Many organisations are currently reviewing their business models, customer contracts and customer relationship management procedures against the requirements of the recently enacted Consumer Protection Act (CPA). Below is a list of a few recommended action items for companies conducting such due diligence exercises:
1. Applying the definition of goods and services to the companies goods and services in order to understand how the Act applies to the company. For instance, software companies may offer software (goods) and support and maintenance packages (services) under the Act.
2. Distinguishing the company’s liabilities as part of the supply chain that delivers the end product or service to the consumer. The Act provides for the following roles: Supplier, Consumer, Intermediary, Service Provider, Producer, Retailer, Importer, and Distributor and each of such roles entail obligations under the Act.
3.Ensuring that the specified mandatory disclosures have been made to the customer and that the prescribed information has been provided for in company marketing, sales and contractual documentation such as: intermediary disclosures, prescribed information which must be made available on sales records and prescribed disclosures prior to a transaction being concluded through catalogue marketing.
4.Contract Reviews: The CPA regulates the terms of agreements deeming certain provisions typically contained in contracts as prohibited terms, otherwise barring unfair terms and requiring that contracts are written in plain language.
5. Review of organisational policies and procedures, such as return policies, commencement and termination procedures, renewal of agreements, dispute resolution procedures and the guarantee and warranty procedures of the company.
6. Conducting a Workshop with the sales and marketing teams to ensure that their practices, intended campaigns and the content of their materials are aligned with the specifications of the Act.
7. Review of Consumer Relationship Management: Organisations should ensure their personnel are adequately trained to deal with consumer queries including requests for cancellation of orders or termination of contracts.
8. Managing Conflict of Contracts: With the myriad compliance obligations stemming from several legislative sources, a significant risk observed is conflict amongst the company’s own legal documentation. In this regard, one approach that we have advised clients to consider is to develop a legal home on their website to house various legal documentation such as Terms of Service(s) and Refund Policies.
Finally, it is critical to note that the legal risk profile of companies vary according to their business model, third party dependencies and methods of business development. Similarly, understanding and applying the Consumer Protection Act to your business should account for the nature of your business provide for the critical success factors that drive your business. Your due diligence should promote consumer interests alongside responsible business development as an end goal.
By Pria Chetty
& Katherine Thompson