returns policies comply with the provisions of the CPA and customers who encounter retailers whose returns policies do not comply with the CPA may also report such retailers to the NCC.
www.adamsadams.co.za
danie-s@adamsadams.co.za
+27 12 432 6000
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