Within its many objectives. the Consumer Protection Act 68 of 2008 (“CPA”) seeks to promote a fair, accessible and sustainable marketplace for consumer products and services. It is thus not surprising that the CPA enshrines the right to fair and responsible marketing under Part E of Chapter 2. Marketing is a constant commercial activity and includes print, audio and digital marketing material. It is an essential, often creative, step that consciously or subconsciously precedes the conclusion of a transaction. Thus it is important for consumers and businesses alike to be aware of the statutory prescripts around marketing. This legal insight outlines the standard of conduct prescribed by the CPA in the context of marketing; conduct that is prohibited in terms of the CPA; and a broad overview of marketing practices regulated by the CPA.
Standard of conduct
As a point of departure, the CPA sets out a uniform standard for the marketing of goods and services. Section 29 of the CPA prescribes that the marketing process must not: (i) be reasonably likely to imply false or misleading representation in respect of those goods or services; or (ii) be misleading, fraudulent or deceptive in any way. This prohibition against marketing that is misleading or deceptive extends to the nature of the services, the manner in which goods or services are applied, the price of the goods or service, event sponsorships or any other material aspect of the goods or services. Accordingly, the CPA categorically denounces misrepresentation, fraud or deception in marketing.
Prohibited marketing conduct
Both bait marketing and negative option marketing are types of conduct that are prohibited by the CPA. Bait marketing refers to practice in terms of which a supplier advertises products or services as being available, or available at a certain price, only to find that such product or service is either unavailable or available at a higher price. Negative option marketing, on the other hand, refers to a practice in terms of which a supplier offers to enter into an agreement with the consumer unless the consumer declines the offer. This kind or marketing this places the onus on the consumer to refuse such an offer in order for the agreement not to come into effect. The CPA provides that an agreement entered into as a result of negative option marketing is void.
Regulated forms of marketing
In addition to the above, there are various areas of promotional activities that are regulated by the CPA. It is essential that businesses are aware of the forms of promotional activities that are regulated by the CPA in order to ensure compliance with the CPA at the pre-transactional stage.
Many business owners, by way of example, run promotions and promotional competitions in order to introduce their products and services into the market. Even at this early stage, section 36 of the CPA comes into operation as it regulates promotional competitions. Amongst other things, section 36 prescribes certain basic information that any entry form to a promotional competition must set out, such as: (i) the benefit with regard to the offer to participate; (ii) the steps to be taken to participate in the competition; (iii) the basis for the determination of the results of the competition; (iv) the competition’s closing date; (v) the medium through which the results would be made known; (vi) the date, time, place and person from whom a copy of the competition rules may be obtained and the winner of the competition may receive the results.
Another common method of promoting goods and services is through cold calling with the intention to sell a product or services. The practice of cold calling falls under the category of direct marketing, which is regulated under various provisions of the CPA. The most important provisions in this respect are sections 11, 12, 16 and 32 of the CPA. In this regard, section 11 of the CPA requires suppliers to discontinue any unwanted direct marketing as a component of observing every consumer’s right to privacy. In addition, section 12 of the CPA, read together with the CPA regulations, goes further to regulate the times during which a supplier may not contact consumers through direct marketing. Accordingly a consumer may not be contacted at home, unless expressly or implicitly requested or agreed otherwise, on Sundays or public holidays, Saturdays before 09:00 or after 12:00 or all other days between 20:00 and 08:00 on the following day. Consumers are also provided with a cooling-off period of five business days within which a consumer can cancel any transaction entered into as a result of direct marketing, in terms of section 16 of the CPA. This cooling-off period commences from the date on which (i) the transaction was concluded or (ii) the goods were delivered to the consumer, whichever happens last. Finally, section 32 of the CPA obliges any supplier that directly markets goods or services to a consumer to inform such a consumer of their right to rescind the agreement in accordance with the cooling off period provided for in section 16.
Other forms of promotional activities that are regulated by the CPA include alternative work schemes, catalogue marketing, trade coupons and similar promotions, referral selling and customer loyalty programs. Business must ensure that they understand what is expected of them in terms of the CPA to avoid falling foul of their duty to comply with the relevant rules and regulations.
Tshepiso Scott, Managing Director: Tumbo Scott