Consumer Protection Act vs The National Credit Act of 2005

. Does the Consumer Protection Act amend the NCA?

The Consumer Protection Act (“the Act”) came into effect on 1 April 2011 and provides an overarching framework for consumer protection. It aims to promote a fair, accessible and sustainable marketplace as well as to provide improved standards of consumer information and to prohibit certain unfair marketing and business practices. All other laws which provide for consumer protection will need to be read with this Act to ensure a common standard of protection.

The Act impinges on a wide range of transactions and consumers and is applicable to all transactions which occur in South Africa regardless of the residence or principle place of business or the supplier.

·         The definition of a “consumer” in terms of the Act includes natural and juristic persons and extends to both the person to whom goods or services are promoted or supplied as well as the actual user of the goods or the recipients/beneficiary of the services. This means that where a product is purchased by one person as a gift for another, both the purchaser (who entered into the sales agreement) as well the recipient of the gift will be regarded as consumers. Goods or services promoted or supplied to the state, in other words, where the state is the consumer;

·         Transactions pertaining to services under employment contracts;

·         Agreements giving effect to collective bargaining agreements;

·         Agreements giving effect to bargaining agreements in accordance with section 23 of the Constitution and the Labour Relations Act; and

·         Credit agreements, in terms of the National Credit Act, No. 35 of 2005.

Note that even though credit agreements are excluded from the ambit of the Act, the goods and services supplied in terms of the credit agreement are not excluded. This means that when a credit provider sells a product to a consumer on credit, the credit agreement must be drafted in terms of the National Credit Act. The consumer will however be offered the protection regarding the product, for example the right to return faulty goods, as set out in the Consumer Protection Act.

Section 9 of the Act however states that if there is inconsistency between the Act and any other law, including the NCA, it must be interpreted concurrently. The Act therefore needs to be applied concurrently with the National Credit Act. If it cannot be interpreted concurrently, the act that is most beneficial to the consumer will prevail. Thus if the Consumer Protection Act affords better protection to a consumer than the National Credit Act, then the Consumer Protection Act will apply in that instance. The contrary will also hold true, where an existing piece of legislation already protects the consumer adequately or better than the Consumer Protection Act, then that piece of legislation will take precedence. The practical impact hereof is that, as in our example above, if a credit provider sells a product to a consumer under a credit agreement, the credit agreement must comply with the requirements of both the NCA and the CPA. This will include that the agreement be drafted in plain, understandable language, that it not contain any prohibited contract terms and conditions and a consumer must not be required to waive any rights.